Landmark Study Shatters Liberal Health Care Claims

By Phillip Klein

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.

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.

Specifically, researchers found that those who received Medicaid increased their annual health care spending by $1,172, or 35 percent more than those who did not receive Medicaid. Those with Medicaid were more likely to be screened for diabetes and use diabetes medication and to make use of other preventive care measures. The study also examined health metrics including blood pressure and cholesterol.

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.

Of course, this is just one study, and the authors offer some caveats. Among others, the study measured an average of about 17 months of health outcomes, so longer-run results may differ. Also, the study applied to Medicaid, rather than private insurance. But given that it had a sample size of over 12,000 and was so well designed, its conclusions will reverberate.

As the authors explain, “our study provides evidence of the effects of expanding Medicaid to low-income adults on the basis of a randomized design, which is rarely available in the evaluation of social insurance programs.”

Starting next year, millions more Americans will become eligible for Medicaid as a result of President Obama’s health care law. As Cato’s Michael Cannon put it, “There is no way to spin these results as anything but a rebuke to those who are pushing states to expand Medicaid. The Obama administration has been trying to convince states to throw more than a trillion additional taxpayer dollars at Medicaid by participating in the expansion, when the best-designed research available cannot find any evidence that it improves the physical health of enrollees. The OHIE even studied the most vulnerable part of the Medicaid-expansion population – those below 100 percent of the federal poverty level – yet still found no improvements in physical health.”