No, Obamacare Won’t Reduce Emergency Room Usage

Supporters of Obamacare have long pitched the law
as a way to address emergency room crowding caused by lack of
health coverage. Individuals without health coverage, the thinking
goes, have no place to turn when they need medical attention, and
as a result they head to the emergency room. That creates crowding,
which can strain medical resources. It’s also more expensive than
an ordinary trip to the doctor. The theory was that by giving
people insurance, Obamacare could mitigate this problem, allowing
more people to skip emergency care facilities by relying on less
crowded, less expensive doctors offices instead.

President Obama pitched a version of this idea in
a speech last September, arguing that emergency room visits by
the uninsured represented a hidden tax on everyone else. “When
uninsured people who can afford to get health insurance don’t, and
then they get sick or they get hit by a car, and they show up at
the emergency room, who do you think pays for that?” he asked.

But the best evidence has never really supported the hope that
the law would reduce emergency room usage. That’s because much of
the law’s expanded coverage comes via Medicaid, the jointly run
federal-state program for the low income and disabled. And Medicaid
beneficiaries tend to visit the emergency room more often than the
uninsured.

A new study of Medicaid beneficiaries in Oregon makes a strong
version of this case. The study, published today in the journal
Science, finds that adult Medicaid beneficiaries rely on
emergency rooms about 40 percent more than similar uninsured
adults.

“When you cover the uninsured, emergency room use goes up by a
large magnitude,” said Amy Finkelstein, a health economist at
the Massachusetts Institute of Technology who served as a lead
investigator on the study, in an MIT press statement accompanying
the study.

There were no exceptions to the trend. “In no case were we able
to find any subpopulations, or type of conditions, for which
Medicaid caused a significant decrease in emergency department
use,” said Finkelstein.

We’ve seen real-world evidence that Medicaid increases emergency
room utilization before, in states like
California. But the Oregon study should settle any lingering
debate. That’s because it was based on a randomized controlled
trial (RCT), in which a cohort of uninsured were selected by
lottery to receive Medicaid, and then compared against a control
group of individuals who did not get coverage through the lottery.
Randomized selection allows researchers to weed out potential
selection effects that can be found in other types of studies; RCTs
are considered the gold standard in social science research design.
This was the first randomized study of Medicaid’s effect on
emergency room usage.

The new study follows up on earlier published findings from the
same group of Medicaid lottery winners in Oregon. Overall, the
results suggest that Medicaid’s real benefits are fairly slim.

Beneficiaries report that they feel better after
they are covered, and they are much less likely to be subject to
large, health-related financial shocks. But the study also found
that, even though utilization of health services—and thus health
spending—increased for individuals with Medicaid coverage, there
was no corresponding improvement in
objective physical health measures.

Which means that Medicaid is mostly a way of insulating
beneficiaries from financial shock, at the cost of more crowded
emergency rooms and greater utilization of health care
resources.

It’s not so much a health program as a financial buffer—and a
costly one at that.

These findings ought to spark a rethinking of Medicaid’s value
and effectiveness. It’s not enough to provide some positive
benefit. It’s also important to ask whether there are other,
better, less expensive and resource-intensive ways of achieving the
same goal. If Medicaid is to be a financial smoothing program
rather than a health-improvement program, then we ought to treat it
like one, and make reforms accordingly.