Medicaid Increases Emergency-Department Use: Evidence from Oregon’s Health Insurance Experiment

By Sarah L. Taubman, Heidi L. Allen, Bill J. Wright, Katherine Baicker, Amy N. Finkelstein

Science, Published Online January 2, 2014

Abstract

In 2008, Oregon initiated a limited expansion of a Medicaid program for uninsured, low-income adults, drawing names from a waiting list by lottery. This lottery created a rare opportunity to study the effects of Medicaid coverage using a randomized controlled design. Using the randomization provided by the lottery and emergency-department records from Portland-area hospitals, we study the emergency-department use of about 25,000 lottery participants over approximately 18 months after the lottery. We find that Medicaid coverage significantly increases overall emergency use by 0.41 visits per person, or 40 percent relative to an average of 1.02 visits per person in the control group. We find 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.

From the Discussion

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 balancing the costs and benefits of expanding Medicaid.

http://www.sciencemag.org/content/early/2014/01/02/science.1246183

How Obamacare will change the emergency room

By Dan Gorenstein

Marketplace, January 2, 2014

And the report already has pundits worked up, especially with 9 million Americans projected to newly sign up for Medicaid this year under the Affordable Care Act.

The reason this is so hot – at least politically – is because the report over turns conventional healthcare thinking. Harvard health economist Amitabh Chandra describes the theory.

“If we insure the uninsured, they are not going to use the emergency room and they are going to use less healthcare. So in the long run, insuring the uninsured saves us money,” says Chandra.

Affordable Care Act advocates have used this argument to say insurance should be expanded.

There’s just one thing: that’s not what happens.

“Its basic economics that I would teach my students,” says MIT economist Amy Finkelstein – one of the report’s authors.

“When you lower the price of something, people buy more of it,” says Finkelstein. “That’s true of apples and bananas and it turns out it’s true of healthcare too.”

Co-author Katherine Baicker says… “That doesn’t mean that it’s inefficient, good or bad. It just means that insurance makes healthcare more affordable, and that has both financial consequences and health consequences.”

Perhaps most important, Harvard’s Amitabh Chandra says when it comes to money, this isn’t where the action is.

“The spending is not in the emergency room. The spending is on high cost patients. These are cancer patients. Many of them in the end of life,” he says.

Chandra says it would be easy to use this report and argue that the Affordable Care Act is too costly.

He says the big question – the tough question – is how to limit the care everyone agrees is inefficient and expensive, regardless of who gets it or where that care is received.

http://www.marketplace.org/topics/health-care/how-obamacare-will-change-…

New Oregon Data: Expanding Medicaid Increases Usage Of Emergency Rooms, Undermining Central Rationale For Obamacare

By Avik Roy

Forbes, January 2, 2014

(The authors) found that those on Medicaid used the emergency room 40 percent more than the uninsured did—1.43 ER visits per Medicaid enrollee, as against 1.02 for the uninsured. More to the point, a majority of the emergency room visits were unnecessary, because they involved conditions that could easily have been managed outside of the ER.

Because Medicaid was nearly free to the program’s enrollees, those enrollees ended up seeking—and receiving—lots of inappropriate care. That led to massive cost overruns that, even today, are bankrupting state governments. The one thing they have been able to do is pay doctors and hospitals less and less to provide the same care.

That trend, in turn, has led many doctors to stop accepting new Medicaid patients. So it’s extremely difficult for Medicaid enrollees to get appointments with primary care physicians. They have to spend weeks on the phone to find someone who will treat them.

Put yourself in the shoes of that Medicaid enrollee. Why would you bother calling primary care docs all day and all week, if you can go to the emergency room and get the same care for the same price? So that’s what Medicaid patients do.

Many hospitals say that they lose money on every Medicaid patient they see. But somehow, if we have more Medicaid patients, taxpayers will be better off?

