The High Cost of Good Intentions in Medicaid

Blindly expanding a program that currently gives recipients little health benefit at a high cost makes no sense

Letter to The WSJ. 

"Jared Bernstein and Hannah Katch reply to my June 5 op-ed on Medicaid by arguing that the healthcare program’s expansions have been of high value to its recipients (Letters, June 12). It’s more accurate to say that Medicaid is an excellent example of the high cost of good intentions.

The best research on the program’s effect on health outcomes is from the Oregon experiment in which people were randomly assigned to Medicaid. Researchers found little evidence that the program improved health outcomes. They also found that recipients value Medicaid at only 20% to 50% of its cost to taxpayers. State lawmakers appear to place a similarly low value on the program. They have always had the option of expanding Medicaid to able-bodied adults at their own expense. Most chose not to do so until they were offered 100% federal subsidies.

Mr. Bernstein and Ms. Katch argue that Medicaid reduces healthcare costs because it substitutes for uncompensated care. But researchers have found that moving uninsured people on to government healthcare increases total healthcare spending. If uninsured people are already receiving healthcare, moreover, why cover them with a government product they hardly value?

Mr. Bernstein and Ms. Katch cite a recent paper by Angela Wyse and Bruce Meyer to support their contention of large Medicaid benefits. But the research is more mixed than they suggest. As the paper’s authors point out, their finding of lower mortality among able-bodied adults may have come at the expense of higher mortality among disabled people, as might be expected if states shifted resources in response to the 100% subsidies.

There is a difference between the financial protection provided by insurance coverage and improving health outcomes. Medicaid should be amended to deliver high quality care to deserving Americans. Blindly expanding a program that currently gives recipients little health benefit at a high cost makes no sense.

John Cogan"