Peter Suderman on the Oregon Health Insurance Experiment

by Reihan Salam

I’ve been reading with great interest the reactions to the Oregon Health Insurance Experiment study. I’m particularly struck by the heroic interpretation of the quite modest and predictable findings, e.g., some readers seem to have mistaken higher health care utilization and self-reported physical health as identical to improvements in health. Peter Suderman has written a very helpful post that is admirably free of political cant:


So those who won the Medicaid lottery are reporting that they feel better about their health. Does that mean they’re actually healthier? Not necessarily. According to the study, the results “may also reflect improvements in objective, physical health, but this is more difficult to determine with the data we now have available.” At this point, in other words, the researchers just don’t know.

Moreover, they believe there’s a real possibility (though far from a certainty) that the increased self-reported happiness may simply be a psychic artifact of health coverage. “The self-reported physical health measures could reflect a more general sense of improved well-being rather than actual improvements in objective health,” the authors write. Indeed, the study finds evidence to support this conclusion: Self-reported health status improved immediately after enrollment—and before enrollees reported increased utilization of care. The level of improvement was equal to about two-thirds of the total increase in self-reported health states. The fact that enrollees were reporting substantially better health before getting any additional care suggests that the happier self-reporting reflects good feelings about personal health far more than any objective changes in medical care or condition.

Now, the study also shows a fair amount of financial smoothing: Health insurance certainly makes it easier for individuals to pay for health care, and reduces the chance of major financial shock. This is consistent with findings about the introduction of Medicare—findings which showed no statistically significant decrease in mortality following the program’s introduction. This is by far the clearest benefit of health insurance. [Emphasis added]

If financial smoothing is indeed the clearest benefit, and I think this is a fair assessment, it suggests that our approach to expanding access to health insurance should be centered on managing the impact of catastrophic medical expenditures, as Michael Graetz and Jerry Mashaw argued in True Security, and chronic illness. This might counsel a different reform strategy. 

What I like about Peter’s post is that he doesn’t mention that one of the co-authors (Baicker) served on George W. Bush’s Council of Economic Advisors (one might also mention that Paul Krugman served on the staff of President Reagan’s CEA) and that Amy Finkelstein has published editorial features in the Wall Street Journal (Alan Blinder writes rather often for the WSJ). Finkelstein is brilliant and, as far as I know, not terribly political. She is certainly not an ideologue. I’m not as familiar with Baicker, but I assume that the same is true of her. They’re not to blame if a paper they’ve co-authored is overinterpreted, as the paper acknowledges the limitations of the study.

The Agenda

NRO’s domestic-policy blog, by Reihan Salam.