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Medicaid and the Uninsured: Good News or Bad News?

bad news good newsMany acute care providers and hospital systems, under the assumption that legions of newly Medicaid-eligible or ACA-covered individuals will begin seeking urgent care for minor illnesses, have begun opening freestanding emergency rooms.

Often, these off-site units are built in rich payor mix neighborhoods and suburbs or in otherwise underserved or untapped areas.

This move should increase the availability of medical services at a time when the system is seeing exponential growth of health care consumers. However, it is only one option that needs to be explored. The ACA isn't going away any time soon, so providers need to start thinking about how reform will play out in their facilities over the long term.

Understanding the Premise

The creation of these freestanding emergency rooms relies on the belief that newly insured health care consumers will only be seeking out emergency services or will be unwilling to travel into poorer urban core areas to visit established hospital-based ERs should that particular need arise.

But, the results of a case-study in Oregon shows that newly insureds may respond in ways beyond what we might expect. 

The Oregon Health Insurance Experiment

A recent independent study on the expansion of Oregon’s Medicaid program shows a look at a microcosm of ACA-like conditions where a wave of newly insureds, some with preexisting conditions, were added to the pool of health care consumers. I wrote about this in an earlier article titled, “Healthcare Market Research Predicts Increased ER Visits with ACA.

The researchers stated that Oregon’s newly expanded lottery system allowed, “the first use of a randomized controlled design to evaluate the impact of Medicaid in the United States,” and further noted that, “although randomized controlled trials are the gold standard in medical and scientific studies, they are rarely possible in social policy research.”

Due to the randomized lottery, researchers were able to see expansion’s effects across socioeconomic strata and health risk groups.

The study, conducted by a panel of university-based economists at MIT, Harvard and other acclaimed research institutions and funded by a consortium of federal agencies and non-profit foundations, has given researchers insights into the effect of public health coverage and produced provocative results.

Oregon's Results May Show a Silver Lining for the Integration of Newly Insureds

At the most basic level, the data gleaned from two years of expansion in Oregon does show that that ER utilization is up (by 40%) and that there has been no significant impact on improving particularly problematic conditions (blood pressure or cholesterol levels) among newly covered individuals.

These two findings — among many in a comprehensive study — have been seen by some as evidence that the Affordable Care Act will have the opposite of its intended effect.

However, lead researcher Amy Finkelstein and her team found that it wasn't just ER usage that increased.

Oregon Medicaid expansion, according to Finkelstein, resulted in an increase in the use of preventative care, “including an increase in cholesterol monitoring of 50 percent and a doubling of mammograms.” Medicaid increased diabetes diagnosis by 3.8% and increased the use of diabetes medication for chronic management by 5.4%.

That means that the number of undiagnosed, unmanaged diabetics (who bounce in and out of ERs and ICUs in an exorbitantly expensive, life-threatening cycle of acute-on-chronic exacerbation) went down.

According to Finkelstein and her team, Medicaid “virtually eliminated out-of-pocket catastrophic medical expenditures and reduced the probability of having to borrow money or skip paying other bills because of medical expenses by more than 50%.” The bill may have been picked up by the taxpayer, but the long-run proposition of a healthier population could pay dividends.

Importantly, the researchers found no statistical decline in employment or increase in Social Security Disability payouts.

While the results from Oregon may not pan in the rest of the country. it's one indication that the Affordable Care Act has the potential to deliver positive results. Many uninsured still need to be persuaded away from the ER and to adopt further wellness and prevention behaviors, but this should be the impetus for many providers to start reassessing their long-term reform strategy.

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