July 7 (Bloomberg) -- In 2002, about 110,000 people were enrolled in Oregon’s Medicaid program. By 2008, budget cuts had reduced that number to 19,000. In fact, so many people were driven out that the state realized it had the money to cover 10,000 more residents. In the interest of fairness, officials set up a lottery -- and, quite accidentally, kicked off the most important health-care policy experiment since the 1970s.
The gold standard in research is a study that randomly chooses who gets a new treatment and who doesn’t. That way, you know your results are unaffected by differences in the two populations you are studying. That’s hard to do with health-care insurance: Are you going to randomly refuse to give people access to medical care just to see how much worse than the insured they fare? Is that even ethical?
But in Oregon, it was happening anyway. The state, due to overwhelming demand and limited resources, was going to randomly give insurance to some via a lottery and leave the rest uninsured. So a team of health-care policy researchers proposed the first randomized experiment to compare Medicaid -- or, to their knowledge, any form of insurance -- to being uninsured.
When writing a column, you want surprising results. “Health Insurance Doesn’t Improve Health” is a great headline, even if it isn’t great news. But by September 2009, after the first year of coverage and data collection, the Oregon experiment wasn’t returning surprising results. Just encouraging ones.
Compared with the uninsured group, those in the Medicaid sample got 30 percent more hospital care, 35 percent more outpatient care and 15 percent more prescription-drug care. There were similar gains for preventive care; mammograms were up 60 percent and cholesterol monitoring rose 20 percent. The Medicaid recipients also had fewer unpaid bills sent to collection, were 25 percent more likely to report themselves in “good” or “excellent” health, and 10 percent less likely to screen positive for depression. The one surprise was that there was no evidence of “crowd-out”: Medicaid coverage didn’t make someone more or less likely to purchase private insurance.
All this gets to a point that is frequently obscured in a debate that’s often concerned more with cost curves than with treating heart disease. Part of health-care reform is about making care cheaper. But the more important part is about making Americans healthier.
“There was a lot of discussion in the reform debate about whether expanding health insurance would save money,” says Katherine Baicker, an economist at Harvard University who worked on the study and served on President George W. Bush’s Council of Economic Advisers. “We don’t talk about other social programs in those terms. Extending food stamps doesn’t save money, for instance.”
In a way, what the Oregon study showed are the tragic effects of the budget cuts that made the experiment possible. In 2002, about 110,000 Oregonians had this insurance. By 2008, only 19,000 did. The study proved how much some 90,000 had lost -- and how much others might lose if the budget debate continues on its current course.
Senior citizens form a powerful voting bloc, with long experience protecting Medicare. Medicaid -- which serves the poor, the young and the disabled -- isn’t guarded by a force anywhere nearly as fearsome. And so, as the Republicans back off Medicare, there’s broad concern that Medicaid is going to get the ax. For instance, Paul Ryan, the Wisconsin Republican who heads the House Budget Committee, wants to repeal the Affordable Care Act’s expansion of Medicaid to 16 million Americans and ultimately cut $1.4 trillion from the $4 trillion program.
Money can’t be our only concern in the health-care system, but neither can it be something we can simply ignore. And though the Oregon project’s results can’t tell us much about how to save money and improve care, they underline the need for experiments that can. After all, we are only now seeing the results from the first gold-standard study examining whether being on Medicaid is better than being uninsured. We can’t wait that long for the studies showing which forms of Medicaid -- and Medicare, and private insurance -- deliver the most effective care for the least amount of money.
“The broad characterization of what we’ve learned is Medicaid matters,” Baicker says. “It improves your health, increases utilization, and reduces the financial strain against being insured. But what is the best way to provide Medicaid? That’s not a question our study answers.”
There have been attempts to answer this question. In the 1970s, the Rand Corp. conducted a huge randomized experiment that gave people insurance with different levels of co-pays and found that more generous insurance didn’t appear to improve health except for the poorest of the poor. What we need now are many more randomized studies looking at different types of insurance and care.
Doing those studies right would cost money, but the returns, in savings and health, would be enormous. After all, knowing that Medicaid matters is good, but we already sort of knew that. Knowing how to make it matter most, and for the lowest possible cost -- that’s where we’re still struggling.
(Ezra Klein is a Bloomberg View columnist. The opinions expressed are his own.)
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