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Expanding Medicaid Coverage in Oregon Led to More ER and Physician Utilization

By October 26, 2016Commentary

One of the somewhat absurd claims made for expanding Medicaid and otherwise getting people health insurance is that this would reduce ER use.  Oregon was early to the Medicaid expansion game, and its experience has been the subject of several studies, including one recently described in the New England Journal of Medicine.   (NEJM Article)   This study followed up on an early assessment of the utilization patterns of patients included in the Oregon Medicaid program, which found that emergency room had surprisingly increased.  This finding was rationalized by saying it reflected pent-up demand and ER use would lessen over time, as the newly-covered established primary care physician relationships.  Not sure how there would be pent-up ER demand, but in any event the authors have now extended the time covered by the original research, with no change in the basic findings.  Compared to similar patients who did not get Medicaid coverage through Oregon’s lottery, those who became Medicaid-covered showed a significant increase in ER use.  Interestingly, at the same time, they showed an increase in physician visits.  This suggests there is no substitution effect–people don’t stop using the ER because they now have better access to primary care, in fact they seem to increase utilization across all settings.  And while we might be inclined to say that’s okay if it leads to better health outcomes, recall that the earlier research also didn’t show that this was the case.

Medicaid is basically free health care, so any cost barriers to excessive utilization are removed, so of course people are going to use more.  And many of the people on Medicaid have lower educational status and other characteristics that don’t facilitate careful and intelligent use of the health system.  As we have repeatedly pointed out, this is fundamentally unfair to taxpayers, most of whom have far worse health coverage, so taxpayers get to pay for others to have free health care that they misuse.  Medicaid needs to find some way, whether some at least minimal cost-sharing, or other controls, that prevent excessive utilization and that encourage Medicaid recipients to do be careful consumers of the health care that currently costs them nothing.

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