Herbert E. Segal: More on Medicaid

January 9, 2014 

Regarding the Dec. 23 Point of View “Another chance to do right on Medicaid” by Dr. Edward Squire: North Carolina legislators will continue to grapple with the twin proposals for Medicaid expansion and change to a competitive managed-care model. Squire supported expansion on the basis of a study of Medicaid beneficiaries in Oregon, which selected approximately 6,000 new recipients by lottery because of limited expansion funds.

The health-seeking behaviors of these recipients were studied, along with a comparison group of almost equal size, by researchers at the Harvard School of Public Health. In evaluating the results, there are three issues to address:

The utilization issue: Has the number of services sought and provided and the site of those services changed?

The quality issue: Have the outcomes of care provided changed?

The insurance issue: Has the financial impact of serious illness changed?

The Oregon study report was published in May in the New England Journal of Medicine by Katherine Baicker and her colleagues. Almost immediately, pundits on both the left and right used this study to support their points of view.

Dr. Squire chose to report one finding: that covered individuals were less likely to experience a depressive mood disorder. He neglected to report perhaps even more significant findings: The Medicaid recipients used more health care services than those in the comparison group. However, they experienced no significant improvement in controlling their high blood pressure or high cholesterol. Diabetes was identified more frequently in the beneficiary group, but there was no significant improvement in controlling the disease. The study also found that beneficiaries did escape the financial consequences of catastrophic illness.

The Baicker study did not fully address the important issue of use of the emergency room. This was addressed in a more recent report by Amy Finkelstein and her colleagues from MIT, who studied the same Oregon population. They found that the use of the emergency room rose by 40 percent among the Medicaid beneficiaries compared with the comparison group.

We can reasonably conclude, from the first two years of the Oregon “experiment,” that the number of services sought and provided increased and that these services were increasingly provided in the more costly emergency room setting. It is also fair to say that there has been no demonstration of an improvement in quality. We may also conclude that Medicaid served its insurance function well, insulating beneficiaries from financial catastrophe.

As a physician involved in managing a statewide Medicaid managed-care plan in New York, I am a proponent of moving toward such a system in North Carolina. Traditional fee-for-service Medicaid, as the Oregon reports indicate, increases utilization and cost without a commensurate increase in quality. If we are to be true to our oath and our responsibilities, we must address both utilization and quality. The Oregon study is a cautionary tale on how not to do that.

Herbert E. Segal, M.D.


The writer is a retired military physician with over a decade of medical management experience in Medicaid and Medicare programs. The length limit was waived.

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