A groundbreaking new study has just undermined a big rationale for Obamacare. Wonkblog reports on new research printed today in Science magazine that shows Medicaid users go to the emergency room more when they get added to the program:
The research…showed a 40 percent increase in emergency department visits among those low-income adults in Oregon who gained Medicaid coverage in 2008 through a state lottery. This runs counter to some health-care law supporters’ hope that Medicaid coverage would decrease this type of costly medical care, by making it easier for low income adults to see primary care providers.“I would view it as part of a broader set of evidence that covering people with health insurance doesn’t save money,” says Jonathan Gruber, a health economist at the Massachusetts Institute of Technology, who has also studied Oregon’s Medicaid expansion but is not affiliated with this study. “That was sometimes a misleading motivator for the Affordable Care Act. The law isn’t designed to save money. It’s designed to improve health, and that’s going to cost money.”
Gruber’s quote is astounding, both for what it obscures as well as what it reveals. If cost-saving was a “misleading motivator,” it was one the administration eagerly peddled. Are we seeing the second great Obamacare deception here? Moreover, as Gruber should know, a earlier study last year on Oregon Medicaid found that Medicaid enrollees did not see measurably better health outcomes than those who remained uninsured. But Gruber is exactly right about the crucial takeaway here: whatever else it does, covering people with insurance doesn’t seem to save money.This doesn’t, of course, mean we should scrap Medicaid, or stop aiming for universal coverage. But it shows just how serious the moral hazard associated with insurance can be. When people get insurance, they consume a lot more care, some necessary, some not. Sub-optimal use of the system doesn’t go away; rather, it increases. There’s not an easy way to solve this problem, but surely a big part of the solution needs to involve both better price signals in the system and a shift away from inefficient and costly service delivery practices. If we are very clear about the costs of the insurance model, and work hard at making easier and more economical to choose more efficient health care, we can start to mitigate the problem uncovered by this study.