New Study

In all my years of interest in health economics, I cannot recall a study quite as stunning as the one that appeared last week in the New England Journal of Medicine.

The conventional wisdom among health experts across the ideological spectrum is that people need health insurance to get good health care.  Indeed, to some politicians the terms "no health care" and "no health insurance" are interchangeable.  Almost as widely accepted is the view that some health plans deliver better health care than others.  But the new study shatters those assumptions.

  • Among people who seek care (actually see a doctor), there is virtually no differences in the quality of care received by the insured and uninsured.
  • There is also very little difference in the care provided by different types of insurance – Medicaid, managed care, fee-for-service and so forth.

Just in case you haven't been following the bidding, there are probably a hundred studies that have claimed to find that uninsured people get less health care than the insured.  Almost all of them are bad studies.  But the one or two that are methodologically sound failded to distinguish between people who seek care and those who do not.  That distinction is crucial.  

In Lives at Risk, we observed that among people who seek care in Dallas County, there is no observable difference between the care received by by the low-income insured (mainly Medicaid) and the uninsured.  We hypothesized that this was probably true nationwide. 

The NEJM study confirms that conjecture.   What are the implications?   The entire Medicaid program (at a cost of $1,000 per person for every man, woman and child in the country and a huge crowd out of private insurance) is predicated on the conventional wisdom that being insured matters.  Now we know that what really matters is seeing a doctor.  Two deterrents are rationing by waiting and physician fees.  Both hurdles could be overcome with funded Health Savings Accounts.  

Another conventional wisdom is that the uninsured need sky-is-the-limit coverage just like the United Auto Workers.  But since the low-income uninsured have few assets to protect, why do people with modest means need such expensive coverage?  They don't.  A scaled down plan could give them ample choice of doctors and allow entry into the system for much lower premiums.

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