In 2008, with limited resources to expand its Medicaid program, Oregon determined a lottery would be the fairest way to choose enrollees. About 90,000 low-income adults applied for 10,000 openings.

This overwhelming response allowed researchers to conduct the first randomized controlled study of insuring previously uninsured adults. As such, it may provide some important clues to the likely impact of the Affordable Care Act, which is estimated to expand coverage by 2019 to 31 million uninsured individuals, nearly half of whom are expected to gain coverage through Medicaid.

A National Bureau of Economic Research (NBER) working paper provides the first look at the Oregon experience after nearly a full year of enrollment. This ongoing study, funded in part by CHCF, finds that Medicaid coverage in Oregon increased individuals' health care access and use of services, lowered out-of-pocket costs, reduced medical debt, and improved self-reported health and well being.

Key findings include:

• Medicaid coverage increased the likelihood of using outpatient care by 35%, using prescription drugs by 15%, and being admitted to the hospital by 30%. It also increased the use of recommended preventive care such as mammograms and cholesterol monitoring.
• It increased the probability of having a regular office visit or clinic for their primary care by 70% and the likelihood of having a particular doctor that they usually see by 55%.
• It decreased the likelihood of having to borrow money or skip paying other bills to pay for health care by 40%, and decreased the probability of having an unpaid medical bill sent to a collection agency by 25%.
• It increased the likelihood that people report themselves in good to excellent health by 25%.

Having Medicaid coverage did not reduce use of emergency departments, and researchers found annual health care expenditures increased by 25%, underscoring the vital importance of finding ways to deliver care more efficiently.

Extrapolating the results of this small Medicaid expansion in Oregon to the very large expansion of Medicaid expansion in California expected under health reform comes with important caveats. The relatively small number of new Medicaid enrollees in Oregon — an increase of less than 2% — means that constraints in the supply of primary care physicians were not a concern. In contrast, health reform is expected to increase Medi-Cal enrollment by 20% or more, and primary care doctors may not be sufficiently available to meet that increased demand.

The demographics of the uninsured population are also much different in Oregon than in California, and Medicaid programs differ in every state. For example, whereas Oregon Medicaid pays physicians 90% of Medicare rates, on average, physician reimbursement rates in California's Medicaid program average only 56% of Medicare rates.

The complete NBER working paper is available as a Document Download.