Medicaid improves health and budgets of poor (Reuters)

WASHINGTON (Reuters) – Medicaid, a government health insurance program designed to help the poorest of the poor, is giving people unprecedented access to doctors and also improving their finances, a study co-authored by the Harvard School of Public Health has found.

The study, released on Thursday, showed that new recipients of Medicaid reported better physical and mental health and were less likely to go into debt to pay their medical bills.

The fate of Medicaid -- the health program for people and families with low incomes and resources -- has been hotly debated for its role in the ballooning U.S. deficit. The Obama administration's healthcare overhaul passed last year requires all U.S. states to extend eligibility to millions more people by 2014.

The study followed health outcomes a year after a 2008 Medicaid expansion in Oregon, where 10,000 uninsured low-income adults won coverage through a lottery.

The results show that Medicaid helps poorer Americans well beyond the default safety net options that exist for people without coverage, according to the researchers from Harvard, the Massachusetts Institute of Technology, the National Bureau of Economic Research and Providence Health & Services.

"Some people wonder whether Medicaid coverage has any effect. The study findings make clear that it does," Amy Finkelstein, professor of economics at MIT and co-principal investigator of the study, said in a statement.

"People reported that their physical and mental health were substantially better after a year of insurance coverage, and they were much less likely to have to borrow money or go into debt to pay for their care," she said.

The study found that newly insured Medicaid recipients sought healthcare "substantially and statistically significantly" more than those who did not get the opportunity to apply for the program.

The lottery winners also spent less on out-of-pocket medical expenses, had less medical debt, were more likely to follow doctors' recommendations on preventive care, buy medication and overall said they enjoyed better health.

An especially large impact was seen in broader access to care. Newly insured adults were 70 percent more likely to report regular clinic or office visits for primary care and 55 percent were more likely to say they visit a particular doctor.

Medicaid coverage also reduced the likelihood that participants would have to borrow money or miss paying other kinds of household bills to pay for their healthcare needs by 40 percent. The likelihood of having a medical bill sent to a collection agency dropped by 25 percent.

The researchers cautioned against extrapolating from their findings to estimate the broader impact of the new U.S. healthcare law given the relatively small sample population.

The study focused on 10,000 lottery winners and compared their outcomes with some of the 80,000 other applicants who were not selected for coverage. Oregon's total population of about 3.8 million includes about 650,000 uninsured and about 200,000 low-income uninsured adults.

Researchers said they will continue to follow Medicaid lottery participants for another year and directly measure health outcomes such as changes in cholesterol levels, obesity and blood pressure.

The research group also included Katherine Baicker, former member of the Council of Economic Advisers under President George W. Bush, and Jonathan Gruber, who helped the Obama administration design the healthcare law as a paid technical consultant.

(Reporting by Alina Selyukh; Editing by Michele Gershberg and Matthew Lewis)