Obamacare: The Oregon Experiment

Obamacare has been under-fire for many reasons. Overlooked in all the uproar, though, is the biggest defect of all… the effect of expanding Medicaid eligibility to 25+ million more Americans as of 1/1/2014.

Medicaid expansion imposes an unfunded and fundamentally unknown direct cost to American taxpayers. Its indirect effect on general health care costs was also a big question mark… until now.

The price-tag is about to be realized!

A preview of what will happen nationally beginning this year started in Oregon back in 2008 when it expanded its Medicaid eligibility to 30,000 more Oregonians.

An MIT study of those 30,000 published in Science on 1/2/2014 titled “Medicaid Increases Emergency Department Use: Evidence from Oregon’s Health Insurance Experiment” discovered an amazing and quite unexpected consequence of expanding Medicaid coverage.

That discovery is only a harbinger of more scary things to come.

A Presidential Proclaimation

Those of us with health insurance are also paying a hidden and growing tax for those without it — about $1,000 per year that pays for somebody else’s emergency room and charitable care
– President Obama. Joint Session of Congress, 9/9/2009

The President said $1,000/year ER costs paid by the insured would go down if we expanded Medicaid coverage to more Americans. He confidently made that prediction before a joint session of Congress. He said fewer ER visits would decrease overall health care costs for everyone.

That idea seemed logical at the time. It was one of the reasons Obamacare passed the Congress. Unfortunately, like so many other predictions, this one won’t come true either.

Oregon Emergency Room Visits Increase by 40% After Medicaid Expansion

Medicaid increased the number of emergency department visits over the 18-month period by about 40 percent
– Finklestein, et. al, Oregon Health Care Experiment, 1/2/2014

The Oregon experience is the opposite of the predicted effect. Costly ER visits went up 40% resulting from Medicaid expansion!

According to Forbes, about 25,000 of the 30,000 new Medicaid recipients turned to hospital emergency rooms for health care over an 18-month period. Expanded to Obamacare,  Forbes estimates it will add another $1 billion/year increase in ER costs nationally.

Thus, not only was the promised ER health care cost reduction unrealized, but now Oregon taxpayers have the added burden of paying for 30,000 additional Medicaid recipients.

To be sure, there are benefits for the newly insured under Medicaid in the Oregon experiment. According to studies, they have less out-of-pocket expenses and had slightly less earlier detection and treatment for such things as high blood pressure, high cholesterol, diabetes and depression.

Generally speaking, though, the study concluded that Oregon’s Medicaid expansion did not produce statistically significant improvements in several different measures of physical health.


90,000 eligible Oregonians applied for Medicaid benefits back in 2008 under its new Oregon Obamacare-like offering. The state could not afford to insure all of them so selected 30,000 out of the total by lottery. The federal government has no such affordability consideration.

Both Oregon and the federal government depend on a reduction of ER visits by Medicaid recipients in order to keep taxpayer costs affordable. That is not happening in Oregon and likely won’t happen nationally either. Medicaid ER expenses alone are projected to add $1 billion/year more to the cost of Obamacare.

Unlike Medicare and Social Security, Medicaid does not have a dedicated funding source. The total cost of Medicaid is hidden. It is shared by both the federal government and the states and paid out of general fund revenues. The federal government controls its own Medicaid costs by just passing what it can’t afford on to the states.

Taxpayers, though, will get hit in the pocketbook from both federal and state taxes that ultimately will have to be increased to pay for unexpected and unfunded Medicaid expenses.

Ultimately, the growing Medicaid price-tag within Obamacare will overwhelm everything else.


About azleader

Learning to see life more clearly... one image at a time!

Posted on Jan 5, 2014, in ACA, Affordable Care Act, Business, economics, Economy, Government, Health Care, healthcare, Medicaid, news, Obamacare, Opinion, Politics. Bookmark the permalink. Leave a comment.

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