Mass. researchers find Medicaid improves health and reduces money woes

By Chelsea Conaboy, Globe Staff

When the state of Oregon decided in 2008 to hold a lottery to determine who would have a chance at enrolling in state Medicaid coverage, it gave researchers a rare opportunity to compare the health and financial stability of people who got covered with those who didn’t.

Nearly 90,000 low-income people applied for 10,000 slots and names were drawn to determine who would get one. A study led by researchers at the Harvard School of Public Health and Massachusetts Institute of Technology and released today found that, after one year, those who were chosen for coverage reported better physical and mental health, had less financial strain, and used the health care system more.

Typically such a study would not be possible because it would be considered unethical to withhold available coverage in order to create a control group. A long-term study in the 1970s came close, comparing groups with varying coverage levels.

“This was literally a once in a lifetime opportunity,” said Amy Finkelstein, a professor of economics at MIT, who heard about the lottery on the radio and contacted Katherine Baicker, a professor of health economics at Harvard. They collaborated with colleagues, Oregon state officials, and researchers at Providence Health & Services Center for Outcomes Research and Education.

As the nation moves toward expanding Medicaid coverage to more uninsured people and Congress debates how to reduce Medicaid costs, there has been some debate about whether Medicaid is a worthwhile investment. Finkelstein said the study provides “the best evidence we have to date” that it is.

“Medicaid makes a big difference,” she said.

Those whose names were selected were found to have used more health care services, including preventive care, primary care visits, and hospitalizations, totalling about a 25 percent increase in spending compared with the control group. They were about 25 percent less likely to have a medical bill reported to a collection agency.

Not all of those chosen for Medicaid coverage enrolled, and not everyone who was uninsured at the start of the study remained that way.

Author Heidi Allen, a research scientist at the Providence center, said one of the more surprising findings was the people chosen for coverage were less likely to test positive for depression in a mailed survey to screen for the condition. They were about 40 percent less likely to report a decline in their overall health than those not selected for coverage.

While the study was unusual in that it provided a look at the issue through a randomized study, Stuart Altman, a health economist at Brandeis University’s Heller School, said the results were not surprising to him.

“It solidified what most of us believed we knew, which is Medicaid makes a difference,” he said.

He said the study is not likely to silence those who are critical of expanding Medicaid. That’s in part because Medicaid coverage in Oregon is more generous than in many other states.

Altman pointed to a study out today in Health Affairs that found that southern central states spent the least per enrollee. New England states are among those that spend the most, but the study cites the region as a possible “success story” because outpatient spending is higher than the national average while inpatient spending is lower than average.

In those states that spend less, limited coverage or a shortage of providers that accept patients with Medicaid may make it harder than in Oregon for enrollees to get access to good care, he said.

The authors of the Oregon study acknowledged that their results may be difficult to extrapolate nationally or to other larger settings. The 10,000 low-income uninsured people selected through the lottery are a small portion of Oregon’s 3.8 million population, which included an estimated 200,000 uninsured adults, they said. And the study results could have been skewed by the fact that those who applied were seeking coverage.

Still, when policymakers argue that Medicaid does not work, “we can point to this study and we can say, ‘No, you’re wrong. It’s not true,’ ” said Michael Miller, policy director at Community Catalyst, a national consumer advocacy group based in Boston.

But, he said, the debate over Medicaid is so focused on budgetary issues, rather than health outcomes, that the study might not make much of a difference.

The $30 million study continues with a second phase in which the researchers conducted about 12,000 in-person interviews and physical exams. Those results are not yet published.