A recent study in the New England Journal of Medicine was devastating for proponents of ObamaCare’s Medicaid expansion. It finds that (as far as physical health is concerned) there is no difference between being in Medicaid and being uninsured. This undoubtedly caused considerable anguish within the Democratic chambers in Congress and among the liberal health policy community.

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.

A Waste of Billions

Beginning next year, ObamaCare was originally expected to newly insure about 16 to 17 million people who would enroll in Medicaid, representing half of those covered under the law. Yet, if they won’t be any healthier once they are in Medicaid than they were when they were uninsured, that implies half of the entire ObamaCare program is one huge waste of money.

The liberal pundits proclaimed the results weren’t a disappointment. They noted (1) There was less depression among the Medicaid enrollees, (2) they reported they were a tiny bit happier and (3) they spent about $215 less out of pocket 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 care 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.

No Health Improvements

The study is not the first to find enrollees in Medicaid do no better than the uninsured. In fact there are studies that show 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.

Until now. What makes this study so different is a special set of circumstances that originated in the state of Oregon. A few years ago the state had a limited amount of money to expand its Medicaid program and the number of qualified people greatly exceeded the state’s budget. The state responded to this dilemma by conducting a lottery. This made possible an ideal experiment in which the people who remained uninsured were no different from the people who were enrolled in Medicaid, except for the luck of the draw – a real-life double-blind study (the gold standard for researchers).

It came out very, very bad for the supporters of the new health care reform law.

Uninsured Still Receive Care

One reason for this result is that the uninsured in this country actually have access to a patchwork system of free care when they are unable to pay for it out of their own pockets. For example, in Dallas, Texas, where I live, the entire county is part of a health district which makes indigent health care available to needy families. It covers people up to 250 percent of the poverty level, with sliding-scale copayments based on family income.

You could argue that uninsured, low-income families in Dallas are actually “insured” in this way, although they face the problems of rationing by waiting and other non-price barriers to care. Officially, they are counted as “uninsured,” however.

When these very same individuals enroll in Medicaid, they enter another system of patchwork care. A third of the doctors aren’t taking any new Medicaid patients, for example. There is rationing by waiting in Medicaid, along with its non-price barriers to care. Often the uninsured and Medicaid enrollees are getting the same care from the same doctors and facilities, even though one group is labeled “insured” and the other “uninsured.”

Expect Increased Waits

A similar description applies to Massachusetts. RomneyCare cut the official “uninsurance” rate in half. But it created no new doctors or nurses or clinics, so the same people are going to the same places and getting pretty much the same care they got before the health care reform. Hospital emergency room traffic is higher than it was before the reform. The traffic to the community health centers has changed very little.

But since they have expanded health insurance in Massachusetts, the demand for care has grown, even as the supply has remained unchanged. As a result, the time price of care has increased. The wait to see a new doctor in Boston is two months – the longest waiting time in the entire country. People in Massachusetts are getting the same care they got before, but they are paying a higher price for it. Expect to see that experience replicated nationwide.