One of the key reasons the Affordable Care Act was supposed to “bend the cost curve downward,” President Obama told us, was because newly insured individuals would receive care from a primary doctor — rather than making the relatively more costly trips to hospital emergency rooms.
As it turns out, this theory was completely wrong. Moreover, the White House and congressional leadership might have known that if they had waited just a few months before enacting such a large-scale intervention into the health care market.
At the same time the ACA was being debated in Washington, D.C., health researchers on the other side of the country were conducting a historic, watershed study on exactly what happens when health-insurance coverage is expanded to low-income individuals.
In 2008, Oregon decided to extend Medicaid coverage to single, able-bodied adults living below the federal poverty line. The catch, however, was that the state didn’t have enough money to offer this coverage to everyone who would be eligible. So, only 10,000 individuals, chosen by random lottery, received this coverage.
For health care researchers, the “Oregon Health Insurance Experiment” offered a unique opportunity to examine the impact of Medicaid expansion, allowing them to compare the experience of those randomly selected to participate with those in similar circumstances who were not selected.
The year-one results of the experiment were published in July 2011 — a little more than a year after passage of the ACA. Given that many of the theories advanced in support of the ACA were untested in real life, it would have made sense to await the results of the only experiment in history poised to confirm or refute those theories. Alas, politicians, so often prone to elevate style over substance, lacked the patience to wait one year.
It’s too bad, because the results of the Oregon experiment refute nearly every theory undergirding the Affordable Care Act. Had politicians displayed the patience to await the experiment’s results, they might have come up with health care legislation that had a better chance of achieving its goals.
Some of the results might have been expected: With the newly insured population now bearing no direct cost for care, consumption of health care services within that population jumped about 25 percent in the first year. Also, the entitlement did reduce financial strain for the newly insured who sought care.
When it came to objective health outcomes, however, “This randomized, controlled study showed that Medicaid coverage generated no significant improvements in measured physical health outcomes in the first two years, but it did increase use of health care services.”
In other words, researchers could find no evidence that people became healthier after gaining Medicaid coverage — despite consuming more services and paying less out of pocket.
What was exceptionally interesting, however, was the way in which the newly covered were consuming. As expected, the new Medicaid coverage encouraged people to seek primary and preventive care. But advocates had also argued that such care would displace more expensive spending on emergency room visits.
It did not.
In fact, a new analysis in the peer-reviewed academic journal Science shows that Oregon’s Medicaid beneficiaries sought emergency room care 40 percent more frequently — and not just for emergencies. Emergency “department use increases even in classes of visits that might be most substitutable for other outpatient care, such as those during standard hours (on-hours) and those for ‘non-emergent’ and ‘primary care treatable’ conditions,” noted the Science article.
The increase was across the board, regardless of demographic group.
Accordingly, the authors concluded that Medicaid coverage “increases annual spending in the emergency department by about $120 per covered individual.”
Given that the reduction in emergency room care called for by theory was supposed to “bend back the cost curve,” the Oregon finding has huge implications for the ACA, especially for states that have elected to expand Medicaid coverage pursuant to the ACA’s vision — such as Nevada.
In the Silver State alone, using the Oregon percentage, the 300,000 projected new Medicaid enrollees could increase emergency room spending by $36 million. And that’s atop the new spending on primary and preventive care for the beneficiaries. It also assumes that a sufficient supply of primary-care physicians will exist within the Medicaid network to treat these new patients. Because that appears highly unlikely, an even greater volume of patients can be expected to fill emergency rooms.
For a political class that was hell-bent on drastically restructuring the American health care market, using Medicaid as a primary vehicle, this information would have been useful. Unfortunately, reason and logic were demonstrably not the currency in use.
On the brighter side, the 25 governors who resisted immediate expansion of Medicaid in their states can now make informed decisions about the relative costs and benefits of such expansion.
Unfortunately for Nevadans, Gov. Brian Sandoval was not among that cautious and prudent group.
Geoffrey Lawrence is deputy policy director at the Nevada Policy Research Institute. For more, visit http://npri.org.
This article was changed to correct a minor error in quotation.