Medicaid Reform and Emergency Room Visits
October 15, 2012
With health care costs skyrocketing, many states have begun to experiment to find methods of reducing costs. With the Affordable Care Act's expansion of Medicaid to people 133 percent above the poverty line, it is important for states to devise methods to increase the efficiency of their Medicaid programs, say researchers with the Mercatus Center.
One of the primary factors for rising health costs can be attributed to the increasing frequency of emergency room visits for nonemergency treatment. To combat this, West Virginia redesigned its Medicaid system to create incentives for people to live healthier lifestyles:
- In 2007, Medicaid recipients were moved from traditional Medicaid to the new Mountain Health Choices (MHC) program.
- In it, recipients were given a choice between a "basic" or an "enhanced" Medicaid plan.
- The basic plan restricted the number of prescriptions per month, and didn't cover mental health services or chemical dependency treatments.
- On the other hand, the enhanced plan offered more free services.
- Enrollees in the enhanced plan had to complete a health improvement plan with their primary care physician and sign an agreement to not use the emergency room for nonemergency care as well as engage in better health behavior.
The goal of the program was to increase incentives for people to live healthier lifestyles to reduce costly health expenditures later in a person's life.
The researchers' estimates show that the enhanced plan is effective in reducing certain types of emergency room visits for children.
- Children and adults who experienced a benefit reduction on the basic plan have higher rates of emergency room visits.
- Overall, the net effect is an increase in the probability of an emergency room visit since far more individuals chose (or were defaulted into) the basic plan than the enhanced plan.
- The effects are largely driven by adults, who experienced a 7 percent increase in the probability of an emergency room visit and about a 10 percent increase in the probability of both nonemergency and primary care treatable visits.
- The researchers also find evidence that placing the average member in the basic plan increases primary care treatable emergency room visits and the opposite holds for the enhanced plan.
Source: Tami Gurley-Calvez et al., "Medicaid Reform and Emergency Room Visits: Evidence from West Virginia's Medicaid Redesign," Mercatus Center, October 2012.
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