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Medicaid expansion might not be as helpful as we’re meant to think

Legislators must be very careful as they weigh whether or not to expand Medicaid. Medicaid expansion may be well-intentioned, but its exorbitant cost means responsible citizens must focus on what will actually accomplish good.
Legislators must be very careful as they weigh whether or not to expand Medicaid. Medicaid expansion may be well-intentioned, but its exorbitant cost means responsible citizens must focus on what will actually accomplish good.
David Goldman, Associated Press

One of the most pressing issues to be discussed in the 2015 legislative session is whether or not to expand Medicaid, and if so, by how much.

The first question that needs to be answered is: Why are we discussing this now? The answer is because Obamacare left a significant population uninsured and tried to make up for that by asking states to expand Medicaid.

It turns out that many states looked at the bill for Medicaid expansion and weren’t keen on just following the feds in lockstep. Utah is one of the states that hasn’t expanded yet, but the Legislature is under a lot of pressure from well-intentioned advocacy groups arguing that people need insurance in order to be healthy. This argument is largely taken for granted, but is it true?

The two most significant studies of health insurance in America are the RAND study, conducted in the 1970s, and more recently the Oregon Health Insurance Experiment, which began in 2008. What these two groundbreaking studies found is that health insurance doesn’t make people healthier.

In 2008, Oregon decided to expand its Medicaid program. Because the newly Medicaid insured were chosen via lottery, it created a perfect research opportunity to study the effects of having free or nearly free Medicaid insurance versus being uninsured.

Pretty much everyone involved expected the results to be a slam dunk in favor of Medicaid making people healthier. But researchers monitored various health outcomes like cholesterol, blood pressure and blood sugar levels and found no statistically significant improvements in any of them. And Oregon’s health care study confirmed the RAND study findings from four decades prior. Simply giving people health insurance doesn’t improve their health.

The whole point of expanding Medicaid is to make people healthier. This is what legislators debating the various expansion proposals will be hearing throughout the legislative session. But data from the best research suggests policymakers shouldn’t take that assumption at face value. With expansion, Utah could take hundreds of millions of dollars from other important programs to fund Medicaid — and not see any real health benefit from doing so.

One positive shown by Oregon’s Medicaid study is the near elimination of catastrophic financial expenditures. In other words, what health insurance does well is act like all other forms of insurance — it prevents a major and expensive event from being financially catastrophic. If you get cancer or need brain surgery, your insurance kicks in to cover those large costs, just like if you get in a car accident or have a house fire — those insurance coverages protect you from those large costs.

But Medicaid is much, much more than just insurance against the rare and unexpected. It covers a wide array of health care services at nearly no cost to the patient. But not only does it not result in better health, it may even incentivize poor behaviors. Oregon’s Medicaid patients used emergency rooms 40 percent more than their uninsured counterparts, even for things better suited for a normal doctor’s office visit. This finding directly refutes another argument repeatedly used by Obamacare and Medicaid expansion proponents — that insurance coverage will reduce health care spending by reducing emergency room usage.

Legislators must be very careful as they weigh whether or not to expand Medicaid. Human beings have a natural charitable inclination to care for others. This inclination can lead us to evaluate policy based on intentions rather than outcomes. Medicaid expansion may be well-intentioned, but its exorbitant cost means responsible citizens must focus on what good will actually be accomplished.

Cameron Robinson is an accountant in Draper and treasurer of the Utah Republican Party.