How the Oregon Medicaid Study is Rocking Liberal Assumptions

How the Oregon Medicaid Study is Rocking Liberal Assumptions
May 2, 2013

Benjamin Domenech

Benjamin Domenech (bdomenech@heartland.org) is a senior fellow at The Heartland Institute. Domenech... (read full bio)

From the beginning, Obamacare’s largest expansion of coverage to the uninsured has come not through the form of subsidized insurance in the exchanges – a middle class entitlement – but through the expansion of Medicaid, the health program with outcomes which largely vary between the subpar and the terrible. Liberal supporters of the law argued vociferously that this expansion amounted to a lifesaving endeavor. Here’s a milder version of the claim, from Ezra Klein in 2009: “In reality, people don't like to talk about health-care reform in terms of lives because it seems, on some level, unfair. It sounds almost like an accusation of murder. That's common rhetoric when talking about wars but not social policy. But it isn't an accusation of murder. It's a statement of benefits.”
 
But is it a real statement of benefits? The data is in, and it says: no. Phil Klein reports: “During the health care debate, liberals argued that government had to a moral duty to enact legislation that expanded health insurance among lower-income individuals.  But a landmark study published in the New England Journal of Medicine dramatically undermines this assumption and shatters the rationale behind the law’s Medicaid expansion.” That study, by some of the nation’s top health economists, including Romneycare/Obamacare architect Jon Gruber, is here. Back to Klein:

“In 2008, Oregon expanded its Medicaid program, but because the state could not cover everybody, lawmakers opened up a lottery that randomly drew 30,000 names from a waiting list of almost 90,000 and allowed them to apply for the program. This created a unique opportunity for health researchers, ultimately allowing them to compare the health outcomes of 6,387 low-income adults who were able to enroll in the program with 5,842 who were not selected. Contrary to liberal assumptions, researchers found that those who enrolled in Medicaid spent a lot more on medical care than those who weren’t able to enroll, but didn’t significantly improve their health outcomes…”
 
“Ultimately, the authors concluded that, “This randomized, controlled study showed that Medicaid coverage generated no significant improvements in measured health outcomes in the first two years, but it did increase use of health services, raise rates of diabetes detection and management, lower rates of depression, and reduce financial strain.” So, the study suggests that expanding Medicaid is one way of reducing financial pressure on low-income groups, but it’s costly and does not improve their health. Another interesting finding was that though medical spending increased among Medicaid enrollees due to more prescription drug usage and doctors’ visits, the study “did not find significant changes in visits to the emergency department or hospital admissions.” This undercuts another favorite talking point of liberals, which is that expanding insurance actually saves money by reducing costly emergency room visits.”

Conservative and libertarian health wonks have long doubted the claims that more Medicaid equals more lives saved in part because the numerous problems in the Medicaid system prevent and delay timely access to care. If anything, the Oregon study, the only one of its kind, ought to have been biased in favor of improved outcomes from Medicaid: the participants in the lottery to gain access to the program were likelier to be sicker and to have more needs for care (where presumably Medicaid could make a positive difference), and Oregon’s program is far less broken than those in other states (it pays doctors more, and only 21 percent of them won’t see Medicaid patients, as opposed to 31 percent on the nationwide average). So with better access and a sicker population, if there was any health benefit to being on Medicaid, you should’ve found it here.
 
For those who want a more wonky review of the study’s results and the nature of its approach to its sample, Avik Roy has that for you here.  

“Where the study did show significant differences between Medicaid and the uninsured was in spending (Medicaid patients spent an average of $1,172 more than uninsured patients); and utilization of health-care services (which drove the spending). Some of that utilization was a good thing, such as an increase in cholesterol screening. But it didn’t result in better cholesterol health outcomes. In addition, the study showed a benefit in “reduced financial strain,” an unsurprising result, given that the Medicaid law strictly limits the degree to which enrollees can pay for their own care. But, again, that reduced financial strain didn’t result in better health outcomes. And if relieving financial strain is all we are trying to do, we’d be better off giving poor people the cash and letting them spend it how they choose.”

In other words, Medicaid is just The Human Fund.
 
The Oregon study takes a sledgehammer to the idea that just handing out more free money  can address health care problems.  Sadly, the response yesterday illustrated just how much liberal economists are willing to reject data for spin when the numbers conflict with their gut instincts. Aaron Carroll suggested (laughably) that a multi-year study of 10,000 people wasn’t statistically significant.  Jonathan Cohn headlines his piece: "The New Study that Republicans Who Reject Medicaid Must Read: A report indicates just how important it can be in improving poor people's lives." But buried in the third to last paragraph, you find: “But one place improvement did not appear was physical health.” To which we ought to respond: Isn’t that the whole bloody point?
 
Across the country, state legislators have been pressured as they decide whether or not to expand their Medicaid programs by a host of advocacy groups, often backed by providers who stand to benefit from the taxpayer dollars, which claim that not expanding would hurt poor people. Many weaker Republicans have buckled under this pressure, such as Florida Gov. Rick Scott. But the truth is that just throwing money at the Medicaid program invests taxpayer dollars in exactly the wrong kind of approach. As I noted to Klein in our back and forth last month, I would rather have a smaller program which met its promise to America’s poor and the truly sick rather than a larger one which offered a false promise of access. As Roy closes his piece: “Progressives have long enjoyed wielding the straw man. “If you oppose expanding Medicaid,” they say, “you oppose health care for the poor. Plain and simple.” But the truth is, if you support expanding Medicaid, you’re doubling down on a broken program, one that shuts the door on real reforms that could provide quality health care to those who most need it.”

Benjamin Domenech

Benjamin Domenech (bdomenech@heartland.org) is a senior fellow at The Heartland Institute. Domenech... (read full bio)