• Expanding Medicaid saved lives

    This post is jointly authored by Aaron Carroll and Harold Pollack

    No matter how many times we refute the idea that Medicaid is bad for health, people keep on saying it. There’s so much evidence to the contrary. Recently, a number of states have used the “questionable” quality of Medicaid to buttress their arguments against the Medicaid expansion contained in the Affordable Care Act.

    Most of those decisions are fiscal. But we shouldn’t ignore the effect of them on patients themselves. There’s a paper in yesterday’s New England Journal of Medicineentitled “Mortality and Access to Care among Adults after State Medicaid Expansions.” It’s worth a read:


    Several states have expanded Medicaid eligibility for adults in the past decade, and the Affordable Care Act allows states to expand Medicaid dramatically in 2014. Yet the effect of such changes on adults’ health remains unclear. We examined whether Medicaid expansions were associated with changes in mortality and other health-related measures.


    We compared three states that substantially expanded adult Medicaid eligibility since 2000 (New York, Maine, and Arizona) with neighboring states without expansions. The sample consisted of adults between the ages of 20 and 64 years who were observed 5 years before and after the expansions, from 1997 through 2007. The primary outcome was all-cause county-level mortality among 68,012 year- and county-specific observations in the Compressed Mortality File of the Centers for Disease Control and Prevention. Secondary outcomes were rates of insurance coverage, delayed care because of costs, and self-reported health among 169,124 persons in the Current Population Survey and 192,148 persons in the Behavioral Risk Factor Surveillance System.


    Basically, Sommers, Baicker, and Epstein examined county all-cause mortality rates of working-age adults in three states—Arizona, Maine, and New York–that expanded Medicaid eligibility for childless adults between 2000 and 2005. They compared trends in these states in the five years before and the five years after Medicaid expansion to trends found in nearby comparison states that didn’t’ expand eligibility. These comparison states therefore served as controls. The authors also examined the proportion of individuals reporting that they are in “excellent” or “good” health, as well as those who reported that they were unable to obtain needed care in the past year because of cost.

    Let’s acknowledge that this difference-in-difference design isn’t airtight. It’s not a randomized trial, and we can’t prove causality. But the study is still pretty compelling.  On all fronts, these authors found that Medicaid expansion was associated with reduced mortality rates, improved health, and improved access to needed care. In the preferred regression model, the authors found that annual mortality rates declined by 19.6 deaths per 100,000. That represents a relative reduction of 6.1% (p=0.001). These results imply that the Medicaid expansion prevented 2840 deaths per year in states that expanded Medicaid by about 500,000 adults. That’s not a small change.

    What’s especially impressive is the way this paper’s modest but important findings hang together from both a statistical and clinical perspective.  Mortality reductions were greatest in precisely the groups most likely to benefit from more generous Medicaid policies: Nonwhites, older adults, and those living in counties with more prevalent poverty. The authors found smaller but significant reductions among whites. They found no effects among persons under the age of 35, whose mortality rate is simply too small for such policies to make much of a difference.

    As the authors say:

    Our estimate of a 6.1% reduction in the relative risk of death among adults is similar to the 8.5% and 5.1% population-level reductions in infant and child mortality, respectively, as estimated in analyses of Medicaid expansions in the 1980s….

    A relative reduction of 6% in population mortality would be achieved if insurance reduced the individual risk of death by 30% and if the 1-year risk of death for new Medicaid enrollees was 1.9%… This degree of risk reduction is consistent with the Institute of Medicine’s estimate that health insurance may reduce adult mortality by 25%, though other researchers have estimated greater or much smaller effects of coverage. A baseline risk of death of 1.9% approximates the risk for a 50-year-old black man with diabetes or for all men between the ages of 35 and 49 years who are in self-reported poor health.

    The bottom line is that, according to these findings, state Medicaid programs need only cover 176 additional adults to avert one additional death every year. This allows for a crude but intriguing cost-effectiveness calculation. Annual Medicaid costs for childless adults are roughly $6,000. The cost per averted death (176*6,000) is thus about $1 million. This $1 million figure is easily within the range of acceptable costs based on common, widely-supported interventions to save lives and improve health.

    In 1994, Janet Currie and Jonathan Gruber performed a classic analysis of the health impacts and costs associated with earlier Medicaid expansions for infants and pregnant women. Largely through the financing of NICUs and related care, these expansions reduced infant mortality. Expressing the findings in year-2012 dollars, Currie and Gruber found that early, more targeted Medicaid expansions for relatively high-risk women and infants cost about $1.3 million per averted infant death. Later expansions to relatively lower-risk patients were more costly, with an estimate of about $6.5 million per averted death.

