How Not To Measure Whether Obamacare Is Succeeding

Apr 24, 2016 by


After some months of little news on the Obamacare front, it’s suddenly back in the headlines in the past week or so.  Major health insurers have announced withdrawals from the “exchanges”; others have announced big losses; and some are predicting a combination of further withdrawals and/or big premium increases when the next round of annual renewals comes up.  Is the whole thing starting to unravel?

Obviously, the New York Times needs to weigh in.  They did so with a big front page article on Monday titled “One Year Later, Many Are Finding Relief in Health Care Law.”  (Online the title is “Immigrants, the Poor and Minorities Gain Sharply Under Affordable Care Act.”  )  Is Obamacare succeeding?  Of course it is!  At least, Obamacare is succeeding if you use the criteria of success that the New York Times uses.  The problem is that they use criteria of success that seem to make sense to the progressive mind, but don’t make any sense to me.

Now, if you asked me to assess whether Obamacare is succeeding, the criteria I would come up with would have to do with whether it is accomplishing important goals in a cost-effective manner.  In other words: (1) Have health outcomes improved for some categories of the supposed beneficiaries of the law? and (2) At what cost?  You won’t be surprised to learn that this very long New York Times article does not devote one word either to the question of whether anyone’s health outcomes have improved, nor to the question of cost.

Well, of course they don’t devote a word to the question of whether health outcomes for anyone have improved.  That’s because by now everybody (or at least everybody who follows the literature) knows that expanding the number of people covered by health insurance does not measurably improve health outcomes.  (You mean you don’t know that?  You’ve been reading the New York Times!)  Megan McArdle here in a 2013 article summarizes the results of the major studies on whether increased “coverage” by health insurance improves health outcomes:

  • There was the big Oregon randomized study that ran for two years from 2008-10.  Oregon got some money to expand Medicaid, but only for about half the number of people they wanted; so they held a lottery to determine who got in.  And then they ran a randomized study on 6400 people who got in and 5800 who did not.  Results:  Not only was there no detectable difference in mortality, but “the study failed to find statistically significant improvement on the three targets associated with the most common chronic diseases.  This, mind you, is the stuff that we’re very good at treating, and which we’re pretty sure has a direct and beneficial effect on health.” 
  • Then there was the big observational study, conducted by Richard Kronick of UC San Diego, based on data from 672,000 insured and uninsured people as reported on the National Health Interview Survey from 1986 to 2000.  Results: “no mortality benefit from insurance.”  
  • Or, going back a ways, there was the big Rand randomized study of close to 8000 people, divided into five groups ranging from very to much less comprehensive health insurance, that ran from 1971 to 1982.  Results:  “[T]hey looked to see what differences emerged in health outcomes.  Shocker: none did.”

OK, so the Times won’t talk about any improvement in health outcomes.  What then are they referring to when they say that immigrants, the poor and minorities have “gained sharply” under the law?  Answer:  they’ve gained “coverage”!

[T]he Times’s analysis shows that by the end of that first full year, 2014, so many low-income people gained coverage that it halted the decades-long expansion of the gap between the haves and the have-nots in the American health insurance system, a striking change at a time when disparities between rich and poor are growing in many areas.

Yes, it’s “coverage,” the holy grail of progressive healthcare policy.  But can somebody please explain to me why “coverage” is of any value to a poor person?  Remember that “coverage” will not improve your health outcomes.  Also remember that in this country, if you are sick or injured and show up at a healthcare facility such as a hospital, they have to treat you.  You might run up a big bill.  But it is a given that if you are poor and without assets, they won’t be able to collect the bill.  That’s why low income people with few assets who think about the subject for a few moments realize that their sensible strategy is to go without health insurance.  If you had few assets and an income around, say, $30,000 per year, and suddenly you had available another $10,000 or so per year in cash, is there really any chance that you would think your highest priority would be to spend all of that money on health insurance?  How about food for the kids, or a new TV?

Let’s give the Times a chance to try to explain why “coverage” is valuable to poor people.

“From the vantage point of the poor and working poor, Obamacare has been profound,” said Jim Mangia, president of the St. John’s Well Child and Family Center, a federally funded health clinic in South Los Angeles that has enrolled 18,000 new patients under the law, nearly all of them Hispanic or black and the vast majority in Medicaid.

But what exactly is the “profound” effect of Obamacare for poor people if you can’t demonstrate any change in health outcomes?  There is, of course, the fact that Jim now gets paid a lot more, since he gives away much less uncompensated care.  Good job, Jim, trying to spin that as a benefit to the poor.

Or try this one:

One new patient, Angela Cruz, 60, is a typical example of a winner under the law. A legal immigrant who is not a citizen, she came to this country from El Salvador in 1990. She had never had health insurance in her 25 years of working in the United States, most recently as a nanny. . . .  Then she got coverage under the health law’s expansion of Medicaid in California.  Now, she said, “I don’t have the stress of wondering — can I pay this — when sometimes I didn’t have anything to pay it with.” 

So what exactly did this big Obamacare “winner” win?  No demonstrably improved health outcomes, but she doesn’t have the “stress” she used to have!

I say, give Angela the real test:  offer her the cost of her Obamacare “coverage” in cash and see whether she takes the cash or the “coverage.”  Of course, she’ll take the cash.  And so would nearly everyone else who the Times says is “gaining sharply” from Obamacare.  That’s because, as I wrote in this post back in 2013, health insurance is about asset protection, not health.  If you don’t have assets to protect, health insurance is of next to no value to you.  It won’t improve your health.  OK, it may relieve some “stress.”  If you had no meaningful assets and pretty good health, would you pay the cost of Obamacare “coverage” versus taking the cash?

Oh, and dare we address that other subject that is taboo over at the Times — cost?  The CBO here puts the net cost of Obamacare subsidies for 2016 at $660 billion.  (And that’s before you even get to the effect of Obamacare in driving up everyone’s premiums.)  But don’t worry, the resources of the federal government are infinite.  We’ll never miss the money.

Source: How Not To Measure Whether Obamacare Is Succeeding — Manhattan Contrarian

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