The Benefits of Medicaid

In tomorrow's New York Times, Annie Lowrey has an interesting story about a study researchers were able to do in Oregon when the state had to hold a lottery to give people Medicaid coverage, leading to the perfect conditions for a randomized field experiment on what effect obtaining insurance could have. The results were pretty encouraging:

In a continuing study, an all-star group of researchers following Ms. Parris and tens of thousands of other Oregonians has found that gaining insurance makes people healthier, happier and more financially stable. The insured also spend more on health care, dashing some hopes of preventive-medicine advocates who have argued that coverage can save money — by keeping people out of emergency rooms, for instance. In Oregon, the newly insured spent an average of $778 a year, or 25 percent, more on health care than those who did not win insurance. For the nation, the lesson appears to be a mixed one. Expanded coverage brings large benefits to many people, but it is also more likely to increase a stretched federal government’s long-term budget responsibilities.

The newly insured of Oregon were more likely to describe their health as good, and to say that their health was getting better, according to self-reported data that researchers are now combining with objective measurements. The uninsured reported being in worse physical and mental shape and were less likely to describe themselves as happy. Getting insurance also had powerful financial effects, the study showed. The insured were 25 percent less likely to have an unpaid medical bill sent to a collection agency and 40 percent less likely to borrow money or skip paying other bills in order to cover their medical costs.

So, getting on Medicaid, despite its weaknesses (mostly related to underfunding that limits your choice of providers, since many doctors won't accept Medicaid because of its low reimbursement rates), nevertheless makes you happier, healthier, and wealthier. And what about the fact that people with that insurance spent more on health care overall? It would be great if the ledger came out positive on that one. But look at the figures again. The price for transforming somebody's health, finances, and peace of mind is a whopping $778 a year. Sounds like a pretty good deal to me.

This is a good opportunity to remind ourselves that we are the only highly developed country in the world that considers it acceptable that any of its citizens live without health insurance. Even if Medicaid isn't the best thing going, this study shows just how spectacularly better it is to have insurance, even imperfect insurance, than to have no insurance at all. And for all the Affordable Care Act's compromises, it will enable about 30 million more Americans to get on Medicaid. That coverage isn't free for the country to provide, but given what's gained, it's a bargain.

That is, unless Anthony Kennedy decides that those 30 million people can go jump in a lake, because government shouldn't make you eat broccoli.

Comments

An obvious reform is to block grant Medicaid funds to the states. This would grant them greater flexibility in tailoring Medicaid offerings to their state's specific needs, and would place the onus upon the states to limit spending.
Block grants would encourage states to mimic successful private health care delivery reforms, and if those reforms reduce spending on acute care by just 4% per year, annual spending would fall by $9.5 billion (http://bit.ly/MhHbk8).
Block grants would remove a significant incentive for states to inflate the price of health care by imposing health care taxes that increase federal matching funds.

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