Oregon Medicaid Lottery Shows Benefit of Insurance

Today’s Managing Health Care Costs Indicator is 89,824

Click to enlarge.  Source 

Oregon realized it had resources to add about 10,000 beneficiaries to the Medicaid roles in 2008, and decided to hold a lottery to determine who would be awarded this Medicaid insurance.    89,824 Oregonians were eligible, 29.664 were randomized to be able to apply for Medicaid, and about 1/3 actually qualified.  (Reasons for not qualifying included not completing the paperwork or having income that was too high.).

Researchers at Harvard used this natural experiment to see what the impact of winning this Medicaid lottery really meant.   This natural experiment is ideal to determine the effect of gaining potential Medicaid eligibility – because the 30,000 who won the lottery (experimental group)  were randomly chosen, making it unlikely that they were significantly different than those who did not win the lottery (control group).

This is an especially important study because of the randomization, and because the researchers surveyed the experimental and control groups, and also looked at medical claims and credit reports to determine financial impact of insurance availability.

All of the conclusions are on an “intention to treat” basis – so that those who won the lottery but didn’t qualify for Medicaid are included in the “experimental” group. While this is necessary to make the “experimental: and “control” groups comparable, this approach likely  understates the effect of actually getting Medicaid because only 1/3 of the “experimental” group actually qualified for Medicaid.

What the researchers found

1)     People who won the lottery more care.  They don’t have fewer emergency department visits, they have more inpatient stays and outpatient visits.  It’s likely that there was some “pent up demand” from previous care foregone
2)     People who won the lottery have less life-changing medical debt. They are less likely to borrow money, and less likely to have a collection agency chasing them for medical debt.
3)     People who won the lottery get more preventive care
4)     People who won the lottery are more likely to report their health is good, and less likely to be depressed

The good news is that 16 million more Americans should be getting access to Medicaid as part of the Affordable Care Act.  There are, of course, two pieces of bad news.  Many states are chopping their current Medicaid programs, decreasing both eligibility and provider reimbursement.  Further, states are trying to wriggle out of their previous promises to expand Medicaid eligibility. Finally, many optimists though that having more people insured would lower medical costs – reasoning  that people could get treated early preventing high costs from detection of late stage disease.   The Oregon natural experiment is short – so it’s possible that this will become evident in the future. It’s unlikely though.   

Access to health insurance improves health and decreases financial stress.  It doesn’t save money.