Oregon experiments with its Medicaid program

In 2008, Oregon randomly assigned 10,000 to its Medicaid rolls. The random assignment meant that any difference between the experimental group (the 10,000) and those in the control group (who didn't get in) could be attributed to the Medicaid program.

So what did we learn about Medicaid? That Medical care is like every other good, if you lower the price, you get more consumption (moral hazard).

...The likelihood of having a hospital admission rose from roughly 7 percent to 9 percent. Average outpatient visits rose from 1.9 to 3. Mammograms for women over age 40 increased from 30 percent to 49 percent, and diabetes screening increased from 60 percent to 69 percent. Average spending was about 25 percent (or $778) higher for Medicaid enrollees in the first year.

This finding casts doubt on the premise of President Obama's health care program, that by providing people with medicare we "prevent" later expenditures.

What about Health?  Here the findings are mixed.  No change in mortality.

Though the president has claimed his health-care law will “save lives,” the OHIE detected no evidence that extending Medicaid to 10,000 adults did so in the first year. 

But an increase in subjective well being:

 ...the likelihood of screening positive for depression fell from 33 percent to 25 percent, and the share reporting their health to be good or better rose from 55 percent to 68 percent. However, two-thirds of the improvement in self-reported health occurred almost immediately after enrollment, before any increases in medical consumption. The authors posit that much of this improvement could reflect “an improved overall sense of well-being” rather than “changes in objective physical health.”

I applaud these kinds of experiments designed to measure the performance of government programs.   See raise the quality of the debates about the effects of these programs.