Wednesday, June 20, 2012

Medicaid Does Make People Healthier

Planet Money, a special program on NPR, had an episode last week exploring the research recently released by Katherine Baicker, a health economist at Harvard.  Her research has begun to lay to rest at least one argument against expanding Medicaid, but it's also called into question an oft cited rationale people use when they are to expand Medicaid.  You can listen to the whole thing here (which also goes into the methodology of the research), but here are some of the key takeaways:
  • Across a similar socio-economic level, people on Medicaid reported better health than people not on Medicaid (reliant on faith-based, charitable, emergency room, i.e. non-government based healthcare).
  • Respondents on Medicaid were 40% less likely to go into debt collection.  Basically, we see positive spillover benefits from Medicaid coverage.  People don't rack up a lot of medical debt, so they have less debt overall so they are much more likely to be able to service the debt they have and not slip into collection.
  • Respondents indicated feeling more healthy within a month of being on Medicaid, even though it took many of them much longer to really engage with the system.  Basically, without the threat of catastrophic health costs hanging over their heads people instantly felt better, less stressed.
All of these are positive things.  But there are a couple caveats to note.  First, this is based on survey results, credit reports, and various other non-biological data (though the study does include some health records).  The researchers have actually taken blood samples from many of the people surveyed and when those results get released you could have definitive medical evidence of improved healthcare outcomes for people on Medicaid.  The second caveat is perhaps a bigger issue:
  • The group on Medicaid actually spent 25% more on procedures than the group not on Medicaid during the first year of the program.
One of the biggest economic rationales for expanding Medicaid is that it will pay for itself.  As people have access to preventive care the overall cost would come down and the expansion would pay for itself.  In the first year of research this didn't prove to be true.  

I would speculate (and I acknowledge it's speculation) that you might be see a binge effect.  People have gone from famine to feast and as they see primary care doctors, those doctors find problems that may have been ignored for a long time.  And the research indicates that most of procedures undergone by Medicaid recipients were scheduled, which would support my speculation.  The researchers are still tracking this group and will report out year two results soon.  I wouldn't be surprised to find that in year two the costs of the Medicaid group drop substantially as people level off into a steady, healthy state.

For now, Baicker says rather eloquently, we have two definitive pieces of information.  One, people on Medicaid have better health outcomes.  Two, having people on Medicaid is more expensive (so far).  So policy makers have to make the cost-benefit analysis for themselves.  What's the value of a healthier populace?  Does it exceed the cost?  I think you all know where I come down on this, but I'm sure there are those that would disagree.

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