Healthcare Reform: Was It Worth It?

Was It Worth It?

Posted from John Goodman’s Blog

Filed in Health Alerts on November 15, 2010 with 18 comments

There is a whole lot of soul searching in Democratic circles these days. Given the shellacking at the polls, it’s only natural to ask: Was the health reform bill worth it?

What did the Affordable Care Act (ACA) achieve that is worth $1 trillion of taxpayer money and benefit cuts for the elderly and the disabled, to say nothing of the Democratic losses on election day? Other than some insurance reforms that have been overhyped, members of Congress who voted for the ACA don’t seem to have a coherent answer. What about Kathleen Sebelius? No luck there. How about Rahm Emmanuel or David Axelrod?  They don’t seem to know either.

So I turned to the blog sites of some academic health economists. If anybody can tell me why the ACA was worth it, surely they can.

Austin Frakt was reliably up to the task. The health care bill will insure the otherwise uninsured, he says, and with insurance they will acquire more health care and live healthier, longer lives. He writes:

The most important benefit of health reform: It was, is, good for health. The principal way in which health reform is good for health is that it provides access to insurance for tens of millions of Americans…. let’s just take insuring the uninsured. Many, many, many, many, many, many studies using the best statistical techniques find that insurance is good for health. Aaron and I have written about them numerous times, so I won’t do a literature review in this post. (Follow the “many” links provided above.)

In my opinion, Austin is cherry picking his evidence — especially when it comes to enrolling the uninsured in Medicaid, which is where half of them are headed. Several of those links are to junk studies; he ignores studies with contrary findings; and he conceals what I think is really interesting (given that we’re about to plop down a cool trillion) — health economists don’t actually agree on what difference health insurance makes.

I want to put the academic studies aside and analyze this issue using ordinary common sense. There are four observations:

  1. No matter how much additional insurance we create, patients as a group will not be able to obtain additional health care unless (a) there are currently idle resources that can be brought online, (b) additional doctors, nurses, etc. are trained, or (c) we relax restrictions on the ability of pharmacists, nurses and paramedical personnel to do some of the things doctors are now doing.
  2. Regardless of conditions of supply, the newly insured will not get more health care unless they obtain access to providers they did not have access to before (e.g., being able to see doctors who previously would not see them or being able to outbid other patients in the competition for provider time and resources).
  3. Even if the newly insured do get more care, is subsidizing insurance premiums the best (most economical) way to create more access (as opposed to, say, creating more community health centers)?
  4. If better health is the ultimate goal, is spending money on health care the best way to achieve it (as opposed to, say, spending money on education, job training, spending money on education, job training, etc.)?

As we have noted before at this blog, the primary care sector is characterized by growing shortages, not surpluses, and the pattern seems to be widespread. The last time you were at a family doctor’s office or a hospital emergency room, did you notice any idle resources? Were there a lot of doctors and nurses standing around with nothing to do? Also, although earlier versions of the ACA did have line item expenditures to train additional providers, all these expenditures were zeroed out before final passage.

Massachusetts cut its uninsured rate in half but did nothing to increase supply. As a result, the wait to see a new physician in Boston is twice as long as in any other U.S. city and traffic to Massachusetts emergency rooms is higher than ever. About half of the newly insured in Massachusetts enrolled in Medicaid and most of the remainder enrolled in plans paying not much more than Medicaid rates. This means that the newly insured are likely to be at the rear of the waiting lines.

Don’t expect the results to be better if we repeat the Massachusetts experiment nationwide.

What is gained by enrolling people in an insurance plan that basically allows them to get care only at the same places they were getting care before they were insured? Not much. At least not much in terms of better health. It seems almost self-evident that if you want uninsured, low-income families to have a wider choice of doctors and facilities, enrolling them in Medicaid is a poor use of money.

Finally, it’s not clear that we get the biggest health outcome bang for the buck by spending money on health care. A principle that applies universally is: wealthier is healthier. Another principle: being better educated is healthier. Marginal dollars spent to improve education and job skills may produce more long-term health benefits than spending more money on medical care.

I’ll return in a subsequent Health Alert to the question of what the evidence shows about whether being enrolled in Medicaid is better than being uninsured.

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