Health Policy

How Can Patients on Medicaid Possibly Be Worse Off than Those Who Don’t Have Insurance?

“Extraordinary claims require extraordinary evidence,” said Carl Sagan.

The claim that health insurance improves health outcomes is hardly ground breaking. Studying whether insurance affects health status is like wondering whether three meals a day lead to a higher muscle mass than total starvation.

Well that’s what I thought. Until I read the study on Oregon’s Medicaid program by Baicker and colleagues in the NEJM earlier this year and, more recently, Avik Roy’s short treatise “How Medicaid Fails the Poor”.

Baicker et al found that Medicaid enrollees fared no better in terms of health outcomes than those without insurance. That is, no insurance no difference.

The study is an exemplar of policy research laced with regression equations, control of known confounders and clear separation of variables. There is only so much rigor social science can achieve compared to the physical sciences. Yet this is about as good a study as is possible.

The one thing the study did not lack was sample size. It’s useful to bear in mind sample size. Large effects do not need a large sample size to show statistical significance. Conversely, if study with a large sample size does not show even a modest effect, it means that the effect probably does not exist.

There are several interpretations of the Medicaid study, interpretations inevitably shaped by one’s political inclination. The ever consistent Paul Krugman, consistent in his Samsonian defense of government programs against philistines and pagans, extolled critics of Medicaid as “nuts” and asked, presumably rhetorically, “Medicaid is cheaper than private insurance. So where is the downside?”

Unlike Krugman I am not a Nobel laureate and am about as likely to win a Nobel Prize as I am of playing the next James Bond, so it’s possible that I am missing something blatantly obvious.  Could the downside of a government program paying physicians, on average 52 cents, and as low as 29 cents, for every dollar paid by private insurance in a multiple payer system be access?

Indeed, it’s darn impossible for patients on Medicaid to see a new physician.  As Avik Roy explains “…massive fallacy at the heart of Medicaid….It’s the idea that health insurance equals healthcare”.

But wait. It gets better.

I am accustomed to US healthcare throwing more plot twisters than Hercule Poirot’s sleuth work. But one I least expected was that patients on Medicaid do worse than patients with no insurance (risk-adjusted, almost). I am not going to be that remorseless logician, which John Maynard Keynes warned us about, who starting with one mistake can end up in Bedlam, and argue that if you are for Medicaid that is morally equivalent to sanctioning mass murder. Rather, I ask how it is possible that possessing Medicaid makes you worse off than no insurance whatsoever.

To some extent this may artifactually appear so because poverty correlates with ill health, and studies that show Medicaid patients faring worse than uninsured, cannot totally control for social determinants of health.

However, I found a plausible explanation during a recent conversation with a physician specializing in physical medicine and rehabilitation (PMR). She ran a special clinic one day a week in which she saw adolescents for free. These kids had no insurance. They were mainly from the local Hispanic and African American communities.

She did not accept Medicaid patients. This point is worth parsing out again. This doctor is happy to see patients uncompensated but not Medicaid patients, partially compensated.

Why so, I asked, bewildered and feeling that I must be in Bedlam.

The physician explained that the transaction costs in billing Medicaid are so high, that it’s not worth the tiny return. Plus one is exposed to unintentional billing fraud, audits, compliance and perpetual war with formularies and pharmacies. She ran her practice as a small business and kept her support staff to a minimum; she simply could not afford the legal and coding help that this would entail.

Ahh, I asked with that “gotcha” feeling, why could she not see Medicaid patients for free on the clinic day that she sees other youngsters uncompensated.

She explained that if she saw all Medicaid patients for free she would technically be committing fraud. Unless she made a nuanced determination to waive fees on an individual basis. At any rate it would unduly burden her, and it was a good deed that best remained unpunished.

Again this is worth parsing out because this is so mind-boggling. Seeing all patients on Medicaid for free is fraud! That’s what this physician believed and what I am told many physicians believe.

I am a simpleton. When I hear “fraud” I think of Madoff, Ceausescu and saying you were given the wrong beer after finishing two-thirds of the bottle at a restaurant. I also understand that after attending law school one’s tryst with simplicity ends forever.

Even though this is probably an exaggerated application and interpretation of the Anti-Kickback Statue, it is difficult to resist the urge to violently shake the framers of Medicaid statutes and yell “what on earth were you thinking, sir and madam?”

Medicaid is a prickly issue. It polarizes. The left sees any attack on Medicaid’s effectiveness by the right as an excuse to throw the program out and replace with nothing. This is plainly shooting the messenger, sometimes. The Pavlovian reaction is understandable as some on the right see in Medicaid scientific vindication of their anti-welfare stance.

But if an individual loses 30 pounds despite a complete diet inquiring about the underlying problem, whether there is a malignancy or not, does not challenge the value of eating.

How utterly incurious must one be to not wonder after the Oregon experiment and several other studies, why? How can you possibly not at the very least inquire whether Medicaid is a structurally sound program?

Roy’s opinions are a little to the right in health policy. But he accepts as do many on the right that the poor should not be thrown under the bus. On Medicaid, the left and right are in that rare agreement.

The mark of a civilized society is how it deals with the poor who are sick. An intelligent society distinguishes itself from an ideological one by acknowledging that the system in which the poor remain sick needs restructuring.

A Manichean view would regard rapacious capitalism as the cause of all ills. But rules and regulations of leviathanic proportion hurt. And we would shock even Mr. Limbkins if we asked for “More” of the same.

Saurabh Jha, MD (@RogueRad) is an Assistant Professor of Radiology at the University of Pennsylvania. His scholarly interests include the value of imaging and dealing with uncertainty in clinical decision making. Jha views most problems in medicine as problems of imperfect information. He trained in the UK and migrated to USA for more predictable weather and a larger yard.