RALEIGH – A new study in the Journal of the American Medical Association is being described as “surprising” because it undercuts the promise of ObamaCare to cut health care costs by reducing emergency-room visits.
I have no doubt that some politicians and activists have found the study’s conclusions surprising. But they shouldn’t have – the truth about emergency-room costs has been clear for years to those willing to look at the evidence.
First, the falsehood: For years, advocates of expanding government health insurance have argued that a major source of health-care inflation was an increasing number of uninsured Americans going to emergency rooms rather than getting medical services from lower-cost providers.
Under the law, emergency room couldn’t turn the uninsured away, the advocates said, so that’s where they go. If Medicaid or some other government program was expanded to insure these Americans, cost would go down because they’d receive medical care in doctor’s offices or clinics.
The claim may have sounded plausible. But it was never consistent with reality.
In the first place, uncompensated care in hospitals – not just in ERs but across all hospital services – has never accounted for a significant percentage of U.S. spending on health care. In most years, the share is between 3 percent and 4 percent. You can complain about “cost shifting” all you want, but that won’t make it into a major cause of rising health costs.
More importantly, to assume that growth in emergency-room visits was an artifact of growth in the uninsured population is to do just that – make an assumption, without good evidence. As some analysts have long pointed out, patients with insurance are more numerous and make up a majority of the people crowding into emergency rooms.
The new study, by a researcher at the University of California at San Francisco, underlines a fact even more inconvenient for ObamaCare supporters. Not only are insured patients the majority in ERs, but patients insured under Medicaid are twice as likely to use ERs as the uninsured are. In North Carolina, 24 percent of ER patients are on Medicaid, far higher than the 14 percent of North Carolinians who are enrolled in the program.
Why is this significant? Because the main way ObamaCare is expected to reduce the ranks of the uninsured is by enrolling them in Medicaid. Far from reducing ER use, ObamaCare will likely increase it.
Medicaid recipients have been crowding into ERs for several reasons, but the biggest one is probably the fact that many physicians won’t take Medicaid patients because the reimbursement rates are so low. In some ways, Medicaid is a generous form of health insurance. It covers many services that private insurance doesn’t, services that patients pay for out-of-pocket rather than by filing claims. And patients share virtually none of the cost of consuming even routine medical services.
On the other hand, Medicaid pays less to providers than other insurers do for comparable procedures. In some cases, then, patients have coverage for some services on paper but lack access to those services in reality, except through ERs that can’t refuse them.
For years, debates about health reform have been fraught with myths. In addition to the uncompensated-care fixation, some politicians and activists have claimed that universal coverage would reduce cost by increasing access to preventive care (which doesn’t actually reduce cost) and that insurance-company profits are the main explanation for America’s relatively high health-care spending (nope).
Clinging to convenient myths may be pathetic, but one has a right to be wrong. The problem now is that Congress and the Obama administration have written their cherished myths into law – forcing us to suffer the consequences in higher taxes, higher deficits, less access to quality health care, and less freedom.
Hood is president of the John Locke Foundation.