Medicaid Reforms and Emergency Room Visits

January 10, 2013 - National Center for Policy Analysis

Many federal and state governments are under pressure to limit Medicaid spending without compromising quality of care. Without some reform, Medicaid will continue down an unsustainable path, says researcher Tami Gurley-Calvez.

Total Medicaid spending increased 118 percent from 1995 to 2005.
The Congressional Budget Office (CBO) estimates another 115 percent increase in federal spending from 2011 to 2021.
States have a particularly large burden, spending an additional 32 percent of the federal total on average.

While many governments continue to explore viable options, West Virginia has created a unique policy that reduces spending and improves health and quality of care. West Virginia's Medicaid redesign, Mountain Health Choices (MHC), aims at increasing personal responsibility and preventative care as a means of cutting costs.

A major goal in this redesign was to limit the number of emergency room visits for non-emergency related needs.
In the redesign, women and child members were either enrolled in an enhanced plan, in which they agreed to certain program rules and received more comprehensive benefits, or a basic option with fewer rules and less coverage than the previous Medicaid design.
For the enhanced plan, members had to sign an agreement that they would be responsible for their health and stick to a health-improvement plan in an effort to prevent costly health problems.
However, only 14 percent of people chose to be in the enhanced plan.

Under West Virginia's reforms, there were less frequent visits to the emergency room among people that enrolled in the enhanced plan.

However, for people in the basic plan, the number of emergency room visits increased. This is most likely because those in the basic plan were offered fewer services. For example, there were reductions in coverage for health services, prescriptions, mental health and chemical-dependency services than the previous Medicaid design.

If individuals are more involved with their health and are in constant contact with their health providers, there is potential to reduce overall health costs. Other states should look to West Virginia as a model and increase involvement between an individual and their health provider.

Source: Tami Gurley-Calvez, "Medicaid Reforms and Emergency Room Visits: Evidence from West Virginia's Medicaid Redesign," Mercatus Center, December 18, 2012.