Published 7/1/2013
Jordan C. Apfeld, BA; A. Alex Jahangir, MD; Hassan Mir, MD; Manish K. Sethi, MD

Coverage, Utilization, and Costs

Results from a minitrial of the Medicaid expansion in Oregon

Orthopaedists often face the option of providing health services to uninsured Americans. Many of these patients could gain insurance coverage under new parameters for Medicaid created by the Affordable Care Act (ACA).

The Congressional Budget Office projects that the ACA will decrease the number of uninsured Americans by almost 30 million over the next 5 years; 11 million of the newly insured will be covered under the Medicaid expansion. However, due to a 2012 Supreme Court ruling, states can now refrain from instituting the Medicaid expansion without being penalized by the federal government.

Nevertheless, states have been urged to participate in the Medicaid expansion for the following reasons:

  • Most of the cost will be picked up by the federal government.
  • Their citizens will have greater access to and be able to use preventive and curative medical services, which will ultimately lead to better health outcomes.
  • More effective preventive services, better outcomes, and reduced state funding for uncompensated pools will lead to net healthcare cost savings (Fig. 1).

Even if states don’t implement the formal expansion, they will see less-extensive Medicaid expansions due to the new ACA provisions on Medicaid eligibility. However, although increases in coverage will likely become a reality, it remains to be seen whether states can really improve health outcomes and reduce overall healthcare costs as a result of the Medicaid expansion.

In early 2008, in response to the cost burden of Medicaid, the state of Oregon began holding a health insurance lottery for citizens who would become newly eligible for Medicaid. Simultaneously, a new Oregon Health Study Group began to track numerous health indicators for the new Medicaid enrollees. By also tracking those who did not get picked in the lottery, the Oregon Health Study is really the first randomized controlled trial examining the impact of insuring the uninsured in America.

On May 2, 2013, the Study Group published its findings on the effects of insurance coverage on healthcare use and health outcomes in the first 2 years after the Oregon health insurance lottery. The findings, which are now being used in arguments both for and against the Medicaid expansion under the ACA, were extremely detailed and showed mixed results. It is essential for practicing orthopaedists to understand the results of the study and its ramifications on the implementation of the Medicaid expansion provisions under the ACA and on the future of health care.

The Oregon Medicaid experiment
In Oregon, more than 90,000 adults waited to get on the “Oregon Health Plan Standard” in 2008. Only 10,000 were randomly selected as new eligibles, and the Oregon Study Group obtained data for 6,387 of these adults. They used 5,842 Oregon citizens who were not selected in the lottery as the control group.

Health services utilization
Predictably, citizens who were selected for Medicaid coverage consumed a greater number of health services compared to those who did not. Use of prescription drugs, doctor’s office visits, and preventive care were much higher—representing an average $1,171 in greater health spending. As a result, more people were diagnosed with hypertension, hypercholesterolemia, diabetes, and depression.

However, only diabetes and depression were diagnosed at a significantly higher rate; these two diagnoses were also the only ones to receive significantly increased treatment and management over the 2 years, as measured by percent usage of disease-specific medication.

For the total amount of health services received, Medicaid-covered individuals paid much less out-of-pocket, and their catastrophic expenditures (more than 30 percent of household income) virtually evaporated. They also had approximately 25 percent less medical debt. This indicates that health care is now more affordable for Medicaid enrollees in Oregon, but have they seen improvements in health outcomes?

Health outcomes
After 2 years, the study found that Medicaid coverage had no significant effect on hypertension, cholesterol, obesity, or current smoking status. Average blood pressure was approximately the same between the insured and uninsured groups, as was high blood sugar—the indicator used to reflect prediabetes or diabetes. The only major indicator that dramatically improved in the Medicaid group was depression, which saw a 10 percent decrease in positive testing, as measured by the Patient Health Questionnaire.

However, compared to those who were not able to enroll in Medicaid, new enrollees rated their current health much better than the year before, both mentally and physically, based on scores from a “Medical Outcomes Study Health Survey.” Medicaid enrollees also thought that care was more accessible and of better quality. These are interesting findings, especially considering that, as a group, the new enrollees saw no significant improvements in measured physical health outcomes across the first 2 years.

Quality and cost
These results lead to the following conclusions:

  1. Health care was more accessible (and utilized).
  2. Overall mental health improved.
  3. The financial strain of seeking health services was dramatically reduced for Medicaid enrollees, as opposed to those who were left out.

Additionally, new enrollees perceived that the quality of their health care was significantly better than before.

However, the study observed little to no reductions in measured health indicators (aside from depression). These indicators were chosen both for their ties to morbidity and mortality and for the feasibility of measuring these indicators across 2 years. An ideal healthcare reform program would show improvements in these indicators, especially if large amounts of state and federal funds are involved.