It was bunk in 2009, and it’s bunk today. It’s why the states that have chosen to forego Obamacare’s Medicaid expansion were wise to do so

http://www.forbes.com/sites/theapothecary/2014/01/02/new-oregon-data-exp…

National Study of Health Insurance Type and Reasons for Emergency Department Use

By Roberta Capp MD, MHS, Sean P. Rooks BA, Jennifer L. Wiler MD, MBA, Richard D. Zane MD, Adit A. Ginde MD, MPH

Journal of General Internal Medicine, December 2013

Objective

We evaluated the association between health insurance type and self-perceived acuity or access issues among individuals discharged from the ED.

Key Results

Overall, 65.0 % of adults reported ≥ 1 acuity issue and 78.9 % reported ≥ 1 access issue. Among those who reported no acuity issue leading to the most recent ED visit, 84.2 % reported ≥ 1 access issue. Relative to those with private insurance, adults with Medicaid (OR 1.05) and those with Medicare (OR 0.98) were similarly likely to seek ED care due to an acuity issue. Adults with Medicaid (OR 1.50) and Medicaid + Medicare (dual eligible) (OR 1.94) were more likely than those with private insurance to seek ED care for access issues.

Conclusion

Variability in reasons for seeking ED care among discharged patients by health insurance type may be driven more by lack of access to alternate care, rather than by differences in patient-perceived acuity. Policymakers should focus on increasing access to alternate sites of care, particularly for Medicaid beneficiaries, as well as strategies to increase care coordination that involve ED patients and providers.

http://link.springer.com/article/10.1007/s11606-013-2734-4

There has been extensive media coverage of this new study which confirms that uninsured individuals who become covered under the Medicaid program will increase their use of Emergency Department (ED) services. Is this good or bad? Conservative physician/columnist Avik Roy writes, “It’s why the states that have chosen to forego Obamacare’s Medicaid expansion were wise to do so.” Really? Let’s try to make some sense of this.

Medicaid patients have learned that access to care is impaired because far too many physicians refuse to accept patients who are on this program. Patients have also learned that they will be seen when they present themselves to the ED, and that they won’t have to pay for the care because of their Medicaid coverage. Even Avik Roy concedes that.

The study by Roberta Capp et al shows that all patients, including Medicaid patients, who perceive the acuity of their condition to warrant ED services will go to the ED for care. Yet Medicaid patients who have impaired access will also use the ED simply because of the access issues. This applies as well to dual eligible patients who have both Medicare and Medicaid, indicating that Medicare patients stigmatized with Medicaid will also have impaired access, except in the ED.

Clearly, the problem is with inadequate access to primary care within the community, largely because of the refusal of too many physicians to accept Medicaid as a payment source.

What does this greater use of EDs do to health care costs? Harvard’s Amitabh Chandra says, “The spending is not in the emergency room. The spending is on high cost patients.” Although many state that ED costs are too high to warrant providing ED care for these patients that should have been served by primary care professionals within the community, in fact it is only the ED prices that are high, and Medicaid doesn’t pay those high prices anyway. The actual marginal costs for taking care of these low acuity patients are almost negligible.

There are some obvious solutions to this problem. The most important is to establish a single payer system so that patients are not sorted out by their payment source. Along with that it is crucial to reinforce the primary care infrastructure so that access is always available. For night and weekend hours, the ED could serve a triage function with primary care services being provided as a community service. If that would overload the ED staff, the community physicians could rotate weekend and night call to back up the ED staff for these lower acuity problems. Also, free standing 24 hour clinics could be established, though in most communities a triage function in the ED would be more appropriate.

What we don’t need is more blaming the victims – condemning Medicaid patients who “overuse” EDs, when they are simply trying to access care that they should have. We also need physicians with a heart, but, unfortunately, medical schools don’t seem to include that requirement amongst their admissions criteria.

Medicare’s Rollout vs. Obamacare’s Glitches Brew

By David Himmelstein and Steffie Woolhandler
Health Affairs Blog, January 2, 2014

The smooth and inexpensive rollout of Medicare on July 1, 1966 provides a sharp contrast to the costly chaos of Obamacare.

We won’t rehearse the chaos part here, just the costs.

