Medicaid Proven A Failure

By Sally C. Pipes – State legislators across the country are wrestling with whether to expand Medicaid, with the bulk of the funding to come from the federal government, thanks to Obamacare.

Thus far, a substantial number of states have rebuffed the feds’ offer — or are leaning that way. They’re right to do so. The states and the federal government have spent trillions on the program — but new data show that Medicaid beneficiaries’ health is not getting any better.

Those new data come from Oregon. In 2008, the state inadvertently became a laboratory for testing the efficacy of its Medicaid program. Oregon had funds to add 10,000 patients to the program, but 90,000 met eligibility guidelines. State officials came up with a novel solution — a lottery that would randomly select qualified applicants.

The lottery afforded researchers a once-in-a-lifetime opportunity to conduct a large-scale study comparing adults newly enrolled in Medicaid with a control group who remained uninsured. Their work, based on two years’ worth of data, was recently published in the New England Journal of Medicine.

The data after year one seemed promising. The lottery winners used more health services and got more preventive care, including cholesterol screenings, flu shots, and mammograms.

But the Oregon study looked at more than just health usage after year two. It also examined health outcomes. The researchers measured enrollees’ blood pressure, cholesterol, and blood sugar levels. These metrics are risk factors for stroke, heart disease, and diabetes — all of which can be managed or prevented with early intervention.

The results? Although Medicaid patients used 35 percent more health services, the coverage appeared to have no effect on blood pressure, high cholesterol or elevated blood sugar. In the researchers’ words, “Medicaid coverage generated no significant improvements in measured physical health outcomes in the first two years.”

With “no significant improvements” in health outcomes, it’s hard to see how being on Medicaid is any better than being uninsured.

The behavior of many Oregonians who actually qualified for Medicaid suggests as much. Some 40 percent of those who won the Medicaid lottery — and thus could have received free coverage — didn’t bother to enroll.

Previous studies have found that Medicaid patients actually fare worse than those with private insurance — or even those without insurance.

A 2010 study of 900,000 surgical cases, for instance, found that Medicaid patients had the longest hospital stays, the highest total hospital costs, and the highest risk of death. And according to a report published in the journal Cancer, Medicaid patients with the publication’s namesake disease are two to three times more likely to die than other patients.

A 2011 study found that Medicaid patients were 8.1 percent less likely to be alive ten years after a lung transplant, compared to those with private insurance and those without insurance.

Obamacare was premised on the idea that extending access to preventive care would save money and lives. The Oregon study is the latest to throw cold water on those claims.

Yet come 2014, Obamacare will consign another 12 million Americans to the Medicaid rolls. They may not be able to get care, as the program’s low reimbursement rates discourage doctors from seeing its beneficiaries. According to one recent study, just 43 percent of healthcare providers accept Medicaid.

The dramatic expansion of Medicaid will pose a staggering cost to taxpayers, who will have to shoulder an additional $640 billion in spending over the next decade. States already spend more on Medicaid than on education, and the program’s costs are rapidly squeezing out other public priorities.

Of course, all that spending may ease the financial burden that Medicaid patients face. New enrollees in Oregon saw their out-of-pocket costs decrease by $215 a year. But to realize those “savings,” they consumed $1,172 more in care per person per year than the average uninsured individual.

Spending a thousand dollars to save a couple hundred makes no sense — especially when all that money doesn’t buy any improvements in patient health.

Our leaders must chart a course for health reform that’s based on hard evidence — not wishful thinking. The data from Oregon prove that Medicaid’s expensive status quo doesn’t deliver for those it covers. Obamacare’s expansion of the program would only double-down on this failed approach.

Sally C. Pipes is President, CEO, and Taube Fellow in Health Care Studies at the Pacific Research Institute. Her next book — The Cure for Obamacare (Encounter) — was released this summer.

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