• Really? Medicaid again?

    Evidently, this trope is rearing its ugly head again. Medicaid is going to hurt people.

    There are times I don’t even want to engage anymore. But once more for old time’s sake, huh? Tighten your seatbelts.

    Let’s start with a basic fact. Having health insurance is better than not having health insurance. Here’s Michael McWilliams saying it saves lives in a guest post. Here’s another post full of links to others who argue that insurance saves lives. Not only that, but health insurance is good for health. Medicaid is health insurance. Therefore, it shouldn’t surprise you that studies show Medicaid improves health.

    But wait! You heard that Medicaid actually hurts people. Well, it turns out those studies some interpret as showing Medicaid is bad for health are showing correlation, not causation. Here’s some more examples of that.

    Want to get in the weeds? Austin describes how the use of instrumental variables can improve research into Medicaid. Here’s a post on Medicaid and mortality for HIV patients. Here’s Medicaid and child health. Here’s Medicaid and saving babies. Here’s Medicaid expansion and health care utilization. Here’s Medicaid expansion and the technology of birth. Here’s a summary of that series:

    My take-away from the Medicaid-IV literature review is: there is no credible evidence that Medicaid results in worse or equivalent health outcomes as being uninsured. That isMedicaid improves health. It certainly doesn’t improve health as much as private insurance, but the credible evidence to date–that using sound techniques that can control for the self-selection into the program–strongly suggests Medicaid is better for health than no insurance at all.

    Don’t forget, of course, the Oregon Health Study, an actual randomized controlled trial of Medicaid. Here’s Austin on the results. Here’s me on the results. Guess what? Medicaid was good for health.

    Yes, Medicaid under-reimburses physicians. But when crying about physician refusal to accept it, it’s important to remember who actually sees Medicaid patients. While you’re at it, remember who Medicaid actually covers. Besides, the natural response to saying physicians don’t get paid enough by Medicaid is to increase Medicaid funding to improve that; cutting it will do the opposite. Besides, cutting Medicaid will be hard and painful, with serious consequences.

    Or, you could save yourself some time, and just read our paper in the NEJM. But that won’t be as fun.



    • If it helps, this post inspired me to cover your NEJM paper in class today as an example of when IVs can be useful. 🙂

    • Truth is Medicaid does help improve overall health conditions of beneficiaries. The problem here lies in the reimbursement rates for providing services. Yes, Medicaid reimbursement is low, but that doesn’t mean the care these Medicaid beneficiaries receive should reflect that. Unfortunately however, more times than not, this is the case. I’m not suggesting that physicians will not “do their best” in identifying a beneficiary’s health condition but more specifically the tools and technology accessible to these physicians might not be “state of the art,” so to speak.
      That being said, physicians are handcuffed with regards to the amount or extent of treatment they can allot a given patient. Reimbursement rates are too low for them to go the extra mile. What the government needs to do is find a way to increase funding for these programs. Why not forgive Medical students loans once they have established their practice and have them accept Medicaid for say the next 15-20 yrs? Not only could the government solidify Medicare/Medicaids’ future for newly eligible beneficiaries but also help Med students, now professionals, improve their practice by exposing them to a broad spectrum of patients. Just a thought….

    • As you have discussed, changing the federal funding formula for Medicaid from the Federal Matching Assistance Percentage (FMAP) an entitlement where spending can expand with need, to a fixed block grant where it cannot, means that ultimately States will have to eliminate coverage for certain populations. With their balanced budget requirements states are unable to expand funding to meet greater and will have no other recourse but to reduce the eligible population. The argument that states can provide health care more efficiently ignores the fact that this is, in fact, what they have been attempting to do now since the economic downturn began.

      If the public can be made to believe, against all facts, that Medicaid is worse than no coverage at all, than throwing people off the program and leaving them uninsured will seem more palatable.

    • A quibble: why must you say docs are underpaid by medicaid? Docs in America make the most of any civilized society. If we are to cut health costs, we are going to have to cut doc pay- no way around that. To begin to accept that, we have to acknowledge that we cannot pay out so much money to docs (and other parts of the health field). Otherwise, nothing will change.