    Now, Sommers, Baicker, and Epstein add to our fund of knowledge by showing that expanded  Medicaid benefits for childless adults can also save lives. Moreover, this Medicaid expansion provides good public value, as it improves many measures of health in addition to preventing death.

    There’s been a wide, often misplaced debate over whether Medicaid helps or hurts its own recipients. We need to stop that. Medicaid helps. As states debate whether and how to expand coverage to millions of childless adults across America, they can focus on how much they’re willing to spend to save lives, but they shouldn’t deny that that’s what’s at stake.

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  • Medicaid spending growth is surprisingly modest

    This post is coauthored by Austin Frakt and Aaron Carroll.

    Christopher Flavelle has put together a fascinating Bloomberg Government Study on the allure and growth of Medicaid managed care and the recent trend in Medicaid spending by states. It’s the first of three pieces in this area and, unfortunately, is behind a paywall. If you can get your hands on it, it’s worth a full read. If you can’t, here are a few details we thought worth highlighting.

    Flavelle writes that advocates of turning Medicaid into a block grant program often claim it would “increase spending predictability.” Given this and other rhetoric from states about their “out of control” Medicaid growth, you’d think that spending has been growing exceptionally rapidly recently.

    According to analysis by Flavelle, that’s not the case.

    Inflation adjusted Medicaid spending per capita by state general funds increased just 3.8% between 2002 and 2011. This is illustrated by the dotted line in the chart below. Per capita Medicaid spending by each of the five states with the largest Medicaid programs is also shown. Though they gyrate up and down, they all end up at the end up in 2011 close to or even below where they started in 2002.

    Some might object to dividing spending by the state population (per capita), because the population grows over time.* Of course, the state’s population reflects its potential tax base too, so it is fair to divide by it by that standard. A State with a growing population should to be able to afford commensurate growth in its Medicaid spending, though that can depend on how different sectors of the population grow relative to each other (more wealthy or more poor people).

    In any case, total (not per capita) real Medicaid growth was just 12% from 2002 to 2011. That’s not as high as we expected, though there is variation by state. While spending in Illinois actually decreased by 1% over this period, spending in Texas went up 58%. Moreover, this is growth above inflation, so there is room for improvement. Still, Medicaid has held spending growth below that of other payers. Flavelle quotes Vernon Smith, former Medicaid director for Michigan:

    “When you look at the rate of growth for all the major payers — Medicaid, Medicare, employer-sponsored insurance, National Health Expenditures — what you see is that no other payer has constrained the rate of growth in spending as well as Medicaid has. [] The reason is that no payer has been as motivated to undertake cost containment as state governments.”

    In total, it looks like states have done a pretty good job. Based on spending trends alone, it isn’t clear why officials in some states think the program needs major restructuring. That’s not to say it is perfect or that there aren’t other justifications for reform. Of course there are. In fact, given its low reimbursement rates, some might reasonably argue we should spend more on Medicaid, not less. At any rate, the data don’t support claims that state spending on Medicaid has been growing in an especially concerning way, particularly relative to other payers.

    * Another potential objection is that Medicaid spending by state general funds does not count “other funds and revenue sources used as Medicaid match, such as local funds and provider taxes, fees, donations, assessments.” True! However, Flavelle justifies a focus on general fund spending by quoting Alan Simpson who characterized that type of spending as a “tax gimmick” and that states just use “that additional ‘spending’ to increase their federal match.” If you collect a dollar and then give it back to those you collected it from in order to get another dollar (or more) from the federal government (which, of course, you also spend on the same providers you taxed), have you really spent your own funds?

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  • Reflex: spiked

    We have decided to terminate our morning Reflex posts. The readership demand (as measured by comments) and blogospheric popularity (as measured by links) do not seem to justify the work required to produce them. If news items warrant comment, we’ll provide it in one-off posts.

    Sorry to those who loved Reflex. The economics of the blogosphere have spoken. We must listen, at least incidentally.

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  • Reflex: December 21, 2011

    Kicking the decision about what benefits must be included in individual and small-employer plans to states will continue the nation’s patchwork of uneven coverage, report Gardiner Harris, Reed Abelson, and Robert Pear. “People in Utah and Wyoming, for example, are likely to have more limited access to expensive services now mandated in states like Massachusetts and Maryland — at least until 2016, when a senior administration official said the federal government plans to establish a national standard of essential benefits.” Austin’s comment: I’m getting a lot of questions as to whether this was a good or bad move by the Obama Administration. One thing is clear, it was a politically wise move. Dodging another huge fight over health reform may aid the viability of the new law in the long run.

