How the Oregon Medicaid experiment is a failure

T.Santo - Oregon Medicaid (media)

An important article was recently published in the New England Journal of Medicine, titled The Oregon Experiment — Effects  of Medicaid on Clinical Outcomes. This study provides a rare look at the effects of expanding Medicaid coverage (specifically, Oregon Health Plan, Oregon’s version of Medicaid) to a population of previously uninsured patients. Having practiced medicine in Portland, Oregon during the time of this study, I was excited to read the results.

The basic premise was that a group of 12,229 uninsured people were selected as study participants, approximately half of which were newly enrolled in Medicaid, while the other half remained uninsured. The participants were then tracked over two years to determine the overall effect on mental and physical health.

To summarize the results, the Medicaid population spent more Medicaid dollars ($1,171 on average) to access more health care, most notably office visits, prescription drugs and mammography screening. In doing so, they felt less depressed (when asked on screening exams), but did not have better outcomes on any physical health metric, including diabetes, high blood pressure and high cholesterol management. They did however experience less financial hardship, including a decreased likelihood of incurring a catastrophic expenditure (defined as an out of pocket medical expense >30% of annual income).

There are two general schools of thought that have emerged since the results were published.

One is, “Health insurance does not necessarily make people healthier,” highlighting that there was no improvement in any objective measures of disease management.

The second is, “Health insurance works.” Citing the 4% decrease in catastrophic expenditures found in the Medicaid population, this group states that health insurance is doing what it is supposed to – shielding people from large financial losses in the case of a rare event.

Personally, I tend to agree more with the former than the latter, for a very simple reason: return on investment. As we get ready to spend billions of dollars to expand health insurance coverage to millions of people, we need to see improvements in health outcomes in return. While financial security is a worthy goal, it comes at too high a price if it is the only benefit. After all, the subtitle of the study is ‘Effects of Medicaid on Clinical Outcomes’, of which there were none demonstrated.

The treatment of chronic disease drives health care expenditures. Last year, we spent $245 billion on diabetes alone, a 41% increase from just five years prior. That is a staggering number, and it will only grow as the long-term effects of poorly managed health manifest in our patients.Without improving the treatment of these diseases, we will never reign in health care costs, or make anyone healthier. Based on limited evidence, it does not appear that Medicaid expansion is the silver bullet.

Unfortunately, the conclusion that expanding health insurance coverage does not improve physical health is not that surprising. We currently operate within a broken health care system. Inefficiencies and redundancies abound, while third parties add layers of complexity that only increase the price of goods and services delivered. If patients, physicians and politicians accept this fact, then clearly the solutions have to be tailored towards fixing the system, not simply granting greater access to it. It is the difference between health care reform and health insurance reform, and it is a distinction that many have failed to make.

It is important to understand that the Affordable Care Act (ACA) is, first and foremost, a reform of the health insurance market. While the legislation contains other elements of reform, these changes are dwarfed by those in the insurance marketplace. For example, consider that Medicaid expansion is projected to cost an additional $952 billion over the next decade, while the 10-year operating budget for the CMS Innovation Center, which is tasked with transforming the way we deliver care, is a (relatively) minor $10 billion. Likewise, Medicare payment reform is projected to save taxpayers $200 billion over five years, while the much-publicized medical device tax is projected to generate just $10-30 billion over ten years.

Clearly, the goal of health care access has been vigorously pursued at the expense of focusing on health care quality and cost. The debate will continue as to whether this approach will pay dividends as we begin to roll out many of the major ACA provisions in 2014. Given the protracted timeline for complete implementation of the health care law, it might be ten years before we have a definitive answer. My concern is that the data from The Oregon Experiment is the earliest indication that we are going to be dealing with many of the same problems in 2023 that we have in 2013.

Thomas Santo is a physician who blogs at Scope of Medicine.

Image credit: Kelly Santo

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