Oregon Medicaid Study Doesn’t Love Big Brother

By Dr. Jonathan Witt

If a large Oregon study is any indication, the Affordable Care Act may drive up frivolous emergency room visits and do little to improve people’s physical or economic health.

The Oregon Health Insurance Experiment began after Oregon budgeted to add several thousand people to their Medicaid rolls and held a lottery to fill the slots, giving researchers a randomized pool to test the effects of having health insurance. Winners were more likely to report being in good health and were less likely to default on medical bills. But there were also some surprising findings. For the lottery winners, getting free health insurance had no measurable effect on their incomes or on three objective health markers followed in the study: cholesterol, blood pressure, and diabetic blood sugar control.

One can only guess why it had no measurable effect on these health markers; but my physician brother-in-law, Bruce Woodall, a family physician with wide-ranging medical experience on three continents, shared with me some thoughts that suggest one possible reason. As he puts it, much of American medical care has become a sickness management industry, with the lion’s share of the industry’s resources spent treating not the elderly but chronically sick middle-aged patients, most of whom are sick primarily because of lifestyle choices.

In essence, the health care industry becomes the enabler in a lucrative game in which patients put off needed lifestyle reform, opting instead for prescription pills, surgeries, and conversations about “genetic predispositions.” None of this gets at the root problem, and indeed exacerbates the root problem. People face a moral challenge to accept responsibility as stewards of their bodies to live a healthy lifestyle. The system, instead of spurring them on to do the responsible thing, all too often invites them to believe they are not responsible and should entrust their genetically hopeless selves into the hands of the medical/pharmaceutical industrial complex.

If the health care market weren’t subsidized and hyper-regulated, the patient would bear more of the economic costs for living an unhealthy lifestyle, which at least would give the patient a strong economic incentive to do the right thing by his body. But thanks to various nanny state interventions, the patient is shielded from many of the economic costs of inaction. Meanwhile, the health care industry goes right on making money, never mind that it’s ostensibly being paid to heal.

Understand, it isn’t just that the health care industry continues making money off the customer even if he remains chronically ill. It’s that the gravy train keeps on rolling only if he remains chronically ill, and insured.

In fairness to ObamaCare, it does contain provisions allowing employers to charge higher premiums to employees who don’t meet certain wellness benchmarks. But applauding the government for this is a bit like applauding your kidnapper for finally allowing you to go to the restroom when you feel like it.

The government never should have been in the business of preventing or allowing insurers to decide what they could and couldn’t charge for health insurance. The process of competing for customers would have sorted this out, provided government had restricted itself to such core tasks as enforcing contracts, promoting contract transparency, and punishing fraud.

For instance, with healthy competition and choice, an insurer who tried to overcharge a physically fit pack-a-day smoker would likely lose the customer to an insurer whose rate more accurately reflected the actual risks of insuring such a person. Instead, because the whole system is fastidiously managed from the top down, with healthy market competition largely squeezed out of the game, ObamaCare’s provisions to boost economic incentives for healthy living have a fussy, nanny-state quality about them, with red tape and unintended consequences likely to come as thick and fast as the Affordable Care Act itself.

The most recent finding of the Oregon Health Insurance Experiment contradicts another ObamaCare selling point. Among those who won the Medicaid lottery, investigators found “increases in emergency-department visits across a broad range of types of visits, conditions, and subgroups, including increases in visits for conditions that may be most readily treatable in primary care settings.” In other words, the free health insurance encouraged patients to visit the ER instead of the more-affordable doctor’s office.

Washington Post article by Sarah Kliff quotes one researcher on the topic:

“I would view it as part of a broader set of evidence that covering people with health insurance doesn’t save money,” says Jonathan Gruber, a health economist at the Massachusetts Institute of Technology, who has also studied Oregon’s Medicaid expansion but is not affiliated with this study. “That was sometimes a misleading motivator for the Affordable Care Act. The law isn’t designed to save money. It’s designed to improve health, and that’s going to cost money.”

Gruber seems to be offering straight talk here, but look closer. Gruber was one of the architects of ObamaCare and, as Kyle Wingfield noted at the Atlanta Journal-Constitution, Gruber was singing a very different tune in October. “The Affordable Care Act is already working: Intense price competition among health plans in the marketplaces for individuals has lowered premiums below projected levels,” Gruber said then. “As a result of these lower premiums, the federal government will save about $190 billion over the next 10 years, according to our estimates.”

More immediately, even Gruber’s newfound straight talk about ObamaCare veers away from the grim reality uncovered by the Oregon study. Yes, the Affordable Care Act won’t be particularly affordable. But while it may improve people’s sense of being in good health, it may do far less to improve the actual health of America—at least if the clinical health markers of 10,000 lottery winners in Oregon are any indication.

Jonathan Witt, Ph.D. is a research fellow and writer at the Acton Institute. He is the lead writer for the PovertyCure initiative and associate producer and lead scriptwriter for the PovertyCure DVD Series. He has written three documentary scripts, including The Call of the Entrepreneur and The Birth of Freedom; and his academic and opinion essays have been widely published. He is a guest contributor for Cascade Policy Institute.

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