Fact-Check Central

Did a Harvard study prove that Obamacare raises healthcare costs without improving health?

Status: Misleading

What’s True:   A Harvard-led study of Oregon State's 2008 Medicaid expansion program found that during its first two years some proxies for physical health did not show statistically significant improvements in low-income adults while others did.

What’s False:   The study did not prove that a nation-wide Medicaid expansion would offer no clinically measurable improvements in the health of program participants, nor that it would be costlier to taxpayers and/or those receiving services.

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The Obama Administration's Patient Protection and Affordable Care Act (or Affordable Care Act for short) was designed to make quality health insurance more accessible to millions of uninsured Americans. One of the key features of the plan was expanded access to Medicaid for low-income families. The program has been controversial, particularly among Republican lawmakers and their constituents, and in the spring of 2013 many conservative commentators began claiming that a recent Harvard study had proven that the act's Medicaid provisions did nothing to improve physical health (Cannon, 2013; Roy, 2013). In my home state of Washington Representative Dave Reichert (R - 8th Congressional District) and three other lawmakers co-authored a letter to Washington Governor Jay Inslee and Insurance Commissioner Mike Kreidler in Jan. 2017 outlining their concerns about the ACA in which they claimed that,

"We would also like to point out that the ACA forced 80 percent of newly insured Washingtonians into Medicaid - a safety net program that has been plagued by severe access problems, poor quality of care, and unsustainable funding. A study by researchers at Harvard University recently found that not only did Medicaid spending increase by $1,100 per person in Oregon, but beneficiaries of the state’s Medicaid program had no better clinically-measured health outcomes than individuals who had no insurance at all..." (Reichert et al., 2017)

Though Reichert didn't cite it, the study he and others are referring to is Baicker et al. (2013) which investigated the effectiveness of the Oregon Health Insurance Experiment (OHIE) on health care for low-income adults (Wikipedia, 2016f). In 2008 an influx of funding allowed the state of Oregon to expand its existing Medicaid program. Because there wasn't enough to provide care to everyone not yet covered by it, a lottery system was implemented and 29,835 candidates selected from a waiting list of some 90,000 were given the opportunity to apply for the program if they wanted to. The result provided economists and healthcare researchers with the holy grail of statistics--a truly randomized sample population with which to study the effectiveness of a key component of the Obama Administration's Affordable Care Act (ACA). Baicker's team gathered two years of health proxy data for a random sample of 6387 lottery-selected adults who signed up for the program, and used a least-squares instrumental-variable regression model to compare them to a control group of 5842 who weren't chosen. Their work expanded on a similar one-year study published the previous summer (Finkelstein et al., 2012). They found that Medicaid coverage had no statistically significant effects on the diagnosis and treatment of hypertension, high cholesterol levels, and average glycated hemoglobin levels (a measure of risk for diabetes), but significantly improved the treatment of depression and early diagnosis of diabetes. They also found that access to preventive care was greatly enhanced and catastrophic out-of-pocket medical expenditures were all but eliminated for those covered. This is being widely hailed by Reichert and other Republicans as "failure."

The team's results are summarized in tables 2 through 5 (Baicker et al., 2013). Reichert's figure of $1,100 was rounded from the estimated annual per-capita healthcare spending change of $1,171.63 reported in Table 5 (shown below).

Several things are immediately apparent. First, the per-capita spending was extrapolated from increases in the number of prescription drugs, office visits, and hospital and emergency room admissions reported in the same table, and the average cost of each. This is hardly surprising. Without affordable healthcare, low-income families cannot use these services and still feed and clothe their children, so they don't. But with Medicaid coverage what once were prohibitively expensive services are now available to them with reasonable co-pays and surprise, surprise... they start using them.