Health Care

Does Medicaid matter? If only we could arbitrarily deny coverage to some poor people…

Jun 25 '12

Since health care coverage is likely to be a hot topic this week, I thought I would share a podcast highlight from my weekend:  Planet Money’s “Does Medicaid Actually Help People?” There is (apparently) a debate on whether needy people would be better off relying on emergency rooms and charity than Medicaid. One could try to test the effect of Medicaid by comparing the health & wealth of people enrolled in Medicaid with similar people who are not enrolled, but this is complicated by selection effects. Scholars could try to resolve this with an experiment, but this runs afoul of human subjects regulations and, well, basic morality:

You can’t do a big study where you take a big group of poor people, give half of them access to health care and half of them you don’t. That is not seen as ethical.*

Luckily, in 2008, Oregon offered just such an experiment. It could only afford to offer coverage to 10,000 of the 90,000 eligible applicants for its Medicaid program, and chose to allocate the slots by lottery. A team of health policy & economics scholars is tracing the effects of this natural experiment, as Dan Hopkins recently mentioned.

The first article from this project came out last year and found that Medicaid substantially increased the recipients’ economic security and self-evaluations of their health:

We found that Medicaid improves financial security. Medicaid reduces by 40% the probability that people report having to borrow money or skip payment on other bills because of medical expenses. Although it does not appear to reduce their risk of bankruptcy (at least in the first year), it decreases by 25% the probability that they will have unpaid medical bills that are sent to a collection agency. This effect benefits not only the insured but, since the vast majority of bills sent to a collection agency are never paid, also those who may ultimately help to finance this unpaid care, including health care providers and the public sector.

We also found that being covered by Medicaid improves self-reported health as compared with being uninsured. Medicaid enrollees are 25% more likely to indicate that they’re in good, very good, or excellent health (vs. fair or poor health). They are 25% less likely to screen positive for depression. They are even 30% more likely to report that they are pretty happy or very happy (vs. not too happy).

Now, unless the SCOTUS strikes down the entire health care law, the expansion of Medicaid coverage in the law will presumably stand. Nonetheless, this is good reading if one if evaluating the argument that we should have the right to go without health insurance.

*(Damn you, IRB!)