Is the Medicaid program worth it

Evidence on the Value of Medicaid

Medicaid has been a central issue of healthcare for quite some time and even more so recently. A big reason for this is that Medicaid spending in the new Senate healthcare bill will decrease about $12 billion next year and gradually rise to $158 billion in savings in 2026. These are significant cuts to Medicaid. And this article looks at a study that attempts to quantify the benefits of Medicaid.

To quickly summarize, the study found that those with Medicaid use health care services more often. Now, some see this as a problem, but my understanding is that the purpose of health insurance is to keep individuals healthy. So, why is it a problem that more people are receiving care?

This study also found that physical health did not improve over time (at least not at a statistically significant level). This should be intuitive though. For instance, those with health conditions (diabetes, high blood pressure, etc) will likely not improve as these typically stem from lifestyle choices (or genetics) that are not easily changed and difficult to reverse decades of neglect.

And, as the famous quote goes – “over the long term, we are all dead” – over time the health of everyone deteriorates. Therefore, the elderly who are using Medicaid will not get healthier over time. I presume if this study was over a very long period that we would see negative health benefits from using Medicaid.

More importantly, this study finds that mental and self-reported health improve. This can be interpreted to mean that Medicaid as a whole is reducing the stress of not having health insurance. This is particularly important for the elderly and children who need more care. Just as important is the financial risk Medicaid protects people from. If Medicaid was not attainable then the costs of medical care can suck a family into poverty for a lifetime as they try to pay off the debt from one medical event.

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