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Tag: Oregon Medicaid Experiment

Stop the War on the Emergency Room!!! (Fix the System Failure)

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There’s a war being waged on one of America’s most revered institutions, the Emergency Room. The ER, or Emergency Department (ED for the sake of this post) has been the subject of at least a dozen primetime TV shows.

What’s not to love about a place where both Doogie Houser and George Clooney worked?

Every new parent in the world knows three different ways to get to the closest ED. It’s the place we all know we can go, no matter what, when we are feeling our worst. And yet, we’re not supposed to go there. Unless we are. But you know, don’t really go.

Somehow, we’ve turned the ED into this sacrosanct place where arriving by ambulance is ok, and all others are deemed worthy based on their insurance rather than acuity. If you think I’m wrong, ask any ED director if they want to lose 25% of their Blue Cross Blue Shield volume.

But its true. I hear ED physicians openly express disappointment in people who came into the ED and shouldn’t have.

It’s just a stomach bug, you shouldn’t be here for this… Or, it’s not my job to fill your prescriptions…

Some history

The Emergency Department is a fairly modern invention. The first EDs were born of two separate, though similar, aims. At Johns Hopkins, the ED began as the accident room, place where physicians could assess and treat —wait for it —minor accidents.

Elsewhere, in Pontiac Michigan and Northern Virginia early EDs were modeled after army M.A.S.H. field hospitals. They were serving more acute needs.

Today, billing for emergency department visits is done on the E&M Levels where level 1 is the least acute (think removing a splinter) and level 6 is traumatic life saving measures requiring hospitalization (think very bad car wreck). Most EDs, and CMS auditors, look for a bell curve distribution, which means there are more level 3 and 4 incidents than most others. While coding is unfortunately subjective, solid examples of level 3 visits include stomach bugs requiring IV fluids, a cut requiring stitches, and treatment of a migraine headache.

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Will the Uninsured Become Healthier Once They Receive Health Care Coverage?

David OrentlicherThe Affordable Care Act might not bend the cost curve or improve the quality of health care, but it will save thousands of lives, as millions of uninsured persons receive the health care they need.

At least that’s the conventional wisdom.

But while observers assume that ACA will improve the health of the uninsured, the link between health insurance and health is not as clear as one may think. Partly because other factors have a bigger impact on health than does health care and partly because the uninsured can rely on the health care safety net, ACA’s impact on the health of the previously uninsured may be less than expected.

To be sure, the insured are healthier than the uninsured. According to one study, the uninsured have a mortality rate 40% higher than that of the insured. However, there are other differences between the insured and the uninsured besides their insurance status, including education, wealth, and other measures of socioeconomic status.

How much does health insurance improve the health of the uninsured? The empirical literature sends a mixed message. On one hand is an important Medicaid study. Researchers compared three states that had expanded their Medicaid programs to include childless adults with neighboring states that were similar demographically but had not undertaken similar expansions of their Medicaid programs.

In the aggregate, the states with the expansions saw significant reductions in mortality rates compared to the neighboring states.

On the other hand is another important Medicaid study. After Oregon added a limited number of slots to its Medicaid program and assigned the new slots by lottery, it effectively created a randomized controlled study of the benefits of Medicaid coverage. When researchers analyzed data from the first two years of the expansion, they found that the coverage resulted in greater utilization of the health care system.

However, coverage did not lead to a reduction in levels of hypertension, high cholesterol or diabetes.

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The Oregon Experiment Revisited

It has been a couple of weeks since the landmark Oregon Experiment paper came out, and the buzz around it has subsided.  So what now?  First, with passage of time, I think it is worth reflecting on what worked in Oregon.  Second, we should take a step back, and recognize that what Oregon really exposed is that health insurance is a small part of a much bigger story about health in general.  This bigger story is one we can’t continue to ignore.

So let’s talk quickly about what worked in Oregon.  Health insurance, when properly framed as insurance (i.e. protection against high, unpredictable costs) works because it protects people from financial catastrophe.  The notion that Americans go bankrupt because they get cancer is awful and inexcusable, and it should not happen. We are a better, more generous country than that.  We should ensure that everyone has access to insurance that protects against financial catastrophe.  Whether we want the government (i.e. Medicaid, Medicare) or private companies to administer that insurance is a debate worth having.  Insurance works for cars and homes, and the Oregon experiment makes it clear that insurance works in healthcare.  No surprise.

The far more interesting lesson from Oregon is that we should not oversell the value of health insurance to improving people’s health.  While health insurance improves access to healthcare services (modestly), its impact on health is surprisingly and disappointingly small.  There are two reasons why this is the case.  The first is that not having insurance doesn’t actually mean not having any access to healthcare.  We care for the uninsured and provide people life-saving treatments when they need it, irrespective of their ability to pay.  Sure – we then stick them with crazy bills and bankrupt them – but we generally do enough to help them stay alive.  Yes, there’s plenty of evidence that the uninsured forego needed healthcare services and the consequences of being uninsured are not just financial.  They have health consequences as well.  But, claims like 50,000 Americans die each year because of a lack of health insurance? The data from Oregon should make us a little more skeptical about claims like that.

