According to a study of the Medicaid expansion in Oregon—which offers particularly fertile ground for research because new Medicaid participants were selected randomly from among those eligible—giving people Medicaid increases ER use, rather than decreasing it as Obama and the Obamacare proponents and so many others had predicted.
Why on earth would this be any sort of surprise? I know, I know: the idea was that people only go to the ER because the law requires them to be treated there and they have no alternatives; if they were covered for doctor visits, the argument went, they would prefer that alternative. But what the study found was that people who were covered by Medicaid used both resources more, which makes perfect sense because, as Megan McArdle points out, “as the basic laws of economics tell us, when you reduce the price of something, people usually want to consume more of it.”
Not only are they consuming ER visits at a faster clip, but they are consuming them more for lesser ills rather than greater ones. McArdle wrote “reduce the price,” but unless I’m mistaken, Medicaid doesn’t just reduce the price, it eliminates it for the recipient. Any health care system involving no payments at all must do one of two things to keep cost and usage down: ration care, and/or start requiring co-pays of some sort.
Those who theorized otherwise were either just saying what they needed to say to pass the law, or truly believed that people would act in ways that they considered “rational” and reduce their ER use, preferring doctor visits and preventive care. But there’s nothing in the current Medicaid system (at least, not so far as I know) that incentivizes doctor visits over ER visits. In fact, I can think of a couple of things that do the opposite: it may be hard to get a doctor to accept Medicaid at all, and even if he/she does accept it there’s usually a wait to get an appointment, whereas an ER may make you wait a few hours but they will see you that day.
What’s even more important is a fact that’s become sort of lost in the shuffle, but which first came out last May in another study of the Oregon Medicaid situation (I wrote about it here), and that is the fact that the Medicaid expansion didn’t improve the new recipients’ health, either, in terms of basic markers such as blood pressure and cholesterol. McArdle points this out, too, “Only two large-scale random tests have ever been done on health insurance, and both have come back with the same surprising result: giving people Medicaid, or more generous health insurance, doesn’t seem to significantly improve clinical measures of good health.”
I would view it as part of a broader set of evidence that covering people with health insurance doesn’t save money…That was sometimes a misleading motivator for the Affordable Care Act. The law isn’t designed to save money. It’s designed to improve health, and that’s going to cost money.
I don’t know whether Gruber himself was originally citing that “misleading motivator” of cost-saving back in the build-up to the passage of Obamacare, but I do recall—despite Gruber’s use of the passive voice in the quote above—that Obama and the Democrats were certainly touting cost-saving. But Gruber’s emphasis on “improving health” is probably a “misleading motivator” as well. As I wrote back in May, Obamacare might just be “making a show of the fact that we ‘care’ without really helping anyone”—and doing so at great cost to the middle class and above.