The Medicaid Deniers
The Left dismisses research finding that government fails to make people healthier.

Paul Krugman


Avik Roy

For years, progressives have claimed that they are the party of science. “Our government has forced what I believe is a false choice between sound science and moral values. . . . I believe the two are not inconsistent,” said President Obama in 2009. Science is the reason we need to suppress trillions of dollars of economic activity around the world, because Al Gore — and science! — tell us that if we don’t, “our planet will experience cataclysmic warming by the end of the century.” Gore has even taken to calling conservative climate-policy skeptics “climate deniers,” a clear reference to Holocaust deniers. But there is at least one area of public policy where the Left has abandoned its rhetorical allegiance to science: health care.

For years, studies have shown that patients on Medicaid — America’s government-run insurance program for the poor — do no better, and sometimes do worse, than those with no insurance at all. The largest such study, from the University of Virginia, evaluated 893,658 major surgical operations from 2003 to 2007 and found that surgical patients on Medicaid were 97 percent more likely to die before leaving the hospital than those with private insurance. Medicaid patients were 13 percent more likely to die than those with no insurance at all. The study adjusted for income, age, geography, prior health status, and other factors.


Many other studies have shown the same thing. There are others suggesting that Medicaid isn’t worse than being uninsured, but that it isn’t better, either. The main problem is that Medicaid pays primary-care doctors an average of 52 cents for every dollar a private insurer pays. This leads many doctors — and also specialists — to stop taking patients on Medicaid, making it hard for poor enrollees to get routine check-ups and needed care.

In 2011, Jonathan Cohn, writing in The New Republic, described those of us who wrote about these studies as launching a “conservative assault on Medicaid.” Liberal health economists contorted themselves into pretzels explaining why the data — the science — must be wrong.

There was a very good reason why progressive commentators needed to convince themselves — and us — that Medicaid made people healthier. Half of Obamacare’s expansion of government-subsidized health-insurance coverage was routed through the Medicaid program. If Medicaid didn’t improve health outcomes, then neither would Obamacare. When then-senator Joe Lieberman (I., Conn.) said that he wouldn’t support Obamacare if it expanded Medicare, the Washington Post’s Ezra Klein wrote, “Lieberman . . . seems willing to cause the deaths of hundreds of thousands of people in order to settle an old electoral score.” 

The Oregon experiment
One legitimate criticism of the inconvenient Medicaid studies is that — like nearly all such policy research — they look back retrospectively on a set of data in order to gain insights into how Medicaid is performing. Hindsight, as we know, can be 20/20. In theory, the most objective form of research is a controlled experiment, in which you randomly assign your subjects to be treated differently and watch what happens in the future, based upon prespecified measurements.

Four years ago, a group of leading health economists, including Obamacare architect Jonathan Gruber, sought to rectify this problem. It turned out that the State of Oregon was holding a lottery, in which, within a certain income bracket, it would randomly allow some people to enroll in Medicaid while leaving others uninsured. It was the perfect opportunity to try to conduct a study on Medicaid’s health outcomes.

In 2011, the economists released their initial findings. While it was too early to measure Medicaid’s effects on objective health measures such as blood pressure or cholesterol, patients told the researchers that they felt better about their health.

This rather modest result led to a chorus of jubilation from liberal journalists. “Amazing Fact! Science Proves Health Insurance Works,” read a headline from Ezra Klein. Wrote Matthew Yglesias, “A new rigorous study from Oregon confirms that Medicaid does, indeed, save lives.” (The study did not, in fact, detect any change in mortality.) Oregon’s result “suggests that having health insurance substantially improves health,” wrote David Leonhardt of the New York Times. One of the authors of the study, Amy Finkelstein of MIT, cheered, “What we found in a nutshell is that having Medicaid makes a big difference in people’s lives.”