You Can Lead a Horse to Water…

I want to make just one observation based on Avik Roy’s outstanding write-up of the Oregon Medicaid project.

Most of the commentary has been shocked that there was no statistically significant improvement in health measures between people who were enrolled in Medicaid and those who were not.

I want to focus on a different issue, one that I have been hammering on in these pages ― that ObamaCare is unlikely to increase the number of people with insurance.

Before we even get to the outcomes question is the issue of whether very many people want to have insurance coverage, even when it is totally free.

Oregon had a limited amount of money with which to expand Medicaid, so it held a “lottery” for those who were potentially eligible. Roy writes −

Of the 35,169 Oregonians who “won” the lottery to gain enrollment in Medicaid, only about 30 percent actually enrolled. Indeed, only 60 percent of those who were selected bothered to fill out the forms necessary to sign up for the benefits — which tells you a bit about how uninsured Oregonians perceive the Medicaid program.

Yet the Oregon Medicaid program is far better than most –

In Oregon, Medicaid pays primary care physicians approximately 62 percent of what private insurers pay. That compares to the national average of 52 percent; a number of large blue states pay less than 40 percent. Because Oregon’s Medicaid program pays more, the state’s Medicaid beneficiaries have relatively better access to doctors. While 21 percent of Oregon physicians won’t take new Medicaid patients ― an unacceptably high number — the national average is even worse: 31 percent.

Importantly, Philip Klein reports that those who did enroll did not reduce their use of hospital emergency rooms –

Another interesting finding was that though medical spending increased among Medicaid enrollees due to more prescription drug usage and doctors’ visits, the study “did not find significant changes in visits to the emergency department or hospital admissions.” This undercuts another favorite talking point of liberals, which is that expanding insurance actually saves money by reducing costly emergency room visits.

So, first, people had to express some interest to be enrolled in the lottery. Then, if they made it through the lottery, they had to fill out enrollment forms. Then, they had to actually enroll. Yet only 30% of the lottery winners bothered to complete the process. And some of these numbers were undoubtedly people who had been getting coverage from their employers but decided that free coverage with no cost-sharing was a better deal than what they got on the job.

So, once again, even if ObamaCare is perfectly implemented on time and within budget, it is unlikely to have any positive effect on the numbers of uninsured ― the entire reason it was enacted.

Why is this? Because policy makers never actually listened to the uninsured to find out why they rejected what was available. Policy makers never treated them as an untapped market that did not care for the existing products. Policy makers decided that they should enroll whether they liked it or not. But these dogs just don’t like the dog food.

Comments (18)

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  1. Ken says:

    Good post.

  2. Lloyd says:

    I totally agree! Amazing how Obamacare will not have the positive impact lowering the number of uninsured as it had been created for.

  3. Buster says:

    One factor that many people fail to appreciate is that in Oregon, the newly-eligible on Medicaid were ones who had won the Medicaid lottery. They are the 30,000 selected out of the 90,000 who were on a waiting list. Most state Medicaid programs only entice maybe 70% of eligible people to enroll. In Oregon, this population that was sampled were — by definition — ones who wanted to enroll and were selected from a waiting list. They feel blessed by the fact they were chosen. If this unique group does not outperform the uninsured there is little chance that typical Medicaid enrollees will fare better.

  4. Erik says:

    Poor people have been condition not to want; whether it is healthy food, new shoes, or health care.

    Give them a chance and they will adapt.

  5. Bob Hertz says:

    Fascinating stuff, but let me critique the points about emergency room visits:

    a. it makes sense to me that when a person has Medicaid, ER visits will increase.
    Why? because with Medicaid you really know that the visit is free.
    Without Medicaid, you have a pretty strong fear of receiving a bill, either because you have no insurance or you have a large deductible.

    One of the worst features of the ACA is the cutting of subsidies to safety net hospitals since more people will be insured. As you say, this is a very bad assumption of liberals. I am just explaining here why it is bad.

    b. Emergency room visits are only “expensive” after a hospital loads in all of its overhead costs onto the bill.

    The actual things done in the ER — interviews, lab tests, occasional code blues like you see on TV — are not in themselves so expensive. The ER nurses get a salary no matter how many patients come in. The problem is that a hospital loads on all its fixed costs onto the bill.

    If we just set up emergency rooms inside fire departments, we would not find that their cost was so high.

    Just another confusion in the USA between costs and charges.

  6. Irving Toller says:

    People who don’t care about seeing a doctor, will not care about insurance.

  7. Keshal says:

    Well, for one, promoting healthy behaviors is a hard and slow process. Most people on Medicaid are difficult group of people to deal with, so access to health insurance will not make much of a difference.

  8. Smitty says:

    “So, once again, even if ObamaCare is perfectly implemented on time and within budget, it is unlikely to have any positive effect on the numbers of uninsured ― the entire reason it was enacted.”

    - So you’re telling me that Obamacare still has many, many flaws? I can believe that.

  9. Tara Smith says:

    The notion that the ACA is not likely to increase the number of insured people is quite scary and upsetting.

  10. Sam says:

    Groundbreaking findings and a great observation. Thanks.

  11. H. James Prince says:

    We are dealing with the Fallacy of Composition: just because it doesn’t work in Oregon, doesn’t mean that it won’t work in other states. By the same token, this also means that we cannot say with any certainty that it will work in other states.
    My gut reaction is to say that expansion will not work in other states. However, my logic is that this will not work in other states because of similar personality threads throughout the entire indigent population, rather than just because “it didn’t work in Oregon”.