As of March, 2013, federal grants for Obamacare’s state exchanges totaled $3.8 billion.  Spending for the federal exchange is harder to pin down because funding has come from multiple accounts, including: the $1 billion Health Insurance Implementation Fund; DHHS’ General Departmental Management Account and General Departmental Management Account; CMS’s Program Management Account and the Prevention and Public Health Fund.  CMS estimates fiscal 2014 spending for the federally-operated exchanges at $2 billion.  So it’s safe to say that the costs of getting the exchanges up and running, and (hopefully) enrolling 7 million people in the program’s first year will exceed $6 billion.

Bear in mind that the exchanges won’t actually pay any medical bills, just sign people up for coverage.  So billions more in overhead costs will show up on the books of the private insurers and state Medicaid programs that will actually process medical claims.

Back in 1966, Medicare started paying bills for 18.9 million seniors (99 percent of those eligible for coverage) just 11 months after Pres. Johnson signed it into law.  Overhead costs for the first year totaled $120 million (equivalent to $867 million in 2013).  But that figure includes the cost of processing medical bills, not just the enrollment costs

Moreover, Medicare and Medicaid (which was passed at the same time) displaced several smaller federal health assistance programs, saving about $376 million on their overhead costs (2013 dollars).

Signing up most of the elderly for Medicare was simple; they were already known to Social Security Administration, which handled enrollment.  To find the rest, the feds sent out mailings to seniors, held local meetings, and asked postal workers, forest rangers and agricultural representatives to help contact people in remote areas.  The Office for Economic Opportunity spent $14.5 million to hire 5,000 low income seniors who went door-to-door in their neighborhoods.

Despite predictions of chaos, and worries that the newly-insured seniors would flood the health care system, there were few bottlenecks.  Hospitals continued to operate smoothly and no waiting lists materialized.  The only real “glitch” was that many hospitals in the Deep South initially refused to integrate their facilities – which Medicare required for certification and payment.  But by the end of the first month, 99.5 percent of hospitals had signed on.

Obamacare’s start-up has been rocky because complexity is “baked in” to the design, just as simplicity was “baked in” to Medicare.  Obamacare’s exchanges must coordinate thousands of different plans, with premiums, co-payments, deductibles and provider networks that vary county-by-county; Medicare offered a single, uniform plan.  The exchanges must calculate subsidies for each applicant after first verifying income, family size and immigration status; Medicare offered free hospital coverage, with a minimal ($22) uniform premium for doctor coverage.  Instead of setting up a new bureaucracy to collect premiums from millions of enrollees and funnel them to private insurers, Medicare relied on the existing payroll and income tax system to garner funds.

Obamacare’s byzantine complexity reflects the contortions required to simultaneously expand coverage and appease private insurers.  And private insurers will exact a steep ongoing toll.  Medicare’s overhead is just 2 percent, vs. an average of 13 percent for private plans (on top of the Exchanges’ costs, roughly 3 percent of premiums).  A single payer plan that excluded private insurers could save hundreds of billions in transaction costs.

Medical quality improvement experts often advise hospitals to “avoid workarounds”; fix system defects rather than force doctors and nurses to sidestep problems like faulty equipment, understaffing, or illegible handwritings.  This advice is equally valid for health reform.  To avoid glitches and wasteful expense, design the system right; eliminate private insurers and cover everyone under a single payer program.

http://healthaffairs.org/blog/2014/01/02/medicares-rollout-vs-obamacares-glitches-brew/

PNHP’s press release: https://www.pnhp.org/news/2014/january/medicare%E2%80%99s-1966-glitch-free-rollout-a-sharp-contrast-with-obamacare-health-affairs

Comment:

From PNHP’s press release:

“Obamacare is a giant workaround crafted to keep private insurers at the center of the health care system,” said co-author Dr. David Himmelstein, a primary care physician, professor of public health at the City University of New York and lecturer in medicine at Harvard Medical School.

“The simple single-payer, Medicare-for-all approach would save more than $400 billion annually on bureaucracy, enough to give every American first-dollar coverage. But to get those savings you have to break private insurers’ stranglehold on health care and on Washington,” he said, adding, “The glitches in Obamacare’s rollout don’t come from government incompetence, but from political cowardice.”

