The Agenda

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

Oregon Health Insurance Experiment Round-Up


Back in 2008, Oregon expanded its Medicaid program. Yet the number of eligible applicants for Medicaid greatly exceeded the number of available slots, and so the state government decided to conduct a lottery to determine which applicants would receive Medicaid coverage. A team of researchers, including several of America’s most distinguished health economists, decided to compare outcomes across a number of indicators of health and well-being for individuals who secured Medicaid coverage and those who did not. The results are mixed. In an ideal world, the initial public policy decision might have been made with the interests of researchers in mind. For example, imagine if the lottery didn’t have a binary result — you either secure Medicaid coverage or you don’t — but rather that it also included a third option, i.e., some number of people who applied for Medicaid coverage would instead receive a cash transfer worth a comparable amount. Or better still, perhaps the experiment could have also included a fourth group that received a cash transfer worth less than Medicaid coverage. If our goal is to improve the well-being of low-income individuals, we’d ideally want to know whether extending insurance coverage is the best, most cost-effective strategy, particularly given the heavy emphasis our public policy conversation has placed on coverage expansion relative to work supports, wage subsidies, and guaranteed income policies. A cynical reading is that our focus on insurance coverage reflects to at least some degree the influence of medical providers, who presumably capture a much larger share of public resources devoted to insurance coverage than to, say, the earned-income tax credit. 

Regardless, many sharp people have chewed over the implications of the Oregon study and its latest results, which its authors characterize as follows:

This randomized, controlled study showed that Medicaid coverage generated no significant improvements in measured physical health outcomes in the first 2 years, but it did increase use of health care services, raise rates of diabetes detection and management, lower rates of depression, and reduce financial strain.

Avik Roy offers a comprehensive take on the study, and he notes a number of potential pitfalls, e.g., the study authors seem to have only measured the baseline health status of the uninsured group and not the Medicaid group. He concludes by suggesting that the results of the Oregon study (after two years) strengthen the case for having the public sector promote catastophic insurance coverage.

Let’s build a new health program for low-income Americans, one that pays primary care physicians $150 a month to see each patient, whether they are healthy or sick. That’s what so-called “concierge doctors” charge, and it would give Medicaid patients what they really need: first-class primary care physicians to manage their chronic cardiovascular and metabolic conditions. Then throw on top of that a $2,000-a-year catastrophic plan to protect the poor against financial ruin. The total annual cost of such a program would be $3,800 per person, 37 percent less than what Obamacare’s Medicaid expansion costs. Hell, put the entire country on that kind of plan, along with giving people the opportunity to use health savings accounts to cover the rest.

Megan McArdle also emphasizes that the chief benefit of Medicaid coverage appears to be that it increases income security. Peter Suderman praises left-of-center coverage expansion advocates for counseling caution in interpreting the findings of the Oregon study, yet he also expresses the hope that the same advocates had exercised caution when the initial results appeared to be somewhat more positive. Ross Douthat, in a related vein, argues that the debate over health reform would look very different if congressional Republicans embraced something like Avik’s approach. But as it stands, the GOP failure to articulate a plausible alternative to the Affordable Care Act greatly weakens their political position and, in the eyes of at least some persuadable voters, their moral standing. Josh Barro agrees that the Oregon study raises questions about the value of comprehensive insurance coverage relative to its cost. He seems convinced, however, that the Oregon findings won’t lead to a more constructive health reform conversation, as Republicans have strong incentives not to advance the kind of policies championed by Avik, Megan, Peter, and Ross, among others:

All of this makes me wish even more that conservatives had been productive partners in health reform rather than trolls. If conservatives want a consumer-directed redesign of the U.S. health-care system that forces patients to pay at the margin more often for care — in order to reveal what treatments are useful — they could have gotten it as part of the health-care overhaul. They just also had to agree to include the progressive fiscal reforms that liberals wanted: ensuring universal coverage and transferring money toward poor people who can’t keep up with the rapidly rising cost of health care.

They didn’t, partly because Republicans care more about not spending money on poor people and not changing programs that old people like than they do about making the health-care system more efficient. They also would have entered a political minefield. Nobody likes being told they’re getting too much health care. Just look at the bipartisan political outcry at the U.S. Preventive Services Task Force recommendation that women start receiving mammograms at 50 rather than 40.

The risk-aversion of the U.S. voting public has proven a powerful weapon against the Affordable Care Act, both during the legislative debate that preceded its passage and over the course of the implementation battle. But risk-aversion is also the enemy of right-of-center health reformers who favor something along the lines of universal catastrophic coverage. One possibility is that the dysfunctional nature of the post-ACA health system will make the prospect of yet another health-system overhaul less daunting, but that’s hardly inevitable.



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