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Topics: Obamacare

Medicaid: The $7 trillion anti-depression program

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Politics,Beltway Confidential,Philip Klein,Obamacare,Health Care,Medicare and Medicaid

As I reported on Wednesday, a landmark new study in the New England Journal of Medicine found that an expansion of Medicaid in Oregon did not improve physical health care outcomes among enrollees. This bombshell finding in a scientifically rigorous study (which included Obamacare’s intellectual architect Jonathan Gruber among its co-authors) has rocked the health care policy world.

Predictably, defenders of Medicaid have jumped to downplay the results or explain them in a favorable light. The New Republic’s Jonathan Cohn noted that though there was no improvement in the physical health of Medicaid beneficiaries (measured by such factors as cholesterol, blood pressure and blood sugar levels), the results found that Medicaid lessened the financial strain on families and improved mental health. This spin was embraced by the broader media. The Associated Press reported on the study with the headline: “Medicaid improved mental health for uninsured.”

Over at the Daily Beast, Megan McArdle, a long time skeptic of the idea that health insurance dramatically improves health outcomes, reflects on how the debate has  shifted:

There’s been a bit of revisionist history going on recently about what, exactly, its supporters were expecting from Obamacare–apparently we always knew it wasn’t going to “bend the cost curve”, or lower health insurance premiums, or necessarily even reduce the deficit, and now it appears that we also weren’t expecting it to produce large, measurable improvements in blood pressure, diabetes, or blood sugar control either.  In fact, maybe what we were always expecting was a $1 trillion program to treat mild depression.

This isn’t to dismiss the seriousness of depression or the importance of mental health. But the pertinent question from a policy perspective isn’t whether, if government throws enough money into a program, it can produce some benefits to some people. (It isn’t surprising, for instance, that giving people free health care will save them money.) The question is whether the benefits justify the costs. And Medicaid is an incredibly expensive program.



According to a Kaiser Family Foundation report (see chart), Medicaid is projected to cost states and the federal government a combined $7.4 trillion over the next decade. (Those numbers assume all states agree to expand Medicaid as part of President Obama’s health care law. Given that some will not, the ultimate cost could be lower, but is still likely to be somewhere in the $7 trillion range.)

Medicaid is not only putting a strain on the federal budget, but it is the largest expenditure for state governments, as this chart from the National Association of State Budget Officers shows.

Because Medicaid gobbles up nearly a quarter of state budgets, governors are hard pressed to finance other state priorities, such as education and transportation. And now the best available study has found that for all of this spending, for all the de-prioritization of other government functions, taxpayers are left with a health care program that doesn’t actually improve the physical health of its beneficiaries. So, the question is not whether, in a vacuum, there are people who derive some benefits from Medicaid. The questions are whether those benefits are worth the tremendous cost and whether there’s a better way to reform the health care system.

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