August 21, 2013

Medicaid Expansion, As Proposed In Obamacare, Shows Potential To Improve Health And Decrease Costs When Tested In Wisconsin

Part of the Affordable Care Act, commonly known as Obamacare, provides for the expansion of Medicaid to low-income, childless adults – which through last summer’s Supreme Court decision has been made effectively optional for states. But thanks to a 2009 health care program in Wisconsin which automatically enrolled thousands of uninsured, childless adults into Medicaid, researchers, including a Texas A&M University professor, were able to study the effects of such a program on health care usage, and found it had the potential to improve the health of participants and decrease costs.

Obamacare demonstration

As national debate continues over health care reform, new research shows one aspect of the plan - Medicaid expansion to low-income, childless adults - has the potential to improve health and lower costs.

“I think this study reminds us that among some low-income populations where Medicaid coverage is minimal or nonexistent, the possibility exists that we can really make people better off,” says study co-author Laura Dague, a health economist and professor at Texas A&M’s Bush School of Government and Public Service.

In the study “Wisconsin Experience Indicates That Expanding Public Insurance To Low-Income Childless Adults Has Health Care Impacts,” published in Health Affairs (June 2013), researchers examined a population of 9,619 low-income, childless Wisconsin adults who were automatically enrolled in Medicaid in January 2009.

In the year that followed, the researchers found increases in both emergency room visits and outpatient visits, but a decrease in hospitalizations. Outpatient visits increased by 29 percent and ER visits by 46 percent, according to the study, while inpatient hospitalizations fell 59 percent and preventable hospitalizations dropped 49 percent.

“These results demonstrate that public insurance coverage expansions to childless adults have the potential to improve health and reduce costs by increasing access to outpatient care and reducing hospitalizations,” according to the study.

“What’s special about this is that studies of expanding insurance coverage typically find increases in usage across the board,” Dague explains. “Typically you would think about two effects: a price effect, through which access to insurance lowers the out-of-pocket price of care, leading people to get more care, and a preventive effect, in which getting folks consistent access to care, they can perhaps manage chronic illness better resulting in better health (and hence needing less intensive health care). The price effect almost always dominates. But we show that in certain populations − very low-income, high incidence of chronic illness, adults without dependent children − it’s possible for the preventive effect to dominate.”

Laura Dague

Laura Dague

Dague notes the caveat that the researchers weren’t able to measure health directly, only usage of health-care services.

She says among such populations as were studied in Wisconsin, “it may be possible for expansions to be cost-neutral, or less costly than expected, since hospitalizations are typically the most expensive type of health care.”

The Wisconsin model presented researchers with a unique natural experiment to study the effects of auto enrollment, says the researcher, adding, “It’s hard to find out the effects of insurance for a couple of reasons: first, since enrollment in insurance is typically based on a person’s own choice, people with insurance are different from people who are uninsured, so selection bias is a problem. And second, you don’t typically have good data from when people are uninsured. We had an opportunity to address both of these issues.”

Because enrollment was automatic and not voluntary, “it ensures that the decision doesn’t depend on individual choices, which could cause selection bias,” explains Dague. “We then were able to let each individual person serve as his or her own ‘control group,’ so we could compare a person’s own usage when uninsured to their usage when insured.”

The researcher adds another implication of expanding Medicaid is that additional outpatient capacity will likely be needed. “We found increases in emergency department use, especially in types of visits that potentially could have been served elsewhere, and since the emergency department is a more expensive place to get care than, for example, your doctor’s office, this capacity issue could be very important for costs,” she concludes.

Dague’s co-authors on the study include Thomas DeLeire, Kristen Voskuil and Donna Friedsam, University of Wisconsin-Madison; and Lindsey Leininger, University of Illinois-Chicago.

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About Research at Texas A&M University: As one of the world’s leading research institutions, Texas A&M is in the vanguard in making significant contributions to the storehouse of knowledge, including that of science and technology. Research conducted at Texas A&M represents total annual expenditures of more than $776 million. That research creates new knowledge that provides basic, fundamental and applied contributions resulting in many cases in economic benefits to the state, nation and world.

Media contact: Lesley Henton, Division of Marketing & Communications at Texas A&M University; 979-845-5591, lshenton@tamu.edu

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1 Comment to Medicaid Expansion, As Proposed In Obamacare, Shows Potential To Improve Health And Decrease Costs When Tested In Wisconsin

  1. Positive outcomes are possible with the Affordable Care Act. The country deserves a chance to help reign in medical costs.

  2. Pat King on August 26th, 2013
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