Last week, Gov. Martin O'Malley's administration announced that it had exceeded its goal for enrolling low-income Marylanders in the Medicaid program as part of the health insurance expansion under the Affordable Care Act. In addition to improving the health and well being of 111,000 people who have gotten coverage under the Medicaid expansion, state officials hope the expanded coverage will ultimately help reduce health care costs as the previously uninsured get access to primary care and thus have to rely less on catastrophic care, such as emergency room visits.
But a new study published in this week's issue of the journal Science reported evidence suggesting that expanding Medicaid could lead to a huge increase in emergency room use. Researchers studied the effects of a 2008 Medicaid expansion in Oregon in which those allowed to enroll were selected by a lottery, providing a rare opportunity in health services research to compare those who received coverage with a control group. What they found was that in the first 18 months after the expansion, emergency room visits increased by about 40 percent among those who got coverage compared to those who didn't.
This finding may come as something of an unpleasant surprise to the backers of the Affordable Care Act and the expansion of insurance coverage generally, but it shouldn't. For one thing, primary care doctors can't necessarily get a patient's diabetes or hypertension under control immediately; it may well take more than 18 months for the potential benefits to be felt. But more fundamentally, Medicare may put primary care within reach for the previously uninsured, but it also means an emergency room visit is no longer financially ruinous, and the switch from relying on one mode of care to another is not immediate or automatic. Some degree of a culture shift is needed, and that takes time and effort. Realizing the hoped-for savings from the Medicaid expansion will require not only education and outreach but also a much greater degree of coordination of care than the American health care system typically offers.
Fortunately, another experiment taking place in Maryland makes this state uniquely poised to provide just that. Maryland is awaiting final approval from the Center for Medicare and Medicaid Services to embark on a new system for compensating hospitals in the state. Maryland is promising the federal government that it will keep overall hospital cost growth to below the growth rate of the state's economy or risk losing billions in Medicare payments. The way it plans to do that is by paying hospitals a set amount to cover the patient populations they serve, regardless of how much care they provide. Instead of making money when a new patient walks into the emergency department, a hospital would instead effectively lose money.
If and when the new system goes into effect, hospitals will have a financial incentive to help steer patients toward more effective, less intensive and less costly care. The only way that will be possible is if they invest in better systems to track patients and follow up to make sure they are not readmitted to the hospital for treatment of the same problem over again. It will require new methods to coordinate with primary care physicians and with facilities like skilled nursing centers. The transition to this new paradigm may be bumpy, but it will finally align some of the major financial incentives in the health care system with what we know to be the best and most cost-effective ways to keep people healthy.
It's also important to note that the researchers who published this week's paper in Science found a wide variety of other benefits from Medicaid expansion. People who gained coverage in Oregon were 25 percent more likely to report that they were in excellent health, and they were 30 percent less likely to show signs of depression. They were also 25 percent less likely to have an unpaid medical bill sent to a collection agency and 50 percent less likely to have to borrow money or skip paying other bills because of medical expenses. Those changes may not immediately show up in the tally of the state's health care costs, but over the long run, their effects on the economy and society generally are incalculable.
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