Getting a lot of attention today is a new study about Oregon’s Medicaid program. Basically several years ago Oregon wanted to greatly expand the program but didn’t have enough money to cover everyone they wanted. As a result they held a lottery. This created a perfect natural experiment on the effect of Medicaid coverage.

The study’s conclusion is: “This randomized, controlled study showed that Medicaid coverage generated no significant improvements in measured physical health outcomes in the first 2 years, but it did increase use of health care services, raise rates of diabetes detection and management, lower rates of depression, and reduce financial strain.”

Some people in the health care community find these results to be disappointing and some conservatives have used it to attack the Medicaid expansion in the Affordable Care Act. I, though, consider the results to be both very positive and about what I would expect.

It is important to remember that many of the lower income people in the state with the most serious medical problems were, for one reason or another, already covered by Medicare, Medicaid, private insurance or disability. So we are only talking about a relatively healthy population in the study. Previous studies have found preventive care has not proved to be as beneficial as many would hope and especially not for relatively healthy people over a short time window.

The most serious health issue facing non-seniors is acute medical events. One virtue of our health care system is that by law everyone, regardless of insurance, can get acute medical care at places like emergency rooms. For many the big problem is not technically getting care, but paying for it afterwards. The study found Medicaid does an amazing job of addressing this problem. Among people who got Medicaid it “nearly eliminated catastrophic out-of-pocket medical expenditures.”

This study should be a serious warning for the exchange part of Obamacare which will serve a similar group of people. For uninsured non-seniors making too much to qualify for Medicaid the law focused on giving them private insurance with zero preventive cost but with very high out of pocket limits cost and low actuarial value. This means a major part of President Obama’s “universal health insurance” law won’t address the one thing studies have shown health care insurance programs can actually do very well for these types of people, eliminate crippling medical bills. Medical bankruptcy could still be a big problem under Obamacare.

Photo by Mike_tn under Creative Commons license