      • Fair enough, But reimbursement dollars also pay rent, nurse salaries, secretary salaries, malpractice insurance, etc. And all of those things can be more expensive, too. Medicaid does under-reimburse, compared to other sources, and there’s an argument to be made that the difference is made up by other billing mechanisms.

        Besides, there are physicians who refuse to see Medicaid patients because of the low reimbursement rates. As long as we respond to such pressure, we should acknowledge it.

    • Thomas Saving had a piece in Health Affairs blog some time ago where he floated the idea of ‘health stamps’ — similar to food stamps.

      The recipient would get a dollar value in vouchers that could only be used for health care.

      Medicaid would scrap its entire fee schedule, at least for physicians.

      The patient could go on and see whoever they wanted to — a nurse practitioner, a full MD, etc.

      This would not work for every single person on Medicaid…..a patient with diabetes and athsma and HIV positive would run out stamps in about a week.

      But some version of this program has merit.

    • It looks like Medicaid has a positive effect on health but we could easily do much better. Better to change medicare to a subsidy where the insured pays part of the premium based on their income or better yet go with a deductible based on income.

      • I decided to check for what health insurance skeptic Robin Hanson had to say about the Oregon randomized study. It is here:


        The big news is that lottery winners had substantially and significantly better self-reported health. The overall health difference is significant at a 10-4 level. Lottery winners reported, for example, being healthy (= unimpaired) an average of a half day more per month. If one assumes that being a lottery winner influences health mainly via giving health insurance, then health insurance gives people 1.6 more healthy days per month.

        Sounds like solid proof that medicine is healthy, right? Not so fast. First, over two thirds of the health gains that appeared on the one-year-later survey also appeared on the very first survey, done before lottery winners got additional medical treatment. So clearly at least two thirds of the health gains here are due to the comfort of knowing one has insurance. (And since they’ll only directly measure health once per person, we may never get the timing data to see if any gains in direct measures also appeared right from the start.)


        Bottom line: So far, the new Oregon Health Insurance Experiment shows that for very poor and sick folks who go out of their way to request medical insurance, giving them such insurance makes them report feeling healthier. Two-thirds of this effect appears immediately on granting their request, and before they actually got more medical treatment. It remains to be seen if these healthy feelings will be reflected in more direct health measures, though that seems plausible, and we’ll probably never see mortality effects. The main results of the RAND experiment, which looked at all sorts of people, suggests doubts about presuming that if medicine helps the very poor and sick, it on average helps everyone.

        Not a debate ender yet.

    • The fact that this issue keeps popping up is always shocking to me.

      Community health centers and safety net hospitals provide care at costs based on income, and sure yes this works for a lot of people. But expanding this concept and replacing Medicaid with vouchers/stamps/coupons subsidies etc depends on whether we feel those that are covered by Medicaid will maximize their ability to utilize and make choices if you provide vouchers instead of Medicaid. Yes, vouchers based on income may work for a huge section of the population but not necessarily for those with the most issues, comorbidities etc and it goes beyond these populations running out of vouchers/stamps/subsidies…. maybe if we substantially educate or ensure fair options but thats in an ideal world. We aren’t there yet.

    • The people on Medicaid have a crying need for free public clinics and free public hospitals.

      We should give the clinics and hospitals a global budget not unlike the fire and police departments, and let them care for everyone that they can.

      Believe me I would prefer this to vouchers.

      The challenge is that this is such a huge country. There are no public clinics or public hospitals in rural North Dakota and never will be.

      The voucher idea is just my guess on what will work in rural area and plenty of suburbs. These communities do have private clinics.
      There is no reason to build new public clinics.

      But the doctors and hospitals have to get paid for what they do for poor people. Vouchers might be better than an inadequate and even insulting fee schedule.

      Please correct me if I am off base.

      Bob Hertz
      The Health Care Crusade