Does Medicaid Make People Healthier?

Does Medicaid, the joint federal-state health insurance program for the poor and disabled, actually result in better health? Given that ObamaCare relies on the program for roughly half of its health insurance expansion, it’s an important question. And there’s a case to be made that on certain specific health measures, it doesn’t.

But a number of the program’s defenders—as well as those who’ve argued in favor of the health care overhaul’s Medicaid expansion—are taking the initial results of a major new study on the program’s effects as strong evidence that the program creates real health benefits for its beneficiaries. At The New York Times, for example, Dave Leonhardt writes that the study “suggests that the law is likely to improve the health and well-being of many of the uninsured.” Others have echoed this line, arguing that the study proves Medicaid makes a clear difference. They’re substantially overstating the study’s conclusions so far.

The most interesting question isn’t whether Medicaid made a difference. Clearly it makes some difference on a variety of measures. It’s whether it actually improved overall health, and whether it did so in a cost-effective manner. The truth is, we still don't really know. 

The study in question looked at the effects of Medicaid in Oregon, which in 2008 chose 10,000 individuals to enroll in Medicaid via lottery. The random nature of assignment made it easy to control for outside factors and avoid the strong selection bias that normally makes such experiments dicey.

The study does indeed show that individuals enrolled in Medicaid used far more in the way of health care services of just about every kind except emergency room visits. Presumably as a result of the increase in utilization, total spending on health care shot up by about 25 percent amongst the Medicaid population.

But greater utilization of care is not the same as better health. For that, Medicaid advocates have turned to the study’s finding that, enrollment in Medicaid “is associated with improvements across the board in our measures of self-reported physical and mental health, averaging two-tenths of a standard deviation improvement.”

So those who won the Medicaid lottery are reporting that they feel better about their health. Does that mean they’re actually healthier? Not necessarily. According to the study, the results “may also reflect improvements in objective, physical health, but this is more difficult to determine with the data we now have available.” At this point, in other words, the researchers just don’t know.

Moreover, they believe there’s a real possibility (though far from a certainty) that the increased self-reported happiness may simply be a psychic artifact of health coverage. “The self-reported physical health measures could reflect a more general sense of improved well-being rather than actual improvements in objective health,” the authors write. Indeed, the study finds evidence to support this conclusion: Self-reported health status improved immediately after enrollment—and before enrollees reported increased utilization of care. The level of improvement was equal to about two-thirds of the total increase in self-reported health states. The fact that enrollees were reporting substantially better health before getting any additional care suggests that the happier self-reporting reflects good feelings about personal health far more than any objective changes in medical care or condition.

Now, the study also shows a fair amount of financial smoothing: Health insurance certainly makes it easier for individuals to pay for health care, and reduces the chance of major financial shock. This is consistent with findings about the introduction of Medicare—findings which showed no statistically significant decrease in mortality following the program’s introduction. This is by far the clearest benefit of health insurance.

But that financial smoothing must be balanced against the study’s other findings: Greater utilization of health services and increased spending to pay for it, no reduction in emergency room visits (as is so often promised), and uncertain physical health benefits. 

So far, the study has only examined one year’s worth of data. In later years, we’ll see more study of objective health measures. But even if the results do show some increase in objective health measures, that won’t necessarily provide clear evidence that Medicaid is fiscally prudent public policy. As Cato’s Michael Cannon writes, “For Medicaid to be cost-effective, it must (A) produce benefits and (B) do so at the same or a lower cost than the alternatives.”

The Oregon Health Insurance Experiment is an important piece of evidence in the study of the effects of health coverage. But it’s far from proof that health insurance actually improves health, or that government-run health insurance programs like Medicaid are worth the price the public pays for them.

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  • Tman||

    Govt: "Hey, here's some free health insurance."

    Recipient: "Hey thanks, now I don't have to pay for my own."

    Govt:"Do you feel healthier now?"

    Recipient:"Of course! Say, can I have some more free stuff?"

  • ||

    averaging two-tenths of a standard deviation improvement

    Do statisticians in the medical field have different definition of standard deviation? How is this at all significant if it means what it says?
    -K

  • mr simple||

    It's hilarious that anyone would suggest that an increase in medicaid recipients would decrease er visits as studies I've seen show medicaid to be responsible for more of an increase in er visits than the uninsured or illegal aliens. This is due mainly to the decreasing number of doctors who take Medicaid.

    Also,
    findings which showed no statistically significant decrease in mortality following the program’s introduction.

    Still 100%, eh?

  • Otto||

    I worked with a woman who had a kid while on Medicare. She went to great pains to learn computer skills to get a job that would have health insurance after that experience. Her description of the way Medicaid patients were treated, and the offices of the few medical "professionals" who would actually take it, were pretty horrific.

  • Mr. FIFY||

    Obamacare = vote-buying scheme.

    Plain and simple.

  • No Name Guy||

    So, what is the rate of death of these 10,000 people since enrollment? What about compared to 10,000 (equally randomly selected) who applied for the lottery yet didn't win the prize? Ditto that for heart attacks, strokes, ER visits for diabetes complications, etc? Hard and fast, measurable numbers.....Numbers talk, bullshit walks.

  • ||

    You're right, exactly.

    Self-reported claims of physical and mental health are laughable on their faces.

    Besides, doctors and medicine don't give health.

    Health is what people give themselves through right living -- eating well, engaging in physical activity of high intensity periodically, socializing regularly.

    Doctors can only stem the effects of disease. It requires the bodies of patients to engage in self-restoration.

    If only the myth would die that doctors give health.

  • Sudden||

    The study in question looked at the effects of Medicaid in Oregon, which in 2008 chose 10,000 individuals to enroll in Medicaid via lottery. The random nature of assignment made it easy to control for outside factors and avoid the strong selection bias that normally makes such experiments dicey.

