The Agenda

Revisiting the Politics of the Affordable Care Act

One of the chief rationales for the Affordable Care Act was that while it would expand coverage to tens of millions of Americans, it would reduce the burden of medical expenditures over the long-run. Some of its supporters pointed to the experience of Massachusetts (an idiosyncratic state) as cause for optimism, including Jonathan Gruber in an optimistic 2011 assessment of the possible impacts of the ACA:

A major concern with such a large expansion in access to care is that it will cause congestion on the supply side of the market. Indeed, many have argued that we have a chronic shortage of primary care physicians in the Unite d States and that expanding coverage will only worsen that shortage. This has not been the case in Massachusetts, however. A recent study by the Massachusetts Medical Society found that average wait times for both family and internal medicine were basically flat in the period since the law passed (Massachusetts Medical Society, 2011).

Moreover, this expansion in insurance coverage has been associated with a rise in access to care. The share of the population with a usual source of care, the share with a doctor’s visit in he last 12 months, the share receiving preventive care, and the share receiving dental care all rose significantly from the fall of 2006 to the fall of 2008 (Long and Masi, 2009). Miller (2011) finds a modest reduction in the rate of utilization of emergency care in the state, while the Division of Health Care Finance and Policy (2009) reports a 40% decline in uncompensated care in the first year after reform.

While the Obamacare exchanges have enrolled relatively few people so far, the new Medicaid expansion is greatly increasing the ranks of the insured in the states that have chosen to participate. This is one of the many ways in which the ACA is unfolding differently than the Massachusetts universal coverage effort, as Massachusetts had a relatively small low-income uninsured population at the time its state law was passed. And so it is really important to understand how the Medicaid expansion might impact emergency care utilization, among other things. In theory, Medicaid allows low-income individuals to have a usual source of care, which in turn would tend to reduce utilization of emergency care. But as Sarah Kliff reports, a new study finds that Oregon’s 2008 Medicaid expansion has not resulted in reduced emergency care utilization — rather, it seems to have increased it:

Previous research on the Oregon Medicaid expansion has found that enrolling in the public program increased hospital visits, primary care trips and prescription drug use. That left an unanswered question: Were new Medicaid enrollees going their primary care doctor instead of the emergency department, or, were they using more of all types of health-care services?

This study suggests the latter answer: With financial barriers removed, Medicaid patients see their primary care doctor more — and also go to the emergency department at an increased frequency. Medicaid enrollees made, on average, 1.43 trips to the emergency department during the 18-month study period, compared to an average of 1.02 visits among those who entered the Medicaid lottery but did not gain coverage.

Medicaid coverage also increased the probability of having any visit to the emergency department by 7 percent. The researchers also looked at the types of visits and found no decline in use of the emergency department for primary care treatable conditions among those who had enrolled in Medicaid coverage.

Kliff does an excellent job of covering the implications of the study’s findings, and she quotes Gruber:

Gruber, the MIT economist, doesn’t see the Harvard study as a compelling case against expanding Medicaid. There are still other benefits to insurance coverage, he says, that aren’t about saving public funding. Separate research on the Oregon expansion, published last spring in the New England Journal of Medicine, found Medicaid enrollees to have significantly lower rates of depression and were more able to pay their medical bills.

“The overall notion is we’re getting people more health care,” Gruber says. “There are huge improvements in mental health. For those who want to argue that expanding Medicaid is a free lunch, this is bad. But that was never the right argument.” 

Yet as Kliff makes clear, advocates of Medicaid expansion touted the benefits of reducing emergency care utilization as an important argument in favor of passing the ACA. If the main benefit of Medicaid expansion is that it delivers huge improvements in mental health to its beneficiaries, it seems important to consider whether there are other more cost-effective strategies for yielding huge improvements in mental health, e.g., increasing cash transfers, marriage and relationship education, or targeted public health interventions.

Imagine if the debate over the Affordable Care Act had unfolded as follows — the president stated that in the interests of improving the mental health of low-income uninsured Americans, but not necessarily improving their health along other dimensions, he hoped to pass a large and expensive Medicaid expansion; to address the needs of the medically uninsurable population, he intended to implement a series of new insurance regulations that would, among other things, prompt the cancelation of large numbers of insurance policies serving the individual and small group insurance markets, with the net result being a reduction in the number of Americans with private insurance coverage, despite new subsidies aimed at low- to moderate-income households; and to finance these new initiatives, he’d restrict the growth of Medicare expenditures and he would raise various new taxes. It’s not obvious to me that this bundle would have struck many voters, including Democratic voters, as attractive.