Supporters of Obamacare have long pitched the law as a way to address emergency room crowding caused by lack of health coverage. Individuals without health coverage, the thinking goes, have no place to turn when they need medical attention, and as a result they head to the emergency room. That creates crowding, which can strain medical resources. It’s also more expensive than an ordinary trip to the doctor. The theory was that by giving people insurance, Obamacare could mitigate this problem, allowing more people to skip emergency care facilities by relying on less crowded, less expensive doctors offices instead.
President Obama pitched a version of this idea in a speech last September, arguing that emergency room visits by the uninsured represented a hidden tax on everyone else. “When uninsured people who can afford to get health insurance don’t, and then they get sick or they get hit by a car, and they show up at the emergency room, who do you think pays for that?” he asked.
But the best evidence has never really supported the hope that the law would reduce emergency room usage. That’s because much of the law’s expanded coverage comes via Medicaid, the jointly run federal-state program for the low income and disabled. And Medicaid beneficiaries tend to visit the emergency room more often than the uninsured.
A new study of Medicaid beneficiaries in Oregon makes a strong version of this case. The study, published today in the journal Science, finds that adult Medicaid beneficiaries rely on emergency rooms about 40 percent more than similar uninsured adults.
"When you cover the uninsured, emergency room use goes up by a large magnitude," said Amy Finkelstein, a health economist at the Massachusetts Institute of Technology who served as a lead investigator on the study, in an MIT press statement accompanying the study.
There were no exceptions to the trend. "In no case were we able to find any subpopulations, or type of conditions, for which Medicaid caused a significant decrease in emergency department use," said Finkelstein.
We’ve seen real-world evidence that Medicaid increases emergency room utilization before, in states like California. But the Oregon study should settle any lingering debate. That’s because it was based on a randomized controlled trial (RCT), in which a cohort of uninsured were selected by lottery to receive Medicaid, and then compared against a control group of individuals who did not get coverage through the lottery. Randomized selection allows researchers to weed out potential selection effects that can be found in other types of studies; RCTs are considered the gold standard in social science research design. This was the first randomized study of Medicaid’s effect on emergency room usage.
The new study follows up on earlier published findings from the same group of Medicaid lottery winners in Oregon. Overall, the results suggest that Medicaid’s real benefits are fairly slim.
Beneficiaries report that they feel better after they are covered, and they are much less likely to be subject to large, health-related financial shocks. But the study also found that, even though utilization of health services—and thus health spending—increased for individuals with Medicaid coverage, there was no corresponding improvement in objective physical health measures.
Which means that Medicaid is mostly a way of insulating beneficiaries from financial shock, at the cost of more crowded emergency rooms and greater utilization of health care resources.
It’s not so much a health program as a financial buffer—and a costly one at that.
These findings ought to spark a rethinking of Medicaid’s value and effectiveness. It’s not enough to provide some positive benefit. It’s also important to ask whether there are other, better, less expensive and resource-intensive ways of achieving the same goal. If Medicaid is to be a financial smoothing program rather than a health-improvement program, then we ought to treat it like one, and make reforms accordingly.