Why Medicaid Patients Using the ER More Isn't a Bad Thing

As they argued that we needed to get coverage for the millions of Americans without health insurance, one of the problems advocates pointed to was the fact that many of the uninsured ended up showing up at the emergency room with relatively minor ailments, because they don't have regular doctors they can see and they know the hospital will have to treat them regardless of whether they'll be able to pay. This leads to crowded ERs and lots of uncompensated care, which is bad for everybody. So what happens when you give a bunch of formerly uninsured people Medicaid? According to a new study from the Oregon Health Insurance Experiment, a unique data set around a randomized experiment made possible a few years back when the state of Oregon distributed new Medicaid enrollments by lottery, people went to the ER more once they got on Medicaid.

Liberals might find this disheartening. But not only is it not all that surprising, it doesn't undermine the case for Medicaid expansion at all.

Keep in mind that this study concerned people with very low incomes in the first 18 months after they got coverage. Why might they go to the ER more often? There are a number of reasons. The most important is that they now know that they have insurance, so they seek all kinds of care, including physician office visits, more. That isn't a bad thing. Second, since they're newly insured, some don't have a longstanding relationship with a doctor, but they know where the hospital is. They're also likely to be working for hourly wages, so going to the doctor during business hours means losing pay. The ER, on the other hand, is open 24 hours and you don't need an appointment.

The best way to understand this study may be as a demonstration of what happens when people with very low incomes who have been uninsured first get coverage. It's possible that over time, their medical use will end up looking much like that of other insured people.

It's also important to remember that the point of getting an individual person insured isn't to save money on that person, particularly in the short run. If somebody never goes to a doctor for their entire life and dies young of a preventable illness, the system has saved money on them, but that's not a good thing. We sometimes forget, as we're talking about health-care costs, that we get something for what we pay on health care: health! Of course we want to make our total costs as low as possible, but one of the most important ways to do that over the long term is to adjust the system so money moves through it in a more sane fashion than it does now.

Recall that when a low-income person who doesn't have insurance goes to the emergency room, they're going to be presented with a huge bill. This bill will be far, far in excess of what the hospital negotiates with insurance companies or programs like Medicaid for the same services, which is why people end up getting charged thousands of dollars for getting a couple of stitches. They'll probably be unable to pay, though the hospital and its debt collectors will hound them, making them miserable. Eventually, the cost will be picked up through a combination of state and local programs that repay the hospital for uncompensated care, with some costs being passed along to everybody else via higher prices. In contrast, when a person with Medicaid goes to the ER, they get care, and Medicaid pays the bill. It's a lot simpler.

Obviously, for something like a kid's ear infection or a broken finger, it makes more sense if people go to a family physician or an urgent-care center than the ER. But in the big picture of health care overspending, insured people going to the ER instead of a slightly cheaper alternative is a drop in the bucket compared to things like needless treatment given to patients in their last weeks of life. And most important, we shouldn't forget that somebody getting medical care when they need it is something to be glad about.

If you want to read more about the context for this study and how we should think about it, see Harold Pollack.

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