Medicaid Expansion in Oregon: No Improvement in Health

May 06, 2013

By: Nicole Kaeding

Last week, the New England Journal of Medicine released a new study with dramatic ramifications on the current Medicaid expansion debate. The study measured the effects of expanding Medicaid to 10,000 individuals in Oregon, and showed that expanded access has no “significant improvement in measured physical health outcomes.” As states grapple with the decision to dramatically expand their Medicaid roles, this study should give everyone pause to ask “is expansion really worth it?”

In 2008, Oregon determined it has access funding in its Medicaid program and could expand coverage to 10,000 new individuals. The study conducted a lottery and enrolled those individuals. This presented an unique opportunity for researchers. They would be able to directly study the effects of expanded Medicaid coverage on those individuals. A large group of health policy scholars embarked on just that task.

And the results are startling. The individuals who gained access to Medicaid through this lottery had no statistically significant improvement in their health outcomes two years later. That means that even after gaining access to health insurance—through the broken, costly Medicaid system—these individuals were no healthier than they were before the program started.

The only real dramatic change that the researchers found was that health care utilization increased which is absolutely expected and shows one of the fundamental problems of Medicaid. By gaining insurance coverage, these individuals were no longer paying for their health care services, particularly since Medicaid basically prohibits any sort of cost-sharing like traditional private insurance. These individuals, in essence, had a free ride to consume more health care with no out-of-pocket exposure. So of course they consumed more health care services. It was free.
But even after purchasing more health care—thanks to Oregon taxpayers—these individuals were no healthier.

Why does this matter? As states decide whether to expand their Medicaid system after last summer’s Supreme Court ruling, governors, state legislators and most importantly, taxpayers, need to ask, “Are we getting our money’s worth?” Medicaid expansion, a centerpiece of the President’s health care law, would add more than 10 million people to this system if all states expand. Medicaid costs state and federal taxpayers almost $500 billion every year and expansion will cost over $800 billion in the next ten years alone. Why would we dramatically expand a program that doesn’t improve health outcomes?

And unfortunately, this isn’t an anomaly. Many other studies have shown the health outcomes for Medicaid patients lag those on private insurance or Medicare. A rigorous study from the University of Virginia found that health outcomes for Medicaid patients were worse than uninsured individuals.

Instead of subjecting millions of Americans to a health insurance system that is now proven not to improve their health outcomes, states must now push back on the federal government and demand real, patient-centered reform. As this study proves, providing someone with a card emblazed with “Medicaid” isn’t the cure-all the Left sells it as.

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