So what really matters?  Right now, we are pouring $2.8 trillion into healthcare services while failing to deliver the basics.  To borrow a well-known phrase, our healthcare system is perfectly designed to produce the outcomes we get – and here’s what we get: mediocre care and lousy outcomes at high prices.  Great.

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Into the Extrapolation Machine

The Kaiser Family Foundation (KFF) recently released a study that showed that 42% of Americans are unaware that Obamacare (the Affordable Care Act) remains the “law of the land.” News like this seems to us, to act as a Rorschach test on how observers feel about the law. Considering 50% of Americans can’t identify New York on a map we tend not to read too much into these polls. However, according to the logic of extrapolation, since we know that the ACA remains law, we are in the elite 58% (it’s about time we made it into the elite of something).

In almost parallel to the KFF news, the New England Journal of Medicine published a follow-up study of the “Oregon experiment.” For those who haven’t been following closely, the study found that previously uninsured people who were enrolled in Medicaid did not see an improvement in clinical measures when compared to those who remained uninsured. The study did seem to show a reduction in the amount of financial distress for the insured however.

Another contentious study, another Rorschach test (example, example). The problem we see with the polarity of views is that both sides seem to be cranking up the extrapolation machine and use single studies/data points to draw broad conclusions to gin up opinions about ACA’s success or lack thereof. In light of the fact that for most practical matters ACA doesn’t really get going until 2014, use of the extrapolation noise generator approach smacks of a lack of analytical rigor in our view. We will know soon enough how the program is doing… exchanges start enrolling on 10/1.

As investors, we should state upfront that we tend to give more weight to financial returns than what the philosopher-kings might call the political context. So what caught our eye in the Oregon study was that Medicaid recipients had higher healthcare utilization rates (and associated costs) than the uninsured. The connection between gaining insured status and healthcare utilization should not come as a surprise since there is a very extensive literature elucidating this connection.

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Misunderstanding Oregon

Much has already been written about the Oregon Medicaid study that just came out in the New England Journal of Medicine. Unfortunately, the vast majority is reflex, rather than reflection.  The study seems to serve as a Rorschach test of sorts, confirming people’s biases about whether Medicaid is “good” or “bad”.

The proponents of Medicaid point to all the ways in which Medicaid seems to help those who were enrolled – and the critics point to all the ways in which it didn’t.  But, if we take a step back to read the study carefully and think about what it teaches us, there is a lot to learn.

Here is a brief, and inadequate, summary (you should really read the study):  In 2008, Oregon used a lottery system to give a set of uninsured people access to Medicaid.  This essentially gave Kate Baicker and her colleagues a natural experiment to study the effects of being on Medicaid.

Those who won the lottery and gained access were compared to a control group who participated in the lottery but weren’t selected.  Opportunities to conduct such an experiment are rare and represent the gold standard for studying the effect of anything (e.g. Medicaid) on anything (like health outcomes).

Two years after enrollment, Baicker and colleagues examined what happened to people who got Medicaid versus those who remained uninsured.  There are six main findings from the study.  Compared to people who did not receive Medicaid coverage:

  1. People with Medicaid used more healthcare services – more doctor visits, more medications and even a few more ER visits and hospitalizations, though these last two were not statistically significant.
  2. People with Medicaid were more likely to get lots of tests – some of them probably good (cholesterol screening, Pap smears, mammograms) and some of them, probably bad (PSA tests).
  3. People with Medicaid, therefore, not surprisingly, spent more money on healthcare overall.
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Evidence That Health Does Not Equal Healthcare? Early Results From the Oregon Experiment Are In

The most important study in American health policy in decades, the Oregon Health Insurance Experiment, published two-year results Wednesday in the New England Journal of Medicine. If you’re reading up on the topic, get ready for bombastic claims and scorching heat as opposed to illuminating light. The quick read leads to an easy Drudge headline – “MEDICAID DOESN’T MAKE PEOPLE HEALTHIER: OBAMACARE WILL FAIL!” – but a fuller reading of the evidence provides a more optimistic, and honest, take.

In 2008, Oregon had 90,000 individuals who wanted to enroll in its Medicaid program, but the funding to enroll only a fraction. So it decided to use the opportunity to create an unparalleled experiment: the first Randomized Controlled Trial (RCT) – the gold standard research methodology that is able to isolate the causal effect of an intervention – in Medicaid history. It endeavored to show nothing less than the actual, causal effect that Medicaid has on its population, a first in the field.

This study, in other words, is a big, big deal.

Two years of data are in, and the results are mixed. First up, the disappointing: Medicaid coverage.

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