The Medicaid Apologist Is In

January 8, 2014

The Medicaid program has been painted as the red-headed stepchild of the ACA, ever since the Supreme Court ruled that Medicaid expansion was optional, not mandatory, for states. Even when it does well – namely, adding 4 million Americans to the program in October and November alone – neither side of the political aisle is willing to take any credit. And when there’s bad press, poor Medicaid gets beat like a rug.


Most recently, it has been charged with increasing costly visits to the emergency room. An analysis of the Oregon Health Insurance Experiment (OHIE) data published in Science has shown that Medicaid coverage was correlated with 41% more trips to the ER, which some have likened to “undermining [the] central rationale for Obamacare” and “contradicting health-overhaul backers.”

As always, the truth is a smidge more complicated than that.

FACT #1: This was the ‘old’ Medicaid program, which Oregon knew needed to be fixed.
This study was conducted in 2008, when Oregon expanded their Medicaid program to a limited number of beneficiaries through a lottery system. In the past two years, Oregon has actually seen a decline in Medicaid ER visits.

“That study was looking at the old system and the old way of doing things,” says Sean Kolmer, deputy chief of policy and programs for the Oregon Health Authority, which runs the state’s Medicaid program. “It reflects what we knew would happen, but that’s the old world.”

FACT #2: Oregon is fixing it, and it looks like it’s working.
Recognizing the potential problems of accessing care, Oregon has been testing different versions of Medicaid: the state is divided into 15 regional “coordinated care organizations,” each of which was provided a block grant to pay for their beneficiaries’ care. Each CCO is provided some flexibility in meeting their spending targets, which are phased in and require steady and ever greater improvements.

The state is now starting to analyze data collected from CCOs, and they’re seeing successes. In the first year, the CCOs saw a 9% reduction in ER visits by Medicaid patients since 2011 (see chart below), with an 18% reduction in ER spending. In addition, outpatient primary care visits increased 18%, with decreased hospitalization for chronic conditions such as congestive heart failure (29%), chronic obstructive pulmonary disease (28%), and adult asthma (14%). These results directly address the “failings” noted in the recent Science publication, which is much more damning about the state of our healthcare system in its previous incarnation than it is about Obamacare.

Emergency department utilization by Oregon Medicaid beneficiaries

FACT #3: The greater the urgency, the greater the cost.

“While these higher costs don’t come as a surprise to many, it has left us wondering why do Democrats call it the Affordable Care Act if the law doesn’t lower the cost of heath care.” – U.S. Rep. Dave Camp (R-Michigan), chairman of the House Ways and Means Committee.

As anyone who has contemplated overnight shipping will know, time sensitivity and cost are directly correlated. This truism extends to healthcare, and is the underlying reason why emergency care is so costly; poor health conditions necessitate immediate, oftentimes expensive care.

We’ve neglected our collective health for a long, long time, and it is incredibly naïve to think that we can improve it at no cost. A considerable proportion of the newly eligible have gone without care for a significant period of time, so it is not hard to imagine that they would require costly, urgent care services. But once their health is improved, maintaining health through primary care and preventive services is significantly cheaper. Repair costs almost always outweigh maintenance costs, and humans are no exception.

FACT #4: Our health care system is complicated, and we need to do a better job connecting patients to appropriate sites of care.

“This [study] will make the states that didn’t expand look even smarter, because they didn’t fall for the promise of lower ER use, and the states that did expand Medicaid will have even more crowded emergency rooms.” – Michael Cannon, director of health policy studies at the Cato Institute

The Harvard study highlighted one of the problems that the ACA aims to fix, which is inappropriate use of emergency services for “primary care treatable” conditions. Indeed, in the OHIE study, Medicaid coverage correlated with increased primary care treatable visits and non-emergent visits in an emergency setting. More recent data from Oregon’s CCOs show that this trend is being reversed, and it is upon us to make sure that all patients are directed to appropriate sites of care with robust primary care and preventive services before health conditions deteriorate.

In California, we’re well aware of the fact that coverage expansions are merely a start. Our goal is to ensure that every Californian is healthy, and that can only be achieved if patients can see their primary care doctors/providers. It is imperative that we make it as easy as possible for them to do so, which will require a combination of improved access, primary care capacity, patient education and payment reforms.

FACT #5: The undocumented aren’t the ones flooding emergency rooms.
In fact, according to a recent study, they were less likely to visit the ER than U.S born, naturalized citizens, or lawfully permanent residents. Despite having the lowest rates of insurance, the undocumented are the least likely to have sought care in an emergency department.

ER use by documentation status

In addition, a UCLA study of Mexican immigrants actually found that many chose to return home to seek care, due to insurance, access, language and cultural barriers.

FACT #6: Medicaid expansion can save lives.
Really, it can. By 19.6 deaths per 100,000 adults, which translates to a 6.1% reduction. That number may not seem like much, but 6.1% of 7 million (the number of uninsured adults who would be eligible for coverage if their home state were kind enough to expand Medicaid) is 427,000. That’s approximately how many Americans die from tobacco smoking each year.


Citing increased ER use as a reason not to expand Medicaid eligibility is prematurely blaming the solution for having caused the problem. Affordability and cost are undoubtedly important aspects to health reform; we’ve started seeing health spending growth slow in recent years, but the greater savings are still to come. In the meantime, we need to make sure the ACA makes meaningful changes, particularly in the lives of those who could benefit the most from it.