We focus frequently on why health insurance matters, and new study published in the Annals of Internal Medicine (abstract) provides further evidence.

Looking at Medicaid coverage for more than 4.7 million residents of California from 1998 to 2002, the study found that gaps in coverage were associated with much higher rates of hospitalization for ambulatory care-sensitive conditions. These are conditions like asthma, diabetes, hypertension and heart failure that "can often be managed with timely and effective treatment in an outpatient setting, thereby preventing hospitalization." See the Commonwealth Fund's chart below, adapted from the study.

Some 62 percent of eligible beneficiaries had a lapse of coverage during the study lasting an average of 25 months. As Dr. Andrew Bindman, the lead author of the study, told the New York Times yesterday:

We're not saying these hospitalizations would never have occurred, but when you have better access to primary care services, you're able to avoid a lot of these hospitalizations [...] What we find is that many patients, faced with financial barriers to getting care, wait and wait, hoping it's going to go away, and by the time they come to the emergency department, the game is over and the only recourse is hospitalization.

The authors of the study caution that while gaps were associated with higher rates of hospitalization, it was impossible to determine what caused those gaps from their study. The Times article suggests however that some policies intended to reduce fraud and abuse in Medicaid increase gaps in coverage leading to higher costs in the long run. Federal law requires Medicaid eligibility recertification  at least once a year. States can require more frequent recertification and California Medicaid recipients during the study were required to recertify their eligibility four times a year. But as the Times notes recipients who: "fail to provide all the documentation required, they lose access to reimbursement for all health care, including doctors' visits and drug coverage."

Balancing continuity of coverage with reduction of fraud and abuse is certainly important. However, the broader lesson for our health care system comes not from determining what causes gaps in Medicaid. Rather it comes from recognizing the fact that our fragmented health system produces gaps in coverage across the population which can lead to poorer health outcomes and higher health care spending with a total cost to the U.S. economy of more than $200 billion dollars.