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Insight: A Lottery Study on Medicaid Coverage in the U.S.
2016-04-12 15:04:11
In 2008, Oregon launched an experiment regarding a Medicaid program for uninsured, low-income adults in order to identify and quantify the impacts of enlarging health insurance coverage and examine the relationship of Medicaid coverage and emergency-department use.
The scientific team drew about 30,000 names by lottery from a waiting list of nearly 90,000 individuals and those selected were placed to a Medicaid group if they completed the application forms and met eligibility criteria. As mentioned above, the event provides the team with a rare opportunity to study the effects of Medicaid coverage for the uninsured upon emergency costswith a randomized controlled design. More specifically, they examined the effects of health insurance coverage on volume of emergency-department use and for specific types of visits, conditions, and group through studying the defined group and administrative data from the emergency departments of hospitals in the Portland area. In support of this, the examination on lottery allowed them to separate the causal effect of insurance on emergency-department visits and care; random assignment through the lottery is able to be involved in studying the impact of insurance avoiding the problem of confounding factors that possibly otherwise differ between insured and uninsured populations.

The lottery study aligned with Oregon Health Plan (OHP) Standard, a Medicaid expansion program that are beneficial to low-income adults who are not categorically entitled to Oregon’s traditional Medicaid program. The eligibility requirements are listed below.  Individuals must be aged 19 to 64, Oregon residents, U.S. citizens or legal immigrants, without health insurance for 6 months, and not otherwise eligible for Medicaid or other public insurance. They must have income below the federal poverty level (which was $10,400 for an individual and $21,200 for a family of four in 2008) and have less than $2000 in assets. OHP Standard provides relatively comprehensive medical benefits (including prescription drug coverage) with no consumer cost sharing and low monthly premiums (between $0 and $20, based on income), provided mostly through managed care organizations. Multiple institutional review boards have approved the Oregon Health Insurance Experiment research.

They commenced the experiment on the Oregon Health Insurance Experiment using the random assignment of the lottery so as to examine the impacts of Medicaid coverage during the first two years. It is found that Medicaid coverage improved the overall self-reported general health and thus reducing depression of individuals resulting from health insurance; however, they did not find statistically substantial effects on specifically blood pressure, measured physical health, glycated hemoglobin levels or cholesterol. Furthermore, they also investigated that Medicaid relieved the extent of financial strain but did not have statistically significant effects on employment rate or earnings. Based on the current analysis, Medicaid increased health care use. In particular, Medicaid coverage provided more self-reported access to and use of primary care, as well as self-reported use of prescription drugs and preventive care. Besides, there was no statistically significant effect of Medicaid on self-reported use of the hospital or the emergency department but Medicaid increased hospital use as measured in hospital administrative data. 

Within the course of examining the obtained data from emergency department using data modeling, it is found that neither theory nor existing evidence gives a definitive answer to the significant policy question of whether increases or decreases in volume of emergency-department use when the amount of health insurance enlarges. Uninsured parties are likely to go to the emergency department due to the fact that hospitals offer care for emergent conditions regardless of insurance status, but they can be charged for legally required care. Similarly, it is implied by basic economic theory that by decreasing the out-of-pocket cost of a visit that an uninsured person would pay, Medicaid coverage should increase use of the emergency department.  Medicaid coverage may provide more real or perceived access to emergency-department care. However, some potential offsetting channels through Medicaid coverage can probably reduce emergency-department use. Medicaid coverage might enable patients to receive some care in physician offices instead in the emergency department by the rising access to primary care. Furthermore, Medicaid coverage might contribute to improved health and hence decreased demand for emergency-department care.

It is difficult to isolate the impact of Medicaid on emergency-department use in observational data, because the uninsured and Medicaid enrollees may differ on many characteristics (including health and income) that are correlated with use of the emergency department. By using the random assignment of the Oregon lottery, the investigation team could isolate the causal effect of Medicaid coverage on emergency-department use among low-income, uninsured adults. It is examined that Medicaid coverage increases emergency-department use and measured an average increase of 0.41 visits per covered person over an 18-month period, or about a 40% increase relative to the control average of 1.02 visits. A back-of-the-envelope calculation, using $435 as the average cost of an emergency-department visit, suggests that Medicaid increases annual spending in the emergency department by about $120 per covered individual.

In conclusion, the study was able to make use of a randomized design that is rarely available in the eva luation of social insurance programs to estimate the causal effects of Medicaid on emergency-department care. It is found that expanding Medicaid coverage increased emergency-department use across a broad range of visit types, including visits that may be most readily treatable in other outpatient settings. These findings speak to one cost of expanding Medicaid, as well as its net effect on the efficiency of care delivered, and may thus be a useful input for informed decision-making that balances the costs and benefits of expanding Medicaid.

Taubman, S, Allen H, Wright, B, Baicker, K & Finkelstein, A 2014, ‘Medicaid Increases Emergency-Department Use: Evidence from Oregon's Health Insurance Experiment’, Science, Vol 343, Issue 6168.


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