  12. Greg Scandlen says:

    Bob Hertz –
    I expect you are mostly right here, however the ER use continued unabated, even though these folks were now seeing regular physicians too. And there are less expensive locations for routine care. But the larger point (and I think we would agree on this) is why should maternity and cardiac patients be overcharged to pay for the cost of providing trauma care to gang bangers with gun shot wounds (or whatever)? IMO, these services should be funded by the larger community, not just cost-shifted from other hospital patients.

    James Prince –
    It’s a fair point, except that, as I said above, Oregon should be a better environment for Medicaid enrollees than most other states. If it doesn’t work in Oregon, it is even less likely to work elsewhere.

  13. Dennis Byron says:

    Greg Scandlen/Bob Hertz

    One of the factors that I think was covered in Avrik’s piece was that all the people sampled in Oregon lived in Portland. If I have that right, the ER situation is easily explained; we had the same result here in Massachusetts with RomneyCare and the highly federally funded expansion of Medicaid that happened together here in 2007/2008.

    Those on RomneyCare (which is MedicaidLite) and Medicaid continued to go the ERs because that’s where they always went, because many doctors did not accept Medicaid (and even fewer accepted RomneyCare), and because the major ERs are in their neighborhoods. In Boston, a person could go nearby to the Mass General, New England Medical Center, or Boston City ERs or go out to Brookline to the fancy medical ghetto three or four times the distance from their neighborhoods.

    All –

    Although not a random study (Roy and McCardle convince me this Oregon study was not all that random either), all these results are very consistent with what happened here in Massachusetts after the availability of RomneyCare and expansion of Medicaid:
    – 200,000 people didn’t sign up at all even though they could get one or the other for free
    – ER use continued to climb (as described immediately above)
    – People who got insurance went to doctors (duh!)
    – There has been no great change in health outcomes (although the evidence on this for Massachusetts is scarce and I think two years, not to mention the five we now have here in Massachusetts, are too short a time period to tell anything on this score)
    – Etc.
    – Etc.

    Of course what the Oregon Study only touched on (because it was not perfectly analogous with Massachusetts) was that costs (both to the states and to employers and individuals) continued to go through the roof, medical practices were merged or put out of business at a high rate, hospitals are merging or going bankrupt at a greater rate than before. In addition people are being kicked off their insurance plans and over 100,000 fewer people are getting insurance through employment (so-called crowd out)

    It’s not just the cost to the government of Obamacare that people should be looking at

  14. John Fembup says:

    @Prince: “also means that we cannot say with any certainty that it will work in other states”

    I suspect it’s also true that, were the evidence statistically significant that Medicaid enrollment actually improves health in Oregon, we would certainly be reading lots of commentary saying Oregon’s experience shows Medicaid improves health, always and everywhere.

    No less a fallacy.

  15. Bob Hertz says:

    Lot of good points here.

    Let me add hopefully a few more.

    a. Greg is right that ER use for the victims and perpetrators of violence should be a public expense.

    No different than fire or police

    Now will Greg and others support a rather tiny increase in the federal income tax to pay for this?

    b. Hospitals are going broke at the same time that hospital bills are skyrocketing for some patients.

    Steven Brill got a lot of ink on this issue, but had no solutions.

    My gut feeling is that we may have to nationalize the hospitals. Before doing so, we should make sure that no one in the hospital makes more than a civil servant.

  16. Greg Scandlen says:

    Hey, Bob, why do you instantly turn to federal income taxes as the source of funding? You equate ER care with police and fire. Both are funded locally. As a thought experiment try to imagine the vast added complexity of —
    1. Congress determining nationally how much money must be raised to pay for ER.
    2. Appropriately allocating the new tax burden between the taxpayers.
    3. Creating a new agency for ER Funds distribution.
    4. Promulgating regulations to determine which facilities will qualify and for how much money.
    6. Sending auditors around to ensure the distributed money is being spent appropriately.
    7. Dealing with the host of lobbyists hoping to cash in on the new money (why shouldn’t our UrgiCenter also get some of the funds?)

    Note that none of this activity has anything to do with patient care.

  17. Linda Gorman says:

    To add to Greg’s comment–

    8. Do what used to work before states embarked on the “if it moves, Medicaid it” strategy. Fund selected public/private hospitals to take care of the medically indigent and let other hospitals transport patients to them. Leave the private sector alone to sort out the rest.

    9. Fix the government run coverage programs. Hospitals that are serving areas with low numbers of Medicaid/Medicare residents are definitely not going broke.

    10. Stop thinking of hospitals as monolithic entities. Some chains are successfully operating stand alone ERs/urgent care centers. Some outpatient surgery centers are expanding into overnight stays. Aside from the regulatory maze, is there any particular reason why we don’t have more variety in hospitals? More specialization as was beginning to happen with the physician owned hospitals before OCare effectively shut them down?

  18. Bob Hertz says:

    Greg and Linda, you are correct that trying to allocate ER funds from Wash DC will be awful.

    However, I am still worried that some states or cities will not allocate any money at all for ER care.

    Most actual voters have health insurance, either Medicare or from employers. In some places they will not raise taxes by two cents for safety net hospitals.

    Perhaps the answer is to redirect Medicaid money that is already in the system.

    Historically, the federal government has been the source of funds and laws to help the poor when local aid was not offered. Not just during the Civil Rights era either; I am reading David Kennedy’s history of the Depression, and it is not fun to read about poor whites and blacks who would literally have starved without federal welfare, in places ranging from Kentucky to North Dakota.