State Policies Matter for Mental Health During Covid-19

The economic consequences of Covid-19 have undermined mental health for many and may affect long-term population health and wellbeing.

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Disruptions to employment such as job loss, wage reductions, and financial strain have undermined mental health for many during the Covid-19 pandemic. By September 2020, over 40% of US adults reported a loss of household income as a result of the pandemic. Mental health challenges compromise current quality of life and can also lead to future health problems and premature mortality. Therefore, the economic consequences of the pandemic may have long-term effects on population health and wellbeing.

The mental health consequences of unemployment and lost wages (what we collectively refer to as “income shocks”) may differ depending on the state you live in. This is because many social safety nets vary considerably across states. For example, a worker in Washington state can receive up to $790 per week in unemployment insurance whereas a worker in Arizona is limited to a maximum of $240 per week. As a result, unemployed adults in Arizona have fewer resources to cope with a sudden loss of income. This difference in unemployment insurance is not driven by the cost of living in these states, which is fairly similar in Washington and Arizona.

In our study, we analyzed data from 582,440 adults collected between April and July 2020. We examined measures of depression and anxiety, household income shocks, and state-level policies. We found that 45% of the sample had experienced a loss of income in their household since March 13, 2020. Not surprisingly, respondents who experienced an income shock during the pandemic were over 1.6 times as likely to report depression or anxiety compared to respondents who did not.

The mental health consequences of income shocks were not uniform across states. Income shocks were less harmful for adults living in states with generous safety net policies. Protective policies included expanded Medicaid eligibility, higher ceilings for unemployment insurance, more weeks of unemployment insurance, and a freeze on utility shutoffs.

To illustrate this finding, we can look at two states with different sociopolitical contexts. Minnesota is a good example of a state with many policies that promote health and well-being such as generous Medicaid coverage and unemployment insurance. Mississippi, on the other hand, does not have expanded eligibility for Medicaid and has a lower ceiling for unemployment insurance payments. In our study, workers who lost their job or experienced a reduction in wages were less likely to be depressed or anxious in states like Minnesota compared to Mississippi. For context, 37 states expanded eligibility for Medicaid, 34 states enacted a freeze on utility shutoffs, and the average ceiling on weekly unemployment insurance across states is $460.

Expanded Eligibility for MedicaidYesNo
State-level Earned Income Tax CreditYesNo
Max. Unemployment Insurance Amount (per week)$462$235
Max Unemployment Insurance Duration26 weeks26 weeks
Pandemic Utility FreezeYesYes
State Moratorium on EvictionsYesYes
Depression Prevalence among Adults with Income Shocks26%36%
Anxiety Prevalence among Adults with Income Shocks39%44%

In our study, workers who lost their job or experienced a reduction in wages were less likely to be depressed or anxious in states like Minnesota compared to Mississippi.

Our findings point to vastly different experiences in mental health across US states during the Covid-19 pandemic. The lack of supportive social policies in numerous states is detrimental for population health and well-being now, during the pandemic, and will continue to be for years to come. But this dire prediction can be averted. For one, states should improve their safety nets by increasing access to Medicaid, raising the ceiling on unemployment insurance, and enacting freezes on utility shutoffs. Alternatively, the federal government should implement policies uniformly across states, such as the nation-wide expansion of unemployment insurance through the CARES Act and the American Rescue Plan.

Creating strong safety nets in every state will have significant effects on the mental health of millions of Americans experiencing income loss across the United States during the current pandemic and future crises. Although the Covid-19 pandemic upended daily life, existing and emergency-related social policies can fill important resource gaps for American families.

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