Asymmetrical Information - Megan McArdle
05.03.13 8:19 PM ET
How the Oregon Study Should Change Our Thinking
On Wednesday, a team of researchers released a new study on Oregon's Medicaid expansion, showing that people who gained access to treatment had no statistically significant improvement on physical health measures like blood pressure or cholesterol. I wrote: "Given this result, what is the likelihood that Obamacare will have a positive impact on the average health of Americans? Every one of us, for or against, should be revising that probability downwards. I'm not saying that you have to revise it to zero; I certainly haven't. But however high it was yesterday, it should be somewhat lower today."
But how should we update our beliefs? Does this mean there's a chance that health care doesn't work?
That's one possible interpretation. Let's look at the strongest case. Assume for a moment that if we could somehow study the entire population of the United States, we'd find that gaining access to health insurance doesn't improve blood pressure, blood sugar, or cholesterol control. What would that tell us? That health care doesn't work?
That's not actually as crazy as it sounds. Lots of treatments are bad for you, and gaining access to the health system may just give you opportunities to get sicker. Say you're an 88 year old with bad hips. Now, maybe sitting still and not exercising is making you sick. But going to get a hip replacement gives you all sorts of ways to die: blood clot, hospital acquired infection, adverse reaction to anaesthesia. If it's not covered by insurance, maybe you'll stay home, take aspirin, and live longer.
But I don't think that's the most likely read of the Oregon results. No, I think that this would tell us something different: not that health care is bad, but that health insurance doesn't actually improve access to necessary treatment that much. If someone else covers the cost, it can help with the financial burden of health care. But uninsured people will mostly find a way for the most important treatments, the ones we know improve health, from stitches to control bleeding, to antibiotics, to blood pressure medication. It's the expensive stuff on the frontier--the stuff that's as likely to be useless, or harmful, as it is to help--that the uninsured mostly forego.
A bunch of people sarcastically asked whether I was planning to drop my health insurance. The answer is no, because my employer pays for it. But if the question is "Has this caused you to revise downward your estimate of the value of health insurance?" the answer has to obviously be yes. Anyone who answers differently is looking deep into their intestinal loops, not the Oregon study. You don't have to revise the estimate to zero, or even a low number. But if you'd asked folks before the results dropped what we'd expect to see if insurance made people a lot healthier, they'd have said "statistically significant improvement on basic markers for the most common chronic diseases. The fact that we didn't see that means that we should now say that health insurance, or at least Medicaid, probably doesn't make as big a difference in health as we thought.
Certainly, this bolsters my belief that health insurance should provide financial protection from catastrophic events, not wrap-around first-dollar coverage. Those who used to read me on The Atlantic may recall that the McArdle Plan for Healthcare involved the government picking up the tab for any medical expenses above 15-20% of income: simple, progressive, and aimed at the actual problem we know health insurance can fix. Unfortunaely, Obamacare made that sort of coverage functionally illegal.
Which brings me to another belief I should update. Three years ago, after Obamacare passed, I predicted that Obamacare would not result in significant reductions in mortality. I now think that this is more likely to be right than I did before. A number of people have been out there saying that the study vindicates their belief in the health benefits of insurance. I would like to hear them say, in clear and simple language, "After seeing the results from Oregon, I now believe that the US mortality rate will fall even farther than I expected, to . . . " with a number, not a hedge about statistically significant studies, attached.
Should we be paying for this kind of financial insurance? That's a moral question, not an economic one. But I think it's instructive that the political campaign for Obamacare leaned so heavily on claims about death and untreated suffering. Whether or not we should provide that sort of insurance, I don't think that Obamacare would have passed if its backers had said "The best study available shows that we'll probably get a nice reduction in depression and catastrophic expenses, but no statistically significant improvement in diabetes, mortality, or cardiovascular health."
That should give us pause. We passed a big, complicated piece of legislation on the assumption that Medicaid expansions like Oregon would make us healthier--so much helathier that we'd obviously be able to measure it. It just made gut sense, after all. And that shouldn't just make us pause and think about Obamacare. What other policies are we pulling out of our intestinal loops?