Four Reasons Why The Oregon Medicaid Results Are Even Worse Than They Look
For years, lefty health policy wonks have insisted, against all the evidence, that expanding Medicaid would save hundreds of thousands of lives, and that, therefore, opponents of the Medicaid expansion are guilty of a form of mass murder. So it’s been interesting to watch their reaction to the Oregon Medicaid study, which found that the $450 billion-a-year program "generated no significant improvement in measured physical health outcomes." They’ve desperately scoured the study to trumpet any silver lining they can find. But the reality is that the Oregon findings are even worse than they look. Here’s why.
1. 40 percent of those who ’won’ the Oregon Medicaid lottery didn’t bother to sign up
According to the authors, "only about 60% of those selected [to join the Medicaid program] sent back applications." Indeed, of the 35,169 individuals who "won" the Oregon Medicaid lottery, only 10,405 enrolled, in large part due to this indifference from the supposed Medicaid beneficiaries, and also because a number of individuals failed in the end to meet the Medicaid eligibility requirements.
In a real randomized, controlled clinical trial, the kind that drug companies must conduct to get past the FDA, you would have to count these individuals as part of your study cohort, in what statisticians call an "intention-to-treat" analysis. That is to say, you have to compare being uninsured to the total group of people who were offered Medicaid, including those who didn’t send back the forms.
If the authors had done that, the study would have had a much larger sample size, and a much smaller difference between Medicaid and uninsurance—in either direction.
2. Medicaid enrollees experienced a substantial placebo effect
One key difference between the Oregon experiment and a traditional, FDA-quality clinical trial is that the Oregon study was what we call "open-label" or "unblinded." People on Medicaid, for obvious reasons, knew they were on Medicaid, and those where uninsured knew that too. Pharmaceutical and biotech companies are required to conduct blinded studies in nearly all instances, because it’s well documented that if you know you’re on the drug instead of the placebo, you can convince yourself that you feel better, even if you don’t. It’s called the "placebo effect."
Those who are in denial about Medicaid’s poor physical outcomes point to the Oregon results on depression. 30 percent of uninsured patients at baseline screened positive for depression; relative to being uninsured, the authors estimate that Medicaid reduced depression diagnosis by 9 percent, with a p value of 0.02 (i.e., a 2 percent chance of statistical noise). "This is an astounding finding," exclaimed Jonathan Gruber, the Oregon study co-author who is best known as the architect of Obamacare. "That is a huge improvement in mental health."
There are a number of flaws in the way that the Oregon investigators measured depression; for a detailed look, go back to my comprehensive review of the results from last week. But here’s the kicker. In 2011, the authors noted that two-thirds of the improvement in patients’ "self-reported health" took place "about 1 month after [Medicaid] coverage was approved," but before "any increase in health care utilization." In other words, patients felt better once they knew they were on Medicaid, but before they had seen a doctor, or undergone a test, or filled out a prescription.
That is the classic definition of a placebo effect. And it’s hardly "astounding" to anyone with experience in clinical trial design.
And remember, the placebo effect works on objective health outcomes too, like blood pressure, high cholesterol, and diabetes, where the Oregon study showed no meaningful difference. How worse would those measures have been if the Medicaid enrollees hadn’t known they were on Medicaid?
3. Oregon’s Medicaid program is actually better than most states’
As I discussed last week, reimbursement rates for Medicaid in Oregon are significantly higher than the national average. So access to primary care physicians, as well as specialists, is better for Oregonians on Medicaid than it is for Medicaid enrollees in other states. In Oregon, in 2008, Medicaid paid primary care physicians around 62 cents for every dollar that a private insurer paid. In neighboring California, Medicaid paid 38 cents. Florida pays 44 cents. New York and New Jersey pay 29 cents.
Hence, extrapolating the Oregon results to other states, especially the many states in which Medicaid’s reimbursement rates are lower, would be a mistake.
