Research & Commentary: State Medicaid Expansion and the Oregon Medicaid Study

Published June 3, 2013

States across the country are currently debating whether to expand their Medicaid programs. Medicaid expansion is an expensive endeavor that studies show will not provide better health care. The current Medicaid system is already stretching states thin financially and causing difficulties providing cost-effective and efficient care for those in need.

The Affordable Care Act allows states to expand their Medicaid programs to more people and aims to improve the care these patients receive. The expensive reforms were expected to improve both health outcomes and financial costs. A recent study published in the New England Journal of Medicine (NEJM) examined outcomes from Oregon’s Medicaid expansion and sheds light on the health, financial, and other consequences states can expect.

In 2008, Oregon expanded its Medicaid program to 30,000 more people selected randomly from a waiting list of 90,000. The NEJM report analyzed actual outcomes for more than 12,000 patients newly enrolled in the program. It found Medicaid did not improve health outcomes for those patients. The report also found Medicaid enrollment increased the use of health care services, raised the rates of diabetes detection and management, lowered rates of depression, and reduced financial strain.

While the study did find some areas of improvement, it found Medicaid expansion fails to achieve the principal goal of any health care reform: improving overall health. According to Phillip Klein of the Washington Examiner, “the study suggests that expanding Medicaid is one way of reducing financial pressure on low-income groups, but it’s costly and does not improve their health. Another interesting finding was that medical spending increased among Medicaid enrollees due to more prescription drug use and doctors’ visits, yet the study ‘did not find significant changes in visits to the emergency department or hospital admissions.'”

Any state considering expanding its Medicaid system should take a close look at Oregon’s experience and be wary of these reforms. As Heartland Institute Research Fellow Benjamin Domenech argues, “I would rather have a smaller program that met its promise to America’s poor and the truly sick rather than a larger one that offered a false promise of access.”

The Medicaid system is now and will continue to be fiscally unsustainable without fundamental reforms. Instead of expanding a flawed model that wastes taxpayer dollars while shifting more power to the federal government, state lawmakers should focus instead on reform options that reduce costs and offer better care to patients. 

The following articles offer additional information on state Medicaid expansion and the Oregon Medicaid study.

Ten Principles of Health Care Policy
This pamphlet in The Heartland Institute’s Legislative Principles series describes the proper role of government in financing and delivering health care and provides reform suggestions to remedy current health care policy problems. 

The Oregon Experiment—Effects of Medicaid on Clinical Outcomes
This article from the New England Journal of Medicine examines Medicaid outcomes in Oregon. Oregon gave researchers the opportunity to study the effects of being enrolled in Medicaid (compared to uninsured) based on data from a randomized controlled trial, the “gold standard” of scientific research. The results found no improvement in health for enrollees, but improved financial protections and increased medical spending. 

Study of Oregon Medicaid Program Reveals No Significant Health Improvements
Writing in the Heartlander digital magazine, Loren Heal examines the Oregon Medicaid study and notes many experts believe Medicaid expansion under the Affordable Care Act is an expensive placebo. “In other words, patients felt better once they knew they were on Medicaid, but before they had seen a doctor, undergone a test, or filled out a prescription. That is the classic definition of a placebo effect,” he writes. 

How the Oregon Medicaid Study Is Rocking Liberal Assumptions
Benjamin Domenech, managing editor of Health Care News, speaks with several health care experts on the Oregon Medicaid expansion study and how it affects the arguments in favor of the ACA: “Contrary to liberal assumptions, researchers found that those who enrolled in Medicaid spent a lot more on medical care than those who weren’t able to enroll, but didn’t significantly improve their health outcomes.” 

Benjamin Domenech: Oregon Medicaid Study
Benjamin Domenech discusses the important new Oregon Medicaid study in this Heartland Daily Podcast. 

Research & Commentary: States Should Avoid Medicaid Expansion
Kendall Antekeier of The Heartland Institute explains the Supreme Court ruling on Medicaid expansion and urges states to avoid expansion. “States should think twice about giving up more control of their Medicaid programs only to further expand a system that is already fiscally unsustainable,” she writes. 

Four Reasons Why the Oregon Medicaid Results Are Even Worse than They Look
Manhattan Institute Senior Fellow Avik Roy examines the results of the Oregon study and argues the findings are even worse than they look at first glance. Roy outlines four specific reasons, including enrollment and cost problems. 

Medicaid: To Expand or Not To Expand
Nicole Kaeding of Americans for Prosperity argues states should avoid expanding their Medicaid programs because doing so would support the flawed and expensive federal health care law, place heavy financial burdens on the state, and expand an already-broken system.  

The End of Federalism: How Obamacare Will Impact States
This brief fact sheet from The Heritage Foundation outlines the consequences of expanding Medicaid programs to meet federal requirements. 

Medicaid Expansion: We Already Know How the Story Ends
Jonathan Ingram of the Foundation for Government Accountability takes a close look at Arizona, Maine, and other states that expanded Medicaid. The report finds expansion supporters have a poor track record of keeping promises. 


Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit Health Care News at, The Heartland Institute’s website at, and PolicyBot, Heartland’s free online research database at

If you have any questions about this issue or the Heartland Institute Web site, contact Heartland Institute Government Relations Director John Nothdurft at [email protected] or 312/377-4000.