Oregon’s Medicaid Expansion Trial – Lessons Learned

There are times where it doesn’t feel good to be right, and this is one of them. 

Under the president’s health care law an estimated 16 million more Americans will be put on Medicaid, bringing the total to more than 80 million Americans by the end of this decade, or around one-quarter of the U.S. population. Universal health care coverage, either through state level Obamacare exchanges, or through expanded Medicaid coverage was touted by progressives as the best ways to provide better coverage for all and better outcomes for everyone, including the very sick and the poor. In the push to pass Obamacare and beyond, liberal pundits and policy wonks made many claims about the benefits of such coverage.  Back in 2009, Ezra Klein put an actual number on the lives universal health care coverage would save and argued that more money simply must be spent. 

During the battle against the government takeover of health care, conservatives were scorned for questioning the ability of a huge bureaucratic program to meet the medical needs of those without coverage.  Conservatives and libertarian policy experts had many concerns about expanding government coverage, especially Medicaid. Not only because of the enormous costs, but also the likelihood that expanding such programs and dumping large numbers of people into an already broken system would only add to the numerous problems providing timely access to quality care.  Yesterday, a report proved these naysayers right in many regards. 

In 2008 Oregon expanded its Medicaid coverage with a lottery system.  The state could not afford to cover everyone who qualified, but they did cover an additional 30,000 of the 90,000 residents in waiting. This new expansion allowed for researchers to contrast specifically designated health care outcomes for over 6,300 low-income adults now covered under the expansion to 5,800 who were not picked in the lottery.  

The New England Journal of Medicine published The Oregon Health Insurance Experiment, (OHIE) conducted by the nation’s top health policy experts.  The study found no measurable effect on any of the measured physical health outcomes studied. Participants spent on average 35% more than those not on the plan, averaging over $1,150 per person.

That’s right, even with access to medical care and increased spending, those on the expanded Medicaid program showed no measurable physical health benefits over those not selected. The study states:

“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.”

After reading Avik Roy’s take on this study, I spoke with him about the most significant findings and what conservatives should take away from all of it.

“Here’s what’s most important to note; we’re currently spending over $450 billion a year on Medicaid, and we’re about to spend over $600 billion a year for a program that does not appear to actually achieve the goal of helping the poor become healthier. I am not opposed to spending money on the poor, I’m opposed to wasting money on the poor.  The dominant argument from the Left is that we must spend more to help these people, and we have, but it’s not achieving the goals.”

As Philip Klein puts it “The landmark study shatters liberal health care claims” stating:

“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 doctor’s 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 save money by reducing costly emergency room visits.” 

As I said in the opening line, it doesn’t feel good to be right this time.  I think I can speak for all conservatives when I say that we want the poorest and most vulnerable members of society to have access to quality health care.  We want the sick and the elderly to be able to access a doctor when needed and have the ability to make decisions for their health that benefit them and that also does not waste the taxpayer’s money. Unfortunately, Oregon shows us that pouring more people into an already burdened and broken system is not the answer.  

This is an important lesson for state legislators and governors and I hope they’re paying attention.  Learn from Oregon, please!  The answer is not Medicaid or the middle class subsidies for health care also known as the Obamacare state exchanges.  The answer is patient centered health care options such as HSA’s, full deductability for medical expenses, block grants to the states, and high risk pools for those with pre-existing conditions.  

There are many solutions to the health care crisis that we face.  The problem is that we need principled leaders at all level of government to first realize that what we’re doing now isn’t working and take steps to reform the system in a substantial way.  The truly compassionate answer is to fix the system, not pour more sick and low-income people into a broken system. 

How many more states will go the way of Oregon?  Will yours be next

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