When President Obama pitched his health care overhaul in 2008 and 2009, one of the arguments he often made was that the existing system relied too heavily on emergency room usage by the uninsured, which drove up the cost of care for everyone else. "If there are affordable options and people still don't sign up for health insurance, it means we pay for those people's expensive emergency room visits," he said in a major speech promoting the law in September, 2009. In multiple speeches, Obama suggested that excess emergency room visits added almost $1000 a year to the average family's medical insurance costs.
But the argument that emergency room usage could be reduced by passing the health law never quite held up. In Massachusetts, which several years prior had enacted a similar health law, emergency room visits had increased. Obama's health reform relied heavily on an expansion of Medicaid, the joint federal-state health program for the poor and disabled—but Medicaid recipients typically used the emergency room far more than other types of patients.
Thanks to the Supreme Court, which ruled that states could choose whether or not to expand Medicaid under the law without fear of losing their existing federal funding, we now have something of a natural experiment. Some states have expanded the health program. Others haven't.
And the results are clear: Emergency room visits are up significantly more in expansion states than in non-expansion states, according to a new study by the Colorado Hospital Association which examined 450 hospitals in 25 states. Medicaid expansion states saw a 5.6 percent increase in emergency department visits in the second quarter of this year compared with the same period last year. Emergency department usage in non-expansion states saw a 1.8 percent increase, possibly because of people who were previously eligible for Medicaid getting covered and using emergency rooms more.
The increased utilization in the expansion states is not only significantly higher than in states that didn't expand, it's more than what might have been expected based on data from the previous two years.
The problem with emergency room usage is that it's expensive and inefficient—which is why it's supposed to be used mainly in emergencies. So what the Medicaid expansion has done is put millions into a health system that encourages this kind of expensive, inefficient care.
The newly covered Medicaid population, meanwhile, isn't like the old one. It's likely sicker, according to the study. Which means they're even more expensive still.
We've seen similar results in studies looking at a randomized experiment expanding Medicaid in Oregon. Overall, Medicaid looks likely to increase utilization throughout the health system. What it doesn't seem to do, as the Oregon experiment found, is increase physical health in a measurable way. That randomized controlled study, the single best examination of Medicaid's effects, found no statistically significant improvement in objective health outcomes. So we're sending people to the emergency room a lot more, and spending billions on expanded coverage in the process. But we may not be helping them get any healthier.
Start your day with Reason. Get a daily brief of the most important stories and trends every weekday morning when you subscribe to Reason Roundup.