New evidence supports value of Medicaid coverage

Individuals with Medicaid coverage were 70% more likely to have a regular medical office to obtain basic care, 55% more likely to have a personal doctor, and obtained more preventive care than an uninsured group, according to a new study.1

"Our study shows that Medicaid substantially improves the well-being of enrollees, putting to rest any arguments that Medicaid doesn't matter to beneficiaries," says Katherine Baicker, PhD, one of the study's authors and a professor of Health Economics at the Department of Health Policy and Management at the Harvard School of Public Health in Boston.

Researchers compared 10,000 Oregonians who won a state-sponsored lottery for Medicaid in 2008 with a group who applied for Medicaid but remained uninsured. Those who obtained Medicaid coverage were 40% less likely to borrow money or skip paying other bills because of medical expenses, and were 25% more likely to perceive their health as being good to excellent, the researchers found.

"We found that Medicaid coverage increased health care use, including inpatient care and outpatient care, such as doctor's office visits, prescriptions, and preventive care," says Dr. Baicker. "Policymakers need to weigh those benefits against the cost of the program."

First study of its kind

The study's findings "really do lay to rest the question of whether insurance coverage, and Medicaid coverage in particular, is of value," says Sara R. Collins, PhD, vice president for affordable health insurance at the Commonwealth Fund's office in Washington, DC.

One major difference between this study and prior research, says Dr. Collins, is that the possibility of differences between people who enroll in Medicaid, and those who are eligible but don't enroll, was eliminated. "In this case, it was a population with similar characteristics," says Dr. Collins. "The state had to make a decision about who they could let into Medicaid. Everyone in the group wanted to enroll. Some were randomly selected, and others didn't make it in."

In addition, says Dr. Collins, the strength of the findings, the large sample size, and the quality of the research team, which includes health policy experts who served in both the Bush and Clinton administrations, "lends the study an enormous amount of credibility."

The fact that people who did not get into the Medicaid program were significantly worse off than those who did, says Dr. Collins, "is an incredibly encouraging finding. People should be heartened by it."

This is the first study to evaluate the effects of Medicaid using a randomized control group, notes Dr. Baicker. Without such a control group, it is very difficult to isolate the effects of insurance itself, she explains, since the insured and the uninsured differ in many ways, such as income, employment, or initial health, that may also affect their health outcomes.

For example, people in ill health may be more likely to enroll in Medicaid when given the opportunity, says Dr. Baicker. "A naive comparison of those who are enrolled to a group of uninsured people might incorrectly conclude that Medicaid harmed health, because enrollees might have worse health outcomes, but it's not that Medicaid caused worse health outcomes," says Dr. Baicker. "Rather, those in poor health were more likely to be enrolled in the first place."

Joseph Newhouse, PhD, one of the study's authors and John D. MacArthur Professor of Health Policy and Management at Harvard University, says that because there had never been a randomized experiment with an uninsured group, he had no strong expectations about the health status results.

"How to interpret them will be clearer when we are able to analyze the physiologic measures of health we are collecting," says Dr. Newhouse. "The work certainly suggests Medicaid has value among the group we enrolled. Whether that value exceeded the cost is still an open issue."

More utilization

"There has been a great deal of debate about how Medicaid affects access to care," says Dr. Baicker. Some have postulated that people on Medicaid don't have much access to care because providers may not accept Medicaid patients, she explains, while others have postulated that the uninsured already consume care through uncompensated care, emergency departments, and clinics.

Prior research suggested that there would be an increase in utilization in response to Medicaid coverage, which the researchers also found, according to Dr. Newhouse. "It was also not surprising, though good to see documented since there had been no prior work, that Medicaid lessened financial strain," he adds.

The study shows that having access to community health centers or ERs is not the same as having health insurance coverage, says Dr. Collins. "It really does underscore the importance of the coverage expansions under the health reform law, which should bring the numbers of uninsured way down," she says.

The fact that people with Medicaid coverage got more preventive care also has fiscal implications for states, says Dr. Collins. "While it may increase public health costs in the short run, it's probably going to save the system costs over the longer term because of a healthier population," she says.

The study's findings demonstrate that Medicaid is a critically important health insurance program, according to Deborah Bachrach, special counsel at Manatt, Phelps & Phillips, a health law and consulting firm in New York City, and former New York Medicaid director.

"To suggest that low-income families, the elderly and the disabled would be better off without Medicaid flies in the face of the facts," says Ms. Bachrach. "This is not to say that Medicaid is without its flaws."

That is why Medicaid directors around the country are focused on strategies to ensure that Medicaid is a sound purchaser, says Ms. Bachrach, using many of the same tools as Medicare and private insurers.

"The Oregon study is a welcome endorsement of Medicaid's role in providing coverage and care," says Ms. Bachrach. "One can hope it will also provide an incentive to ensure eligible Americans are able to access quality, cost-effective care — now and in 2014."

Contact Ms. Bachrach at (212) 790-4594 or DBachrach@manatt.com, Dr. Baicker at (617) 432-1029 or kbaicker@hsph.harvard.edu, Dr. Collins at (212) 606-3838 or src@cmwf.org, and Dr. Newhouse at (617) 432-1325 or newhouse@hcp.med.harvard.edu.

Reference

1. Finklestein A, Taubman S, Wright B, et al. The Oregon health insurance experiment: Evidence from the first year. National Bureau of Economic Research Working Paper No. 17190. July 2011, Cambridge, MA.