Medicaid Study: First 2 Years, Mental Health Improves, Not Physical

Co-author Amy Finkelstein (Courtesy)

Prof. Amy Finkelstein of MIT (Courtesy)

Prof. Katherine Baicker of Harvard (Courtesy)

Prof. Katherine Baicker of Harvard (Courtesy)

Just out here in the New England Journal of Medicine: The latest, mixed but important findings about how health and life change for uninsured people when they gain Medicaid coverage.

It’s a nuanced look at what most changes — mental health — and what doesn’t — physical health — in the recipients’ first two years on Medicaid, the government health insurance mainly for low-income and disabled people.

That “mixed message,” in fact, is the bottom line, says lead author Katherine Baicker, a health economics professor at the Harvard School of Public Health.

“There are substantial benefits, but they’re not uniform across all outcomes,” she said. “It’s too easy to have a black or white view of the program.”

If you’re a big Medicaid fan, the study’s findings may well disappoint you. Among winners in Oregon’s Medicaid lottery, after about two years with coverage, it found no measurable improvement on several important health measures: high blood pressure, cholesterol, blood sugar control in people with diabetes.

On the other hand, the study did find a dramatic drop in depression among people newly covered by Medicaid, and — not surprisingly — a great easing of the financial strain caused by medical expenses. In the two years it followed the lottery winners, it also found an increase in diagnoses of diabetes and in the use of medication for diabetes.

Prof. Baicker says the findings contradict “two extreme and opposing points of view” about Medicaid. One holds that Medicaid is “a terrible program that has huge costs and does nothing for beneficiaries” — yet the study clearly found improved well-being among recipients, from reduced depression to increased visits to the doctor.

(From "The Oregon Experiment -- Effects of Medicaid on Clinical Outcomes," courtesy of the New England Journal of Medicine.)

(From “The Oregon Experiment — Effects of Medicaid on Clinical Outcomes,” courtesy of the New England Journal of Medicine.)

The opposite view holds that Medicaid is “a fantastic program” that so improves care for chronic disease that it will quickly save money. In fact, she said, the study found that people tended to incur $1200 in additional health costs once they were covered, and it’s clear that “at least within the first two years, expanding Medicaid does not pay for itself. It costs money.”

Highlights of the paper from Prof. Baicker and Prof. Amy Finkelstein of MIT:

Using a randomized controlled design, the study finds that for uninsured low-income adults, enrollment in Medicaid has the following effects after about two years:

Physical health:

Medicaid significantly increased the probability of being diagnosed with diabetes after the lottery (by 3.8 percentage points, relative to a base of 1.1) and use of diabetes medication (by 5.4 percentage points, relative to a base of 6.4).

Medicaid had no statistically significant effect on measured blood pressure, cholesterol or glycated hemoglobin (a measure of diabetic blood sugar control).

Medicaid had no statistically significant effect on diagnosis of or medication for blood pressure or cholesterol.

There were also no statistically significant effects observed in higher risk subgroups, including older adults and those with pre-existing diagnoses.

Mental health:

Medicaid reduced observed rates of depression by 30 percent (by 9.2 percentage points, relative to a base of 30).

Medicaid increased the probability of being diagnosed with depression after the lottery (by 3.8 percentage points, relative to a base of 4.8).

Medicaid also increased self-reported mental health.

Financial hardship:

Medicaid virtually eliminated out-of-pocket catastrophic medical expenditures (reducing the chances of having out-of-pocket expenditures that exceeded 30 percent of income by 4.5 percentage points, relative to a base of 5.5).

Medicaid reduced other measures of financial strain, such as reducing the probability of having to borrow money or skip paying other bills because of medical expenses by more than 50 percent (by 14.2 percentage points, relative to a base of 24.4).
Utilization and access:

Medicaid increased use of physician services, prescription drugs, and hospitalizations. This increased use represents about $1200 in medical costs annually, or an increase of about 35 percent.

Medicaid increased the probability of having a usual place of care by 50 percent (by 23.8 percentage points, relative to a base of 46.1).

Medicaid increased the use of preventive services and screening, such as increasing the probability of having a cholesterol check by more than 50 percent (by 14.6 percentage points, relative to a base of 27.2) and doubling the probability that women over 50 had a mammogram (by 29.7 percentage points, relative to a base of 28.9).

The current study is part of a broader, ongoing research program gathering a wide array of data sources to examine many different effects of Medicaid. A previous study examined administrative data and mail surveys from about a year after random assignment (Finkelstein et al, Quarterly Journal of Economics, Aug 2012).

Like the current study, the previously study found that Medicaid substantially increased health care use – including primary and preventive care and the use of prescription medications – increased self-reported health, and reduced financial strain. More information about the study can be found on our study’s website:

Readers, thoughts? Any surprises here? For further reading that includes a broader political perspective on the fights over Medicaid, The Washington Post’s Sarah Kliff reports: “Study: Medicaid reduces financial hardship, doesn’t quickly improve physical health.

And as spin and counter-spin on the study begin, The Incidental Economist offers an informed take here: Oregon and Medicaid and Evidence and CHILL, PEOPLE.

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  • Anna

    Peace of mind guaranteed (POMG) effect. Mental health improves when you have coverage. You feel ‘safe’. However, physical health does not improve with coverage. Why? Because the chronic conditions set in motion by a lifetime of poor dietary and lifestyle choices cannot be undone by having coverage. They can only be ‘managed’. These results are consistent with that.

  • Dennis Byron

    My opinion is the same as when the first stage version results were released two years ago:

    “I think what the (Oregon Medicaid study report authors) found is that a bunch of intelligent Oregonians who wanted free medical care and proactively sought to win a lottery in order to get it, then took advantage of the free medical care. Did the (authors) really need to spend $30 million – much of it Federal money from the Stimulus bill and the Patient Protection and Affordable Care Act (PPACA) — to find this out? I’d have rather seen the money spent on public health outreach.

    “But thanks, Oregon. It looks like a bunch of guys here in Massachusetts got the $30 million while you got a few percent of your (already sick) low income population to go to the doctors…”

    These results mirror dozens of studies of RomneyCare results in Massachusetts but are considered better research because the Oregon groups were sort of partially — depending on your political view — randomized and sort of, maybe — depending on your political point of view — large enough to be statistically significant.

  • Josh Archambault

    Carey one of the better write ups is from Avik Roy at

    He highlights the design pros and cons, contrasts them to FDA trials,puts in context the promises of the Oregon study, and the disappointing results. Finally he offers a common sense assessment of why this study matters, contradicting Prof. Backier’s framing. This is not an up or down vote on Medicaid, it is an assessment of whether or not the current system is worth the money given the outcomes. The answer appears to be no, and begs the question if there is a better way. Avik closes with:

    ‘Let’s build a new health program for low-income Americans, one that pays primary care physicians $150 a month to see each patient, whether they are healthy or sick. That’s what so-called “concierge doctors” charge, and it would give Medicaid patients what they really need: first-class primary care physicians to manage their chronic cardiovascular and metabolic conditions. Then throw on top of that a $2,000-a-year catastrophic plan to protect the poor against financial ruin. The total annual cost of such a program would be $3,800 per person, 37 percent less than what Obamacare’s Medicaid expansion costs. Hell, put the entire country on that kind of plan, along with giving people the opportunity to use health savings accounts to cover the rest.’

  • james o’neill

    can also be interpreted that results show how badly people needed access to healthcare

    people actually needed the access to healthcare they were given

  • Wes

    Interesting, thank you for summing this all up so well!