As debt negotiations continue to dominate Washington, entitlement programs – particularly Medicaid – have found themselves on the chopping block as Congress looks for savings as they tackle the federal deficit. We have also seen many states cut back on their Medicaid programs as a result of the current fiscal crisis.

While the federal and state governments look at Medicaid for potential budgetary savings,  the National Bureau of Economic Research recently published a study that demonstrates the benefits of providing medical insurance, Medicaid in particular, to the poor. In 2008, Oregon opened up a limited number of slots in its Medicaid program, which had been previously closed to new enrollments. According to this study, people given coverage under Oregon’s Medicaid program saw doctors more often, felt better, were less depressed and were better able to maintain financial stability. The investigators for the study were also interested in whether having insurance shielded one from financial catastrophe in the way that home, auto and health insurance offers protection. They found that people with insurance were less likely to be sent to collections or fail to pay other debts to cover medical bills. The researchers also found that being insured eliminated the financial stress of being uninsured, which is a great relief to those who have to worry about meeting their obligations on a daily basis. Unfortunately, especially during these tough economic times, the study did show that the new enrollees drove up spending. Over time, as enrollee health potentially improves with continued access to care, savings may be seen in the aggregate. Revisiting the population examined in this study to determine whether they are still incurring higher spending could be telling. Positive results from such a re-examination would only further help in arguing the value of Medicaid for the nation’s most vulnerable.

Reactions to this study have not been mixed and critics have raised some noteworthy points. Paul Winfree of The Heritage Foundation commented that that there was a low take-up of Medicaid as it took Oregon 8 lotteries to fill the 10,000 open slots. How truly random was their sample that they compared against those without insurance? Winfree argues that having outcomes based on enrollment into Medicaid was not random – because people still self-selected into Medicaid. Those who were seeking out Medicaid coverage were willing to go through the process for the chance to enroll. With multiple lotteries weeding out people who were no longer eligible for Medicaid (because their income disqualified them) and people who never returned the necessary paperwork – one would hope that Medicaid would improve access for the sickest of those selected – especially when compared to people without any health insurance. Additionally, he urges that the comparison be made with those enrolled in Medicaid and private insurance. A recent GAO study, for instance, shows that those with private insurance do have better access and enjoy better levels of health. On the other hand, one should also keep in mind that most with private insurance are typically better off in general than those enrolled in Medicaid – who tend to be poor with higher rates of chronic conditions.

As we near the 2014 expansion under the Affordable Care Act, policymakers and researchers have questioned whether providing health insurance to the poor would actually make a real difference. Some argue that expanding Medicaid would limit one’s ability to see a doctor, as so few accept patients enrolled in the program. The question of whether there is real benefit to insuring the uninsured is still widely debated, but studies such as this one help inch closer to an answer.