John C. Goodman

Within the White House, within the Democratic chambers in Congress and among the (overwhelmingly liberal) health policy community there was considerable anguish this week. The reason: a new study finds that (as far as physical health is concerned) there is no difference between being in Medicaid and being uninsured.

It's hard to exaggerate what a blow this is to the people who gave us the Affordable Care Act (ObamaCare). Everything about ObamaCare ? from the money we are spending to the damage being done to the labor market to the hassles the whole nation is going through ? depends on one central idea: that enrolling people in Medicaid will give them access to more health care and better health.

Beginning next year, ObamaCare is expected to newly insure about 34 million people. About half of these will enroll in Medicaid, the federal/state program for low-income families. Yet, if they won't be any healthier once they are in Medicaid than they were when they were uninsured, that implies that fully half of the entire ObamaCare program is one huge waste of money.

[Actually, the results weren't a complete disappointment. There was less depression among the Medicaid enrollees, they reported that they were a tiny bit happier and they spent about $215 less out of pocket annually on medical care, on average. But, remember, we could have simply given every one of them $215 in cash and spent far less than was actually spent on this program.]

It gets worse. The other half of the newly insured next year are supposed to get their insurance in health insurance exchanges, where most will qualify for generous premium subsidies paid for by federal taxpayers. If the Massachusetts health reform is precedent, however, these people will be in health plans that pay doctors only about 10 percent more than what Medicaid pays. Think of these plans as Medicaid Plus.

The study released this week is not the first study to find that enrollees in Medicaid do no better than the uninsured. In fact there are studies that show that Medicaid enrollees find it more difficult to get a doctor's appointment and have worse outcomes than the uninsured. Each of these studies has been subjected to a lot of nitpicking on various grounds, however, and a fair-minded person would probably have to say that how much difference Medicaid makes is an open question.


John C. Goodman

John C. Goodman is Senior Fellow at The Independent Institute and author of the widely acclaimed book, Priceless: Curing the Healthcare Crisis. The Wall Street Journal and National Journal, among other media, have called him the "Father of Health Savings Accounts."