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Study: Medicaid better than nothing

July 11, 2011

Health care reform will add roughly 500,000 Hoosiers to the Medicaid program and, in spite of great criticism of that expansion, a new study suggests Medicaid coverage does help consumers get more care, have fewer unpaid bills and feel better.

On the downside, the study found that one of the central hopes of the health care overhaul—that increased health insurance coverage would reduce expensive use of emergency rooms—failed to occur.

The study, published this month by the National Bureau of Economic Research, studied able-bodied adults in Oregon with incomes below the federal poverty level, who were chosen through a lottery to apply for Medicaid coverage. The random selection of participants gave researchers an unusual opportunity to compare those who won the chance to apply for Medicaid with those who entered the lottery but were not able to apply.

In the first year after the lottery, the winners were 35 percent more likely to have an outpatient visit, 30 percent more likely to go the hospital, 15 percent more likely to take prescription drugs, and more likely to be in compliance with preventive care such as mammograms and cholesterol monitoring.

Also, the lottery winners were 25 percent less likely to have an unpaid medical bill and 35 percent less likely to have any out-of-pocket medical expenses. They also reported increased levels of mental and physical well-being.

“Our results suggest that Medicaid provides benefits to this [low-income] population above and beyond the non-Medicaid alternatives that exist through various safety net options,” wrote the study’s authors, who were led by Amy Finkelstein, an economist at Massachusetts Institute of Technology.

Finkelstein is no shill for ObamaCare. In 2007, she published research—trumpeted by many conservatives—that suggested the biggest contributor to health care costs over the past 40 years was the 1967 launch of the Medicare program. The upshot of her research was that expanding government-sponsored insurance programs—as the health care reform law later did—was almost sure to lead to even faster cost growth.

But her most recent study, if it can be extrapolated from Oregon to other states, runs against much thinking about the expansion of Medicaid eligibility that will occur in 2014. At that time, states must allow adults with incomes up to 133 percent of the federal poverty limit to get Medicaid coverage. Indiana’s current cutoff is 26 percent of poverty.

Dr. Scott Gottlieb of the New York University School of Medicine has argued that being on Medicaid is actually worse than being uninsured—mainly because so few doctors accept the low reimbursement rates that Medicaid pays.

Others, such as Bloomington emergency room physician Rob Stone, have worried that the expansion of Medicaid will give even more patients an insurance plan that few doctors take—leading them to use the emergency room even more. Stone would prefer the nation adopt a single-payer system, in which the federal government would cover all Americans.

Gov. Mitch Daniels has criticized the Medicaid expansion as sure to overwhelm the state’s finances, and has instead asked the federal government for permission to steer people away from Medicaid and into the state’s Healthy Indiana Program, which uses health savings accounts for low-income adults.

 

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