But while the numbers suggest that a potential Medicaid expansion might not improve overall state health, the experiment says nothing about health results beyond the 2-year time frame. Furthermore, many indicators were not tested, such as outcomes associated with cancer, Alzheimer’s, or Parkinson disease.

Finally, results could have been skewed due to intrinsic differences between those who opted in or out of their Medicaid eligibility. For example, only 30 percent of those chosen as Medicaid eligible in the lottery actually enrolled in Medicaid.

As for costs, although healthcare costs were much lower for the newly qualified Medicaid patients, state and national healthcare bills undoubtedly will rise as a result of providing greater Medicaid coverage. Major cost savings have not occurred in the short-term but could result from long-term improvements in health outcomes. For example, by diagnosing at-risk individuals with a Pap smear early on, the high-cost treatments for advanced cervical cancer could be averted, resulting in significant cost savings.

The number of diagnoses for illness or disease did increase within the 2 years, but the link between more frequent diagnoses, better treatment, and better health outcomes was not tested in the Oregon Health Experiment.

Looking forward
The first report from the Oregon Health Plan Study Group casts some doubt on whether giving people insurance through Medicaid will lead to improved outcomes. Although such a move may result in a lowering of overall, long-term healthcare costs, this particular preventive approach does not guarantee that this will occur.

Physicians who practice in states where the Medicaid expansion is still being debated should examine this report, because the findings can help detail the pros and cons of increasing Medicaid enrollment as part of the ACA. For states that have already approved the expansion, the Oregon health experiment can serve as a predictor for the impact of ACA reforms to Medicaid (with a few disclaimers).

Low-income patients, whether they are covered by Medicaid or not, are frequently seen in the emergency department with orthopaedic injuries. The patients without Medicaid would otherwise be covered through uncompensated care pools, so the cost ramifications of expanding Medicaid are an interesting discussion to have. Orthopaedists should continue to track this longitudinal experiment as the Medicaid expansion reaches new enrollees over the next 5 years.

Jordan C. Apfeld, BA; A. Alex Jahangir, MD; Hassan Mir, MD; and Manish K. Sethi, MD, are all affiliated with the Vanderbilt Orthopaedic Institute Center for Health policy.

Bottom Line

  • The Affordable Care Act offers states an opportunity to expand Medicaid programs so that more individuals have health insurance.
  • In Oregon in 2008, the use of a lottery to determine who would be accepted into Medicaid provided a unique opportunity to study the impact of insurance coverage on costs, utilization, and outcomes.
  • Results of the first 2 years show increased utilization and diagnoses, but no significant effect on hypertension, cholesterol, obesity, or current smoking status.
  • Insured individuals reported better mental and physical health than those without coverage.


  1. Mehta S, Nunley R: Issues facing America: Medicaid. AAOS Now, June 2008. http://www.aaos.org/news/aaosnow/jun08/reimbursement1.asp.
  2. Apfeld J, Han A, Stern T, et al: Implications of the Supreme Court Ruling on Medicaid. AAOS Now, September 2012. http://www.aaos.org/news/aaosnow/sep12/advocacy1.asp.
  3. Phend C: Study: Medicaid Expansion Won’t Help All Aspects of Health. Medpage Today. 1 May 2013. http://www.medpagetoday.com/PublicHealthPolicy/Medicaid/38797.
  4. Holohan J, Buettgens M, Corroll C, Dorn S: The Cost and Coverage Implications of the ACA Medicaid Expansion: National and State-by-State Analysis. The Kaiser Commission on Medicaid and the Uninsured. The Urban Institute November 2012. http://www.urban.org/UploadedPDF/412707-The-Cost-and-Coverage-Implications-of-the-ACA-Medicaid-Expansion.pdf.
  5. Baicker K, Taubman SL, Finkelstein AN: The Oregon Experiment – Effects of Medicaid on Clinical Outcomes. The Oregon Health Study Group New Engl J Med 2 May 2013. http://www.nejm.org/doi/full/10.1056/NEJMsa1212321.
  6. Bennett D: How to Use the Oregon Medicaid Study to Your Ideological Advantage. The Atlantic Wire 2 May 2013. http://www.theatlanticwire.com/politics/2013/05/oregon-medicaid-study/64816/.
  7. Congressional Budget Office. CBO’s February 2013 Estimate of the Effects of the Affordable Care Act on Health Coverage. February 2013. http://cbo.gov/sites/default/files/cbofiles/attachments/43900_ACAInsuranceCoverageEffects.pdf.
  8. Salam R: Interpreting the Oregon Experiment. The Agenda: NRO’s domestic-policy blog. National Review Online 15 May 2013. http://www.nationalreview.com/agenda/348375/interpreting-oregon-experiment.
  9. Lowrey A: What the Oregon Health Study Can’t Tell. Economix Blog. New York Times. 1 May 2013. http://economix.blogs.nytimes.com/2013/05/01/what-the-oregon-health-study-cant-tell/