The Impact of the Coverage Gap in States not Expanding Medicaid by Race and Ethnicity

Kaiser Family Foundation, December 17, 2013 Medicaid eligibility for adults is very limited. Many states limit Medicaid eligibility for parents to below poverty, and adults without dependent children have historically been excluded from the program. The ACA’s Medicaid expansion to adults with incomes at or below 138% FPL would significantly increase eligibility for parents in many states and end the exclusion of adults without dependent children from the program. The expansion was intended to occur nationwide as of January 2014 and serve as the base of coverage for low-income individuals, with premium tax credits available to moderate-income individuals above Medicaid limits to purchase Marketplace coverage. However, as a result of the Supreme Court decision on the ACA, implementation of the Medicaid expansion is now effectively a state choice. As of December 11, 2013, 26 states, including DC, are moving forward with the Medicaid expansion in 2014, while 25 states are not moving forward at this time. In states that do not expand Medicaid, nearly five million poor uninsured adults will fall into a “coverage gap.” These individuals would have been eligible for Medicaid if their state had chosen to expand coverage. In the absence of the expansion, they remain ineligible for Medicaid and do not earn enough to qualify for premium tax credits to purchase Marketplace coverage, which begin at 100% FPL. Most of these individuals have very limited coverage options and are likely to remain uninsured. These continued coverage gaps will likely lead to widening racial and ethnic as well as geographic disparities in coverage and access. Table 1: Nonelderly Poor Uninsured Adults in the Coverage Gap in States Not Expanding Medicaid by Race/Ethnicity Total, United States 4,832,000  –  All races/Ethnicities
2,248,000  –  White
1,327,000  –  Black
  992,000  –  Hispanic
  265,000  –  Other
2,584,000  –  People of Color http://kff.org/disparities-policy/issue-brief/the-impact-of-the-coverage-gap-in-states-not-expanding-medicaid-by-race-and-ethnicity/

Comment

By Don McCanne, M.D. Since it was decided to reject reform that would have been truly universal, you would think that at least we would be covering the most vulnerable segments of our population. But no, half of our states rejected federal funding for Medicaid expansion, leaving almost 5 million otherwise qualified individuals out of the Medicaid program, even though their incomes ironically are too low to qualify them for subsidies to purchase plans in the state insurance exchanges. Over half of these people left out are people of color, resulting in a widening of the unjust disparities in care already plaguing our nation. What a terrible way to start the first year of what is essentially the full implementation of the Affordable Care Act. It seems pretty obvious what our New Year’s resolution should be: Let’s bring health care to everyone through an improved and expanded Medicare for all.

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10 Questions: Eric Matteson, MD

By Nancy Walsh
MedPage Today, December 27, 2013 Eric L. Matteson, MD, of the Mayo Clinic, is the chair of rheumatology and professor of medicine.

1. What’s the biggest barrier to your practicing medicine today? Without a doubt, it is lack of access for many patients, especially the un- and underinsured.

2. What is your most vivid memory involving a patient who could not afford to pay for healthcare (or meds, tests, etc.) and how did you respond? I have a young woman with severe erosive RA who has limited mental ability who works 20 hours a week in a rural recycling center at a minimum wage job sorting recyclables. I see her in another state at a small clinic that’s 80 miles away. She has only Medicaid. She is able to afford methotrexate and hydroxychloroquine. We accept losses with the cost of monitoring, and also for the orthopedic surgeries she has required and she cannot afford. I have sought drug and assistance from every company with biologics on the market, some on more than one occasion, and to date have been turned down by all of them. She is not able to even afford gas, or the time off, to come to our center to participate in drug studies.

4. If you could change or eliminate something about the healthcare system, what would it be? I would have a tax-supported universal healthcare for at least minimum services. http://www.medpagetoday.com/Rheumatology/Arthritis/43597

Comment

By Don McCanne, M.D. Mayo Clinic’s Eric Matteson is yet another prominent physician who supports “tax-supported universal healthcare,” though he qualifies that with “for at least minimum services.” From his example, it seems that he would include most of his field of rheumatology as “minimal services,” though others might say “all essential services.” Nevertheless, there continues to be an increase in those who now are willing to speak out on the need for a publicly-financed health care system that covers everyone. There is a growing consensus that financial barriers to care need to be removed.

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