    The selection bias still appears to be pretty strong. The randomly selected 10,000 people were still part of a list of 90,000 low income adults. They're not exactly drawing from a pool that includes people with median to higher incomes or existing catastrophic coverage.

  • ||

    There is an additional selection bias; those who took the time to actively apply for the lottery can be presumed to be more proactive in terms of their own health than those who did not. This applies both to use of medical services after they have "won" Medicaid coverage and to non-medical activities to promote health. They may not be representative of those who did not apply for the lottery.

  • Brett||

    So a random lottory is used to determine who will be admitted to a program intended to manage risk?

  • Tony||

    Tman hits the nail on the head. Of course greater access to healthcare insurance means better health.

    The problem is they don't deserve it because they're poor and unworthy, and someone is probably lacking a mother-of-pearl inlay in his private jet, which is a national tragedy.

  • ||

    Of course greater access to healthcare insurance means better health.

    (1) Free health insurance.
    (2) ?????
    (3) Better health!

  • ||

    Insurance doesn't equate to health and neither does medicine and doctoring.

    If doctoring and medicine equaled health than explain why thousands die each year of cancer and adult onset diabetes.

    Health is what people have only from right living.

  • ||

    "Insurance doesn't equate to health and neither does medicine and doctoring. If doctoring and medicine equaled health than explain why thousands die each year of cancer and adult onset diabetes."

    Insurance doesn't equal health, nor does "medicine" and "doctoring". But all other things being equal, those with access to health care tend to have better health outcomes than those without access to health care. And in this nation's health care system, those with insurance tend to have more access to health care (and, thus, better health care outcomes) than those without insurance. None of the above is in any way controversial.

    Patrick Meighan
    Culver City, CA

  • Tman||

    Also, if you give me free booze I'll be nice and drunk!

    Give me free food, I'll get plenty stuffed!

    Give me a free car, I'll drive around the country all the time!

    greater access to healthcare insurance means better health.

    No it doesn't! Read the article again dummy.

    The problem is they don't deserve it because they're poor and unworthy

    The poor get Medicaid.

    someone is probably lacking a mother-of-pearl inlay in his private jet, which is a national tragedy.

    Why do hate jet makers, Tony? Don't you realize that someone has to inlay that mother of pearl? Do you want him to lose his job too?

    You're so MEAN.

  • Mr. FIFY||

    Was that the stench of wealth envy I smelled?

  • Tony||

    Yeah that line is a real winner in this day and age. I bet you stick with it no matter how much wealth gets transferred to the very top. Stop yer whining starving person, aren't you relieved that some useless CEO made 400,000 times your salary because of freedom? You're just jealous!

  • Jordan||

    Of course greater access to healthcare insurance means better health.

    Dead wrong. Culture >> healthcare.

  • ||

    I demand to know what the publication was not referred to as "Lost Tiempos de Nueva York".

  • ||

    But for many hardworking families, affordable insurance can be hard to find. The new "Penny Health" is giving you more control over your family’s health care by expanding your options for health insurance and making them more affordable.

  • maggie kozel||

    If having health insurance does not improve health, than why do any of us need it? What about you, Mr. Suderman? Do you carry insurance? Sounds like there is no point. Or is it just poor people that don't benefit from health coverage?

    I have an idea. Why not ask a doctor who treats Medicaid patients what he or she thinks? There are lots of us out here who would be happy to provide you with a reality check. And if you don't have a clue as to why Medicaid coverage doesn't necessarily stem Medicaid abuse, I invite you to check out my recent blog, as well as others', on drsforamerica.org
    Be well!

  • maggie kozel||

    correction. What I meant to say above was why "medicaid coverage doesn't stem ER use."(although the built in incentives to channel Medicaid patients to ERs could be considered Medicaid abuse, too.)

  • ||

    IF the argument is offered that the medical care does not lead to improved health then why are billions spent on medical care and why do those spending the most defend it with the greatest ferocity? Or is there some contention that those providing medical care shortchange those on medicaid? Just curious.

  • ||

    Mr. Suderman, Do you utilize health insurance to access to health care services? If so, do you have proof that having insurance is really making you healthier? Or does your argument only work for low-income/disabled/elderly/young people?

  • ||

    Medicaid covers old old oldies and poor. Impriove Health? Ridiculous. Keep alive main goal. I visit rest homes often and most are bed ridden.

    A poor choice of Health care facilities

    My 1999 Buick not as good as daughter 2009.

  • ||

    That is true of Medicare, not Medicaid. Most persons transfer from the later to the former once they hit 65. Medicaid is disproportionately composed of low income kids.

  • maggie kozel||

    Two points. It is Medicaid that covers nursing homes, but it pays for an overmedicalized system of eldercare that our society has devised, and that does not serve elders well. Those costs need to be reined in, but that will only happen when we put in place better options for our seniors. Secondly, children utilize less than a quarter of medicaid dollars. We spend about $2K annually per child on Medicaid, compared to 7-10K for seniors.

  • ||

    Medicaid covers old old oldies and poor. Impriove Health? Ridiculous. Keep alive main goal. I visit rest homes often and most are bed ridden.

    A poor choice of Health care facilities

    My 1999 Buick not as good as daughter 2009.

  • Syz||

    Basically, Suderman believes that the health care benefits attributed to these Medicaid beneficiaries are merely "psychic and good feeling".

    So he concedes that Medicaid causes an immediate and continuing improvement in mental health among a population that tends towards depression and anxiety. He further concedes that it removes a major source of stress: the fear of crippling medical bills. And this is his argument against Medicaid?

    Try harder, Pete.

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