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Medicaid Expansion Enhances Financial and Mental Well-Being, Study Says

By Karen Pallarito
HealthDay Reporter

WEDNESDAY, May 1 (HealthDay News) -- As states prepare to expand Medicaid in 2014, a new study provides insight into how that health insurance coverage might affect low-income adults and what it means for access to care and the cost of care.

The study found that having Medicaid -- the U.S. public health insurance program for lower-income Americans -- reduced financial strain related to out-of-pocket health care costs and improved mental health during the first two years of enrollment.

Medicaid also increased prescription drug use and office visits, according to the study, which is based on data from Oregon's 2008 Medicaid expansion.

People with Medicaid spent $1,172 a year more -- about 35 percent more -- on medical care than a comparable group of adults not enrolled in the program.

Yet there's no clear evidence that having Medicaid improved control of diabetes, high-blood pressure and high cholesterol, at least in the early years of enrollment.

"One thing it doesn't tell us is what happens three, four, five and six years later, and that's important because so many of the benefits of health care accumulate over time," said Dr. David Meltzer, associate professor of medicine, economics and public policy studies at the University of Chicago, who was not involved in the study.

Expanding Medicaid to millions of uninsured adults is one of the goals of the 2010 health reform law known as the Affordable Care Act.

Oregon's experience offers a rare opportunity to examine the effects of Medicaid coverage by comparing people who made it into a health care lottery program with those who did not. Unable to cover everyone who wanted to enroll in Medicaid, Oregon held lottery drawings, pulling names from a waiting list of nearly 90,000 uninsured people to fill 10,000 openings.

For the study, published online May 2 in the New England Journal of Medicine, researchers at the Harvard School of Public Health and Massachusetts Institute of Technology conducted more than 12,000 in-person interviews and health exams of lottery participants in the Portland, Ore., area about two years after the lottery.

"It's not just another study on Medicaid; it's the first randomized, controlled study of Medicaid," said lead author Katherine Baicker, professor of health economics in the department of health policy and management at the Harvard School of Public Health.

When comparing outcomes of the people selected to apply for Medicaid with those who were not selected, the researchers found that:

  • Use of health services increased among Medicaid enrollees. "People go to the doctor more, they use more prescription drugs, they go to the hospital more, they get more preventive care," Baicker said.
  • Medicaid enrollment improved access to care, sharply increasing some preventive health screenings, including mammography for women and PSA testing for men.
  • Medicaid nearly eliminated "catastrophic" expenditures -- out-of-pocket medical expenses exceeding 30 percent of income. "It's important to remember that Medicaid is not just about access to health care," Baicker added. "Like any insurance product, it's also supposed to protect you from financial ruin if you have a high medical expense."
  • The rate of depression dropped by 30 percent among people with Medicaid versus people without insurance who screened positive for depression. The authors don't offer an explanation for this, but the study noted that having Medicaid led to an increase in the probability of receiving a diagnosis of depression. "The suggestion is that there were people walking around with undiagnosed depression who were then treated," Baicker said.
  • Medicaid's impact on physical health -- specifically high blood pressure, high cholesterol and high blood-sugar levels (indicating diabetes) -- was less clear-cut. The research team chose those health outcomes because they are widespread and serious, yet treatable.

The authors of an accompanying editorial offered a possible explanation. Richard Kronick, of the Office of the Assistant Secretary for Planning and Evaluation at the U.S. Department of Health and Human Services, and Dr. Andrew Bindman, at the University of California, San Francisco, said Medicaid's minimal effects on physical health "are not entirely surprising given the many steps that are needed between the availability of insurance coverage and the delivery of appropriate care."

What's more, they said, the short follow-up period and small number of people with chronic conditions in the study sample may have skewed the results.

It is also possible, Meltzer said, that small improvements did occur but didn't show up as statistically significant. "A [slight] decline in blood pressure could be really important, and we can't say that didn't happen," he said.

Lessons learned from the Oregon experience could be instructive as half of the states in the nation proceed with plans to broaden Medicaid enrollment in 2014, while others remain opposed or undecided.

Results of this study and findings from earlier research on the Oregon experiment should dispel any notion that expanding Medicaid will save money, Baicker said, because "the program costs money; people consume more health care." On the other hand, the results demonstrate clear benefits to the people who are enrolled.

"Policymakers have to weigh how much they value those benefits to enrollees against alternative uses of the resources that go into the program," she said.

More information

Go to to learn more about your state's Medicaid program.

SOURCES: Katherine Baicker, Ph.D., professor of health economics, Department of Health Policy and Management, Harvard School of Public Health, Boston; David Meltzer, M.D., Ph.D., associate professor of medicine, economics and public policy studies, University of Chicago; May 2, 2013, New England Journal of Medicine

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