Limited Benefits, Massive Costs of Medicaid Expansion in Oregon

Posted on December 28, 2011 by


h/t Eric Fruits for bringing our attention to this post.

The National Bureau of Economic Research (NBER) has recently conducted a study of the costs of the 2008 expansion of Oregon’s Medicaid program that added 10,000 new, previously disqualified low-income adults to the program. The offering was so popular (90,000 applications for 10,000 spots) that Oregon instituted the first ever lottery system to award enrollments.

The study, as reported by The Heartland Institute, showed very stark realities about the program:

Expanding Medicaid coverage to low-income individuals results in better reported health and greater financial well-being, but also higher costs and greater utilization of care, according to a new study by researchers from the National Bureau of Economic Research and the Oregon Health Study Group.

The article goes into great depth and quotes several Oregon experts on the costs and effects of the expansion of the program. Suffice it to say that healthcare usage greatly expanded (by up to 25%); the Medicaid expansion created a plan that is a placebo that does not significantly increase access to health care; negligible reductions in ER visits were seen (a driver of cost increases); and perhaps most importantly, a false sense of heightened patient demand was created to justify the actions of the politicians, where the evidence didn’t support the claim.

If that weren’t enough, advocates of a national universal healthcare plan will also be disappointed.

Dr. Roger Stark, a physician and health care policy analyst at the Washington Policy Center, said it is totally unreasonable to compare the Oregon experience with ObamaCare.

“The Oregon experience is essentially not transferable to any other situation. Oregon had a fixed amount of money, estimated the number of people they could cover, and then limited enrollment in the program via a lottery. In other words, the state did not have enough money to cover all eligible people, but they did have enough money to influence outcomes for those lucky enough to be enrolled,” he said.

“The country does not have an unlimited supply of money, providers, hospitals, etc., to cover all people in the same fashion as Oregon,” said Stark.

So despite all of the evidence that the beneficial effects are illusory at best, Oregon Health Plan has inexplicably been held out as a model for universal health care for other states.

Will the myth of universal healthcare ever lose its romantic hold on politicians?