    Yes, Congress didn’t pass a deal to extend the Payroll Tax deal, but that also means they didn’t pass a temporary doc fix, writes Julian Pecquet. “Patient advocates immediately started blasting Congress on Tuesday after House Republicans nixed a temporary fix to Medicare payments to physicians. The House voted 229-193 to reject the Senate’s two-month “doc fix” and instead call for a conference meeting with the Senate. Senate Majority Leader Harry Reid (D-Nev.) says the Senate is done for the year. If neither chamber changes its mind, physicians will see a 27.4 percent cut in Medicare payments starting Jan. 1.” Aaron’s Comment: There’s no “if” there. The Senate has gone home for the holidays, and the House has voted. There will be no doc fix before the new year. This doesn’t mean that one own’t be passed retroactively, but it’s got to be frightening for the AMA and others. If Congress is willing to play chicken with all of America, I don’t know why they wouldn’t with physician reimbursement.


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  • Reflex: December 20, 2011

    House will not have direct vote on Senate deal, writes Tom Cohen and Alvin Silverleib. The two month extension of the payroll tax cut, Unemployment Insurance and the doc fix that passed the Senate 89-10 on Saturday appears dead in the House and there will not be a direct vote on the Senate measure; Senate Democrats say they will not negotiate a full year extension of the payroll tax cut (that everyone wants) until the House passes the 2 month version. Don’s comment: This is not as dumb and dysfunctional as the debt ceiling debacle in August, but there is still time.

    Ezekiel Emanuel rejects premium support. “Premium support is classic cost shifting, rather than cost cutting. [...] To address the root of the cost problem, we must change how we pay doctors and hospitals. We must move away from fee-for-service payments to bundled payments that include all the costs of caring for a patient, thereby encouraging providers to keep patients healthy and avoid unnecessary services.” Austin’s comment: Premium support is a broader concept than Emanuel suggests. It need not shift costs to Medicare beneficiaries. However, Emanuel’s conclusion is reasonable. The type of cost cutting we need will not be found in premium support alone. My recent series covered all these points and more.

    The administration’s first crack at essential benefits guidance is drawing no backlash, says Jason Millman. “The Obama administration’s first crack at defining minimum health benefits did exactly what consumer groups hoped it wouldn’t do: It gave states a choice of “benchmark” plans rather than spelling out the details. But the administration seems to have pulled it off — because there was no backlash to be found from groups that championed the law.” Aaron’s Comment: (1) It provoked no backlash because it punted the call to the states. (2) It’s sad that “success” is now being defined as not angering anyone. (3) That just doesn’t seem worthy


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  • Reflex: December 19, 2011

    Julian Pecquet expects continued attacks on and challenges to the ACA. “Its first life-or-death experience lies in the hands of the Supreme Court, which could potentially strike down the Affordable Care Act as early as June. Even if the high court upholds the law, it could remove its individual mandate [...] Every Republican presidential candidate has vowed to repeal the law, through executive orders and by signing repeal legislation. Republicans are expected to keep control of the House, and with Democrats defending 23 seats in the Senate, the GOP has a shot at gaining the 60-member majority needed to get anything through.” Austin’s comment: The outcome of the 2012 election is the most important factor in the future of health reform and structural changes to Medicare.

    Crisis line tries to save suicidal veterans, writes Christina Ginn. There is an epidemic of suicide among veterans in the U.S., but there are resources to help. Don’s comment: Even as the Iraq war ended yesterday, this piece points out that our nation will be dealing with the aftermath of this war as well as the one in Afghanistan for many years. 1-800-273-8255 is a crisis line that any vet can call to receive help, or you can send a text to 838255 or go to http://www.veteranscrisisline.net/

    And now there’s concern over deadlines for the federal government’s health-care exchange, writes Julie Appleby. “With many states unwilling or unable to get insurance exchanges operational by the health-care law’s deadline of Jan. 1, 2014, pressure is growing on the federal government to do the job for them. But health-care experts are starting to ask whether the fallback federal exchange called for in the 2010 law will be operational by the deadline in states that will not have their exchanges ready.” Aaron’s Comment: I’ve written many times of the gamble some states are playing by not getting their exchanges ready; if they don’t the feds will take control. It’s hard to understate the importance of the federal government not falling behind if they want the ACA to succeed.

