Oregon's Medicaid Lottery Works, Says MIT Economist

By using a lottery to assign coverage, Oregon had unintentionally created the perfect conditions for a randomized controlled trial that could reveal the true costs and benefits of health insurance.

When Oregon voted in 2008 to use a lottery to determine which low-income adults to add to its Medicaid rolls, Stephen Colbert mocked the effort as "gambling for health insurance."

MIT economist Amy Finkelstein wasn't laughing. "I heard about it and immediately thought, 'Oh my god, drop everything and get on this!'" says Finkelstein, the Ford Professor of Economics at MIT and a principal investigator of the groundbreaking Oregon Health Insurance Experiment. "What they saw as humorous, we saw as an unprecedented opportunity to bring the gold standard in scientific research to one of the most pressing questions of our day."

By using a lottery to assign coverage, Oregon had unintentionally created the perfect conditions for a randomized controlled trial that could reveal the true costs and benefits of health insurance. Since the population that received coverage was statistically equivalent to the group that didn't, economists could simply compare outcomes between groups to gauge the effects of insurance. "Remarkably, this had never been done before in the United States," says Finkelstein, who won the 2012 John Bates Clark Medal from the American Economic Association for most significant contribution to economic thought by an economist under 40.

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