The debate over Medicaid expansion in Virginia just got more complicated… again. A new study found that 10,000 new low-income Medicaid recipients in Oregon visited emergency rooms 40% more often than those without insurance, reports the Wall Street Journal. The finding undercuts claims that expanding the program would save money as low-income patients utilized primary care doctors instead of expensive ER services.
The new Medicaid recipients used ERs more often for all kinds of health issues, including problems that could have been treated in doctors’ offices during business hours, the WSJ writes. Using $435 as the average cost of an ER visit, researchers calculated that Medicaid increased annual ER spending by $120 per covered person.
Oregon extended the Medicaid program to 10,000 residents selected by lottery in 2008, providing, in effect, a controlled experiment showing the effects of Medicaid coverage. A separate study found that while new Medicaid patients spent less money out-of-pocket for care and reported improved health, they showed no improvement in such measures as blood pressure, blood sugar or cholesterol levels.
“It may be that some people did substitute the physician’s office for the ER, but there wasn’t enough of that to offset the increase in ER use,” said Katherine Baicker, an economist at the Harvard School of Public Health, a … principal investigator of the project. She said the data from all their research to date suggest that extending Medicaid to the uninsured increases health-care costs between 25% and 35% per person.
One still can argue that expanding Medicaid in Virginia is fiscally prudent, even if total health care spending goes up, because the federal government will pay 100% of the added expense for four years and 90% after that. But it will be impossible to maintain, as some did, that overall costs will go down.
It was unclear from the WSJ reporting of the study what impact a statewide expansion of Medicaid in Virginia might have on the state’s health care system. However, based on the Oregon experience, it seems reasonable to conclude that adding an estimated 200,000 patients to Medicaid in Virginia would create a surge in demand for hospital ER services. On the positive side, hospitals would get reimbursed for those services; typically, they write off much of the cost of care for the near-poor targeted by Medicaid expansion. On the downside, ERs could become overloaded and the quality of service could deteriorate for all ER patients.