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  • Reflex: December 16, 2011

    There’s more backlash for Wyden than for Ryan on controversial Medicare plan, writes Brian Beutler. “First, the political consequences of the Wyden-Ryan alliance are worse for Democrats than for Republicans. As noted above, it gives Romney or Gingrich some cover when the Obama campaign attacks them for wanting to end Medicare (“one of the most liberal members of your party supports my plan,” goes the imagined retort). And more broadly, it complicates the Democratic party’s heretofore unanimous opposition to all plans that involve partial or total privatization of the program.” Aaron’s Comment: The fact that many Republicans are embracing it and almost no Democrats are says something about which way the plan moves the ball.

    Advocates push for a public option in MA, writes Andy Metzger: “Five years after redrawing the lines in the national health care debate, Beacon Hill is looking at new reforms, closely studying payment system plans to lower costs and examining a government controlled single-payer model. “We will end up with a government option at some point. We will end up with a single-payer at some point, and wouldn’t it be wonderful if that point was now, and the place was Massachusetts?” said Sen. Dan Wolf (D-Harwich) at a Thursday afternoon legislative hearing.” Aaron’s Comment: Stranger things have happened. Vermont may go single payer, after all.
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  • Reflex: December 15, 2011

    Gingrich proposes more Medicare Advantage, reports Sarah Kliff. “What Gingrich proposes sounds a lot like what we have in Medicare right now: A public, traditional Medicare plan coupled with private alternatives, Medicare Advantage, that seniors can voluntarily enroll in.” Austin’s comment: It has become popular among leading GOP contenders to propose reforms to Medicare that are indistinguishable from current Medicare. Gingrich follows Romney who is not following Rep. Ryan. Kevin Drum reminds us what’s wrong with Medicare Advantage.

    Speaking of Rep. Ryan, he’s distancing himself from his own Medicare plan too, reports Sam Baker. “Rep. Paul Ryan (R-Wis.) is moving away from his controversial plan to end traditional Medicare, putting forward a new proposal with Sen. Ron Wyden (D-Ore.) that would keep the federally funded program in place. The plan, which Ryan and Wyden plan to unveil Thursday morning, would give Medicare beneficiaries a choice between today’s Medicare and private health plans.” Austin’s comment: I will write more about the Wyden-Ryan plan after I have a chance to review the details. An op-ed by the two legislators appears at the Wall St. Journal.

    Mandy Locke finishes her series on the WakeMed v. UNC Health Care competition for Rex Hospital. This installment focuses on the question of what is public and what is private and should the state-owned health system compete with private institutions? Don’s comment:The back story of WakeMed offering to buy Rex Hospital was the $3 Billion budget shortfall that the N.C. General Assembly had to address last session. WakeMed’s offer to buy Rex for $750 Million would close a big chunk of it, and cause the state (via UNC) to divest of an asset they felt the state shouldn’t own in any event. Of course, the $750 Million would be a one-time state budget help, but the asset would be gone forever. The status quo holds for the time being, but the N.C. legislature is looking more closely at what UNC health care should be allowed to do by way of competing against private health care systems.

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  • Reflex: December 14, 2011

    The TIE team lost the morning. The final straw was that Austin’s computer got taken over by a SAS install. Reflex will resume tomorrow.

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  • Reflex: December 13, 2011

    Mandy Locke has the third (of four) piece in a series on hospital-system competition. The latest installment focuses on the relationship between the CEOs of UNC Health Care and WakeMed. Don’s comment: Interesting series, but that phrase Duke University health system has barely appeared in it. Dean Roper (CEO of UNC Health System) is quoted in the piece as hoping that UNC and WakeMed one day can merge. It seems to me the bottom line is this: there will be two big players in the RTP area of N.C.: UNC and Duke. The only question is whether there will be a third (WakeMed) or whether they will be gobbled by UNC (or Duke). The other non-Wake Med hospitals (Rex and Duke Raleigh) are already owned by UNC and Duke respectively. Yesterday’s related Reflex.

    The House Republican bill to hold down payroll taxes and extend unemployment benefits will make it easier for doctors to own hospitals, writes Robert Pear. “The bill would repeal and relax several provisions of the 2010 health care lawthat clamped down on doctor-owned hospitals. The bill would allow such hospitals to open if they were under construction at the end of last year, and it would allow them to expand if they were already in existence. Congressional aides say dozens of hospitals and their physician owners could benefit.” Aaron’s Comment: I have no doubt. But it may not benefit the rest of us so much. When physicians own the stuff they use in health care, they tend to use it more.

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