Study: Expanding Medicaid Increases Emergency Room Use by 40 Percent

Published November 30, 2016

Expanding Medicaid insurance coverage increases enrollees’ number of trips to the emergency room and their use of other forms of medical treatment, a new study has found.

Oregon residents who received Medicaid coverage through a lottery process used emergency services 40 percent more than those who remained uninsured in 2008, according to “Effects of Medicaid Coverage on [Emergency Department] Use—Further Evidence from Oregon’s Experiment,” published in the New England Journal of Medicine (NEJM) on October 20, 2016.

The finding contradicts President Barack Obama’s 2009 assertion, “I think that it’s very important that we provide coverage for all people because if everybody’s got coverage, then they’re not going to the emergency room for treatment.”

Increased Use of Services

The study found enrollees’ emergency department (ED) use remained elevated 15 months after receiving Medicaid and that enrollees consumed more health care services than uninsured people generally.

“We estimated that Medicaid coverage increased the joint probability of a person’s having both an ED visit and an office visit by 13.2 percentage points,” the authors write.

States can expect similar results from future expansions of Medicaid, the NEJM study concludes.

Newly insured people will most likely use more health care across settings—including the ED and the hospital—for at least 2 years and that expanded coverage is unlikely to drive substantial substitution of office visits for ED use,” wrote the authors of the NEJM study.

Greater Use, Not Better Health

Katherine Baicker, a professor of health care economics at Harvard university’s School of Public Health and a coauthor of the study, says expanding Medicaid coverage increased consumption of several health care services, including the emergency room.

“We found that Medicaid increased health care use across a range of settings, including office visits, prescription drugs, hospitalizations, and emergency department visits,” Baicker told Health Care News.

New enrollees felt happier, healthier, and financially stable, but they were no more physically healthy nor likely to be gainfully employed than before enrolling in Medicaid, Baicker says.

“It improved financial security and self-reported health, and substantially reduced the prevalence of depression,” Baicker said. “We did not, however, detect any improvements in several physical health outcomes … and there were no changes in employment or earnings.”

Cost/Benefit Analysis

Baicker says lawmakers considering expanding Medicaid should pay attention to the likelihood of increased emergency room visits.

“This study provides key information for policymakers who are considering expanding Medicaid,” Baicker said. “The program has important health and financial benefits for enrollees but comes with substantial costs in terms of increased health care spending that must be financed with public dollars.

“Policymakers need to weigh the costs against the benefits,” Baicker said.

Poor Return on Investment

Brian Blase, a senior research fellow at the Mercatus Center of George Mason University, says Medicaid expansion is not worth the expense.

“I don’t believe the benefits are worth the cost,” Blase said. “One of the main selling points of Medicaid expansion—enrollees will find a regular source of care and limit their use of the ER—not only looks wrong, but the opposite actually happens.”

Most of the money states spend on Medicaid never reaches the patients in the form of health care, Blase says.

“Another study of the Oregon Medicaid experiment estimated that enrollees only received 20 to 40 cents of benefit for each dollar of Medicaid spending on their behalf,” Blase said.

Calls for Competition

The best way to serve the uninsured working poor is to allow health care competition to increase options and drive prices down, Blase says.

“[Legislators should] expand options available to people,” Blase said. “Lawmakers can liberalize the supply side of health care markets, like loosening scope of practice laws, eliminating certificate of need laws, expanding the use of telemedicine.”

Several proposals by Republicans in Congress and literature from President-elect Trump’s campaign support repealing the Affordable Care Act, which relies heavily on Medicaid expansion to reduce the country’s uninsured rate, and block-granting Medicaid funds for states to manage at their discretion.

Baicker says states could discover more effective Medicaid models by experimentation.

“Different Medicaid designs might, however, change patterns of health care use and health outcomes, and many states, including Oregon, are now experimenting with their Medicaid programs to try to more effectively manage chronic disease and reduce use of the ED,” Baicker said.

Ben Johnson ([email protected]) writes from Stockport, Ohio.

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