Magazine | April 19, 2010, Issue

Hardly Healthier

The evidence does not establish that expanding insurance coverage improves health outcomes

Just before the House of Representatives voted to enact Obamacare, Speaker Nancy Pelosi triumphantly proclaimed, “This legislation will lead to healthier lives.” Democrats and liberal pundits have clung to that belief with near-religious fervor. But is there strong empirical evidence that expanding health insurance significantly improves health outcomes?

The answer, according to a scrupulous review of the literature by health economists Helen Levy and David Meltzer, is no. Despite years of research, the question of whether health insurance has a substantial impact on health “remains largely unanswered at the level of detail needed to inform policy decisions,” they wrote in a 2008 journal article. While it seems clear that insurance boosts the health of certain groups — infants, children, AIDS patients — and helps address various conditions in adults, such as high blood pressure, “for most of the population at risk of being uninsured (adults ages 19 to 50), we have limited reliable evidence on how health insurance affects health.”

The biggest reason, Levy and Meltzer explain, is that insurance coverage and health status are usually dependent, at least in part, on common variables, such as income, education, and lifestyle. Also, health status itself can have a direct influence on coverage, since sick people sometimes lose their jobs or get dropped by their insurance companies. Therefore, the fact that someone with insurance is healthier than someone without it may not be caused by the latter’s lack of coverage.

Dr. Meltzer, a professor of both economics and medicine at the University of Chicago, discussed his findings with a Cato Institute audience on March 25. He noted that the Obamacare debate primarily concerns the effects of insurance on the adult population, rather than on the subgroups just mentioned, and stressed that the relevant studies fail to compare alternative policies for improving general health results. There is no evidence, said Cato scholar Michael Cannon, that broadening insurance coverage saves more lives for every dollar spent than do other health interventions.

We should thus be skeptical of claims that Obamacare will dramatically reduce U.S. mortality rates. Throughout the debate, Americans have repeatedly heard mind-boggling statistics about the number of people who die for want of health insurance. A 2002 Institute of Medicine report concluded that around 18,000 U.S. deaths each year can be attributed to lack of insurance. More recently, a Harvard Medical School study put the figure at 45,000.

These numbers have been challenged by none other than political scientist and health-care expert Richard Kronick, who helped devise President Clinton’s ill-fated reform plan in the 1990s and now works for the Obama administration as deputy assistant secretary for health policy at the Department of Health and Human Services. After controlling for health status, Kronick found that “there appears to be no difference in the survival probabilities of uninsured and similar insured persons.” Overall, he has determined that “there would not be much change in the number of deaths in the United States as a result of universal coverage, although the difficulties in inferring causality from observational analyses temper the strength of this conclusion.”

It’s important to remember that many Americans without health insurance are either voluntarily uninsured or young and healthy. Using a previous government analysis (conducted in 2005) as his basis, former National Economic Council director Keith Hennessey has provided a useful breakdown of the 45.7 million people whom the Census Bureau identified as being uninsured at a given moment in 2007. According to his estimates, 6.4 million of them actually were insured through either Medicaid or the State Children’s Health Insurance Program (these folks are typically known as the “Medicaid undercount”); another 4.3 million were eligible for one of those two programs but not enrolled; another 9.3 million were not American citizens; another 10.1 million had family incomes above 300 percent of the federal poverty level; and another 5 million were childless adults aged 18 to 34.

For those keeping score, that leaves us with 10.6 million, less than a quarter of the original total. Other methodologies produce different figures, but the consensus is that a voluntary lack of health insurance is far from rare. Baruch College economists June and Dave O’Neill reckon that if we designate 250 percent of the federal poverty level as our affordability threshold, then 43 percent of those aged 18 to 64 who were uninsured in 2006 could be classified as voluntarily uninsured. “Using the behavioral definition of health insurance as affordable if the majority of people in similar circumstance purchase coverage,” health economists Mark Pauly of the University of Pennsylvania and Kate Bundorf of Stanford calculate that more than 50 percent of the uninsured in 2000 could have afforded insurance.

#page#In short, the involuntarily uninsured are a decidedly smaller group than many politicians would have us believe. And  the uninsured population is constantly in flux: A 2003 Congressional Budget Office study indicated that “between half and two-thirds of the people who experienced a period of time without insurance in 1998 . . . had coverage for other portions of the year.” The uninsured are also a healthier lot than we might imagine: According to Urban Institute researchers Lisa Dubay and Allison Cook, nearly 89 percent of the nonelderly uninsured describe their health status as “good” (28.8 percent), “very good” (31.8 percent), or “excellent” (28.3 percent); only 3.2 percent say they are in “poor” health.

This may be unsurprising, given that the uninsured often receive health care — some of which they pay for out of pocket, and some of which is provided without compensation. (Hence the complaints about our “free rider” dilemma, which has been overblown.) Relying on the 2005 Medical Expenditure Panel Survey, the O’Neills examined selected medical services (including routine checkups, Pap smears, PSA tests, mammograms, and more) received by nonelderly adults (aged 18 to 64). They established that “the uninsured receive about 50 to 60 percent of the amount of services received by those who are insured.”

But what about Americans’ relatively low life expectancy at birth? Surely that reflects profound flaws in the U.S. health-care model? On closer inspection, no. In a recent blog post, my NR colleague Jonah Goldberg cited the work of health economists Robert Ohsfeldt of Texas A&M and John Schneider of Oxford Outcomes (a consultancy). In their 2006 book, The Business of Health, Ohsfeldt and Schneider show that between 1980 and 1999, mean life expectancy at birth was 75.3 years in the U.S., 75.4 in Germany, 75.6 in the United Kingdom, 76.6 in France, 76.8 in Australia, 77 in Norway, 77.3 in Canada, 77.7 in Sweden, and 78.7 in Japan. But America has staggeringly high rates of homicide and transportation fatality, with most of the victims below age 60. After adjusting the data to account for national variations in murder, suicide, and accidental-death rates, Ohsfeldt and Schneider demonstrate that America’s standardized life expectancy at birth over the 1980–99 period was higher than that of any other OECD country.

They also make a crucial point about behavior: In 2003, nearly a third of America’s adult population was clinically obese; meanwhile, the obesity rates in the U.K., France, and Japan were 23 percent, 9.4 percent, and 3.2 percent, respectively. One need not endorse nanny-state solutions to acknowledge that the U.S. has a weight problem. Obamacare won’t solve it.

Here’s another reason we should not expect the landmark bill to yield major health gains: A hefty chunk of the newly insured under Obamacare — anywhere from 15 million to 18 million people, according to projections — will rely primarily on Medicaid for their insurance. Unfortunately, the fact that Medicaid reimburses participating providers at low rates has made it increasingly difficult for recipients to find doctors. In a 2008 survey, only 40.2 percent of physicians told the Center for Studying Health System Change that they were accepting all new Medicaid patients, and more than a quarter (28.2 percent) said they weren’t taking any. It can be even harder for Medicaid patients to locate dentists.

And yet this is the program that will soon be flooded with a massive wave of new enrollees. Dr. Edward Miller, dean and CEO of Johns Hopkins Medicine, has written that “without an understanding by policy makers of what a large Medicaid expansion actually means, and without delivery-system reform and adequate risk-adjusted reimbursement,” Obamacare “will have catastrophic effects on those of us who provide society’s health-care safety-net.”

If the overarching goal of health-care reform were to improve health outcomes, we would not be steering millions of Americans into a program that has consistently shortchanged both patients and providers. Nor would we be adopting policies (new taxes, regulations, and price controls) that threaten to hamper medical innovation.

Which raises the question: What was the Battle of Obamacare truly about?

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