Saturday, January 4, 2014

Insurance coverage and ER visits

Science just published the results of a new study showing what effect increased Medicaid coverage has on emergency room visits.  As reported in WSJ, Oregon conducted a controlled experiment where Medicaid coverage was randomly provided to 10,000 low income residents.  By comparing the health and health expenditure data for those who won the insurance lottery and those who did not, one can discern how much impact Medicaid expansion has on health and consumer behavior.  (Aside: the lottery was necessary because more people applied than anticipated so there were not enough funds to cover everyone.)

What should happen when more low income people get health insurance?  One possibility is that they will now go to doctors' offices during normal hours, so ER use will fall.  The other possibility is that the increased insurance coverage leads to increased purchases of medical services across the board, including ER visits.  

The answer is quite clear in the Oregon data: ER use increased by 40% for those newly covered by Medicaid compared to those who did not get coverage.  So as Medicaid coverage expands in most states as the Affordable Care Act comes into effect, we should expect a lot more ER visits.  

For further insight, be sure to check this post by Bloomberg columnist Megan McArdle.

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