Deniers point to the fact that, under Obamacare, Medicaid primary care reimbursement rates will temporarily increase for two years. But after those two years, rates will revert to their previous levels; and the temporary bump doesn’t apply to specialists. So if you’re a kid on Medicaid, and you’re having an acute asthma attack or something similar, you have a 66 percent chance of being denied a doctor’s appointment, compared to only 11 percent for those with private insurance.
4. Medicaid will cost $7.4 trillion over the next decade alone
Paul Krugman, captain of the Medicaid deniers, tried his best to play up the Oregon results, concluding this way: "Above all, you should bear in mind that if health insurance is a good idea—and you are nuts if you let this study persuade you otherwise—Medicaid is cheaper than private insurance. So where is the downside?"
The downside is that taxpayers will spend $7.4 trillion over the next ten years on this failed program. The burden is on Medicaid’s partisans—and proponents of Obamacare’s expansion of the program—to explain why middle-class taxpayers should pay more in taxes to support a program that, at best, makes no difference in its enrollees’ health. These taxpayers, after all, are themselves struggling with high medical bills.
One important aspect of the study, as Robert Samuelson has highlighted, is that the uninsured actually have access to substantial amounts of health care in America today. The Oregon authors found that the average uninsured individual consumed $3,257 a year in health spending, much of it through uncompensated and charity care. Medicaid increased that spending by $1,172. 61 percent of the uninsured said they "received all needed care" in the past 12 months, and 78 percent of the uninsured said that this care was of "high quality."
61 percent isn’t high enough. We can do better. But in the Oregon study, Medicaid only modestly improved patients’ perceived access to care, especially when we take the placebo effect into account. Indeed, for many people, Medicaid constrains access to quality care. Did I mention that we will spend $450 billion on Medicaid this year?
Remember also that the leading medications for high blood pressure (amlodipine), high cholesterol (atorvastatin), diabetes (metformin), and depression (citalopram) are all generic. It’s literally more expensive to make a six-pack of Coke than to make a bottle of cholesterol pills. We don’t need to spend $7.4 trillion over the next ten years to treat depression. Even puppies are costlier than a year’s supply of Prozac.
One other point about Medicaid’s cost. The Congressional Budget Office estimates that Obamacare’s expansion of Medicaid will cost about $6,000 per patient per year. In 2010, Oregon spent around $4,700 per adult enrollee. But according to the Oregon study, Medicaid only increased patient spending by $1,172. Where did the rest of the money go?
The cost-effectiveness of public spending is a moral imperative
There’s been a lot of talk recently of the fact that it’s incumbent upon conservatives to show how they would do things differently, if they were in charge. "If their own party can’t find a way to unite around an Obamacare replacement, the Republican governors and legislatures fighting the Mediccaid expansion will [achieve] nothing except delay," writes Ross Douthat.
I strongly agree, and I feel like I’ve done my part to propose alternatives. But it’s worth pointing out that conservatives—and Republicans—have been proposing free-market alternatives to Medicaid for years. In 2008, John McCain proposed a universal, $5,000 tax credit that would allow every American family to purchase the health coverage of its choosing. Obama campaigned against it.
The Florida House proposed replacing Medicaid with catastrophic coverage and health savings accounts. They were blocked by those, including Republicans, who wanted to expand Medicaid instead. Indiana’s popular Medicaid program includes HSAs and high-deductible coverage. But the Obama administration shut down Healthy Indiana, because Democrats are ideologically opposed to that approach.
Conservative voters instinctively resist expanding government programs because they know that progressives are usually indifferent, at best, to government’s effectiveness and efficiency. The more the Medicaid deniers dig in their heels and ridicule the idea that $7.4 trillion in federal spending has a "downside," the harder it is for conservatives to offer something more constructive.
Given that Medicaid will spend $6,000 per person per year for around $1,250 in patient health spending and no improvement in health outcomes, it’s entirely appropriate—if not imperative—for conservatives to oppose Obamacare’s expansion of the Medicaid program. If the left insists on hostility to health savings accounts and catastrophic coverage, maybe it’s high time for them to propose an alternative.
This piece originally appeared in Forbes
This piece originally appeared in Forbes