Health Insurance Battle Royal: Commercial vs. Medicaid

What insurance is better: private commercial health insurance or public health insurance? This is a more difficult question than it seems since individuals with commercial vs. public health insurance differ over a number of dimensions which affect health care spending, quality and outcomes.

To try and get at this question, a paper by Allen et al. (2021) compare individuals with Medicaid and those on health insurance exchanges. To make individuals more comparable, they use two strategies: (i) limit the sample to non-pregnant individuals aged 19-64 that were within 5 percentage points of the federal poverty level (FPL) cutoff, and (ii) propensity score match individuals that were on Medicaid against those who were commercially insured. With respect to the first point, individuals with income below 138% FPL qualified for Medicaid; those just above qualified for the commercial insurance under the subsidized health insurance exchanges. Under the ACA, this threshold sorts the low-income population lacking employer-sponsored insurance into 2 coverage types

Based on this approach, the authors used 2014-2015 data from the Colorado All-Payer Claims Database and found that:

Marketplace coverage was associated with fewer ED visits (mean, 0.36 [95% CI, 0.32-0.40] visits vs 0.56 [95% CI, 0.50-0.62] visits; P < .001) and more office (outpatient) visits than Medicaid (mean, 2.22 [95% CI, 2.11-2.32] visits vs 1.73 [95% CI, 1.64-1.81] visits; P < .001). No differences in ambulatory care–sensitive hospitalizations were found (0.004 [95% CI, 0.001-0.006] vs 0.007 [95% CI, 0.002-0.011]; P = .15). Total costs were 83% higher in Marketplace coverage (mean, $4553 [95% CI, $3368-$5738] vs $2484 [95% CI, $1760-$3209]; P < .001) owing almost entirely to higher prices, and out-of-pocket costs were 10 times higher (mean, $569 [95% CI, $337-$801] vs $45 [95% CI, $26-$65]; P < .001).

In short, Medicaid cost less, but not necessarily because they use less services, but because prices are lower. So, it’s clear that we should go with Medicaid, right?

Well not necessarily. Quality of care was shown to generally be better among the commercially insured.

Five of 12 secondary quality measures favored private insurance, and 1 favored Medicaid.

One interesting question that was not answered was through what pathway quality improved. Did commercially insured individuals go to higher quality doctors? Did the doctors themselves prioritize commercially insured patients or perhaps were there shorter wait times for commercially insured compared to Medicaid patients? Or did physicians provide different quality of care depending on whether each individual was commercially or Medicaid insured? Or perhaps quality was the same but commercially insured plans better documented quality of care?

The Allen study is interesting but more research is needed in this battle royal.

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