(Summer Re-Run) Medicaid Matters: Study finds coverage boosts health outcomes and financial security

In the wake of the Supreme Court’s ruling on the Affordable Care Act, states must decide whether to expand Medicaid to cover adults with incomes below 133 percent of the federal poverty level.  This post originally ran on our blog in July 2011 and is part of an ongoing series of posts examining the Affordable Care Act. For links to other posts and resources, please visit the health care reform page on our website.

As states and Washington grapple with ongoing budget shortfalls, the Medicaid program is often in the crosshairs of those calling for major reductions in government spending. But while the costs of funding Medicaid are readily apparent, we should not forget the program’s crucial role in providing health care for those who may be too poor or too unhealthy to buy coverage in the commercial insurance market. Recently, a path-breaking new study reported that when those without health insurance are enrolled in Medicaid, they see wide-ranging benefits in terms of access to health care services, better physical and mental health, and financial stability. These findings should assume great importance in ongoing state and federal debates on Medicaid and health care reform.

Medicaid is the primary source of health insurance for low-income children, pregnant women, seniors, and individuals with disabilities. The federal-state program covers 47 million Americans, or just under one in five of all those with health insurance coverage (2009). In Oklahoma, 728,594 persons are covered by Medicaid as of May 2011; the majority (63 percent) are low-income children. Medicaid is administered by the states with the federal government assuming a majority share of the costs.

As with all health care costs, the cost of Medicaid has been rising rapidly in recent years and has been absorbing a growing share of state budgets. As we showed in this recent blog post, the Oklahoma Health Care Authority, the state’s Medicaid agency, will receive 15.1 percent of state appropriations in FY ’12, compared to 6.9 percent in FY ’01. In part, rising Medicaid costs are the result of  rising enrollment, especially of children. Employer-based coverage for children has declined and the state expanded eligibility for children up to 185 percent of the federal poverty level. The new health care law, the Affordable Care Act, expands Medicaid eligibility for low-income adults up to 133 percent of the federal poverty limit in 2014. According to a study for the Kaiser Commission on Medicaid and the Uninsured, the health care law is projected to increase Oklahoma’s Medicaid enrollment by  350,000 – 470,000 individuals and increase the state’s Medicaid spending by 4-6 percent. The federal government will assume well over 90 percent of the costs of Medicaid expansion in the initial years, with states covering the remainder.

In these tight budget times, it is especially critical to be sure that public funds invested in Medicaid have an impact. The new study from a team of leading health care researchers and economists published by the National Bureau of Economic Research, provides encouraging evidence of the benefits of Medicaid coverage – and, conversely, of the costs of being without insurance. The study examines what happened in Oregon when the state opened a waiting list for a limited number of spots in the Medicaid program, drawing 10,000 names by lottery out of a pool of some 90,000 applicants.  By comparing a sample of  those chosen to apply (the ‘treatment group’) to a sample of non-applicants, the researchers were provided a unique opportunity to apply scientifically rigorous methods to the study of social policy.

In the first year, the study finds significantly better outcomes for the treatment group in three key areas (based on summaries from the Center on Budget and Policy Priorities, New York Times and Washington Post):

• Increased health care utilization: Compared to the uninsured group, Medicaid recipients got 35 percent more outpatient care, 30 percent more inpatient care and 15 percent more prescription-drug care. They were 70 percent likelier to have a regular office or clinic where they could receive primary care and women were 60 percent likelier to have mammograms,
• Better health condition: Medicaid recipients were 25 percent likelier to report themselves in “good” or “excellent” health and 40 percent less likely to report a decline in their health in the last six months.
• Greater financial stability: Those with Medicaid were 25 percent less likely to have an unpaid medical bill sent to a collection agency and 40 percent less likely to have to borrow money or leave other bills unpaid in order to cover medical expenses.

According to Katherine Baicker, a Harvard economist who worked on the study and was a member of George W. Bush’s Council of Economic Advisers:

The broad characterization of what we’ve learned is Medicaid matters. It improves your health, increases utilization, and reduces the financial strain against being insured.

In a state like Oklahoma that has a high rate of uninsured and ranks among the unhealthiest states, the study also demonstrates, at least implicitly, some of the costs of being without health insurance – less timely care and poorer health for our workforce, greater debt and financial strain for our households. Expanding Medicaid coverage to low-income adults thus provides us with a real opportunity in the coming years to promote family economic security and overall economic prosperity for Oklahoma.