The Benefits of Medicaid

| Thu Jul. 7, 2011 10:45 AM EDT

When education researchers study charter schools, the gold standard is to compare kids who won a lottery to get in with kids who lost the lottery. That way you can be pretty sure that the kids themselves are pretty similar, and any differences are really, truly due to the school itself.

It would be nice to do the same thing for healthcare, but that's a dicier matter. What are you going to do, hold a lottery and give only the winners medical coverage? Of course not. Unless you're Oregon, which in 2008 decided to expand Medicaid but didn't have enough money to expand it to everyone who wanted it. So they held a lottery, and the lucky winners received Medicaid coverage.

Reearchers have now completed a study comparing the winners to the losers, and Jon Cohn reports on the results: on the positive side, winners got more health care and reported better health outcomes. On the negative side, emergency room use didn't go down and overall spending increased. And then there was this:

But the study demonstrates clearly, and persuasively, a different benefit of Medicaid: It provides beneficiaries with economic security. The Medicaid population was 40 percent less likely to borrow money or avoid paying other bills because of high medical expenses. The likelihood that unpaid medical bills ended up with a collection agency was also 25 percent lower. Not coincidentally, people on Medicaid were 55 percent more likely to report having a doctor they see regularly and 70 percent more likely to report they had an office or clinic for care.

I think both sides sometimes go overboard on Medicaid. Reformers often claim that overall costs will go down if you insure everyone because providing health coverage makes people healthier. Maybe, but I think there's little evidence of this. The fact is that if you add people to the Medicaid rolls, we're going to have to pay for it. Conversely, opponents of Medicaid like to claim that it doesn't actually improve outcomes. But this is true only if you look narrowly at things like life expectancies. You may not live much longer if you have health coverage, but guess what? Your life is going to be a lot better. You're less likely to lose your teeth, less likely to be in pain, less likely to be incapacitated with chronic illness, and more likely to receive treatments that demonstrably improve your quality of life. That's well worth it, even if you still end up dying at age 74.6.

And the economic peace of mind that even a modest program like Medicaid provides? That's yet another bonus. It's the least — literally the least — that a rich country can provide for its poorest residents.