The New York Times takes a look at how health insurance coverage is distributed to the needy here in Oregon – with mixed results:
In 2008, Oregon opened its Medicaid rolls to some working-age adults living in poverty, like Ms. Parris. Lacking the money to cover everyone, the state established a lottery, and Ms. Parris was one of the 89,824 residents who entered in the hope of winning insurance.
With that lottery, Oregon became a laboratory for studying the effects of extending health insurance to people who previously did not have it. Health economists say the state has become the single best place to study a question at the center of debate in Washington D.C. – What are the costs and benefits of coverage?
My first reaction when I heard that Oregon’s needy had to enter a lottery for a chance to obtain coverage was incredulity. A lottery? A lottery is no rational basis for the distribution of finite resources. It’s not like you can’t divide the available dollars up.
But the practice did manage to create a useful laboratory to study what happens when a limited demographic – the heretofore uninsured population of Oregon – suddenly gains access to health coverage. The population sample came with its own control group: Lottery losers.
The results, however, are not surprising. Those who won the lottery, and had access to health insurance coverage, reported better health outcomes.
The data also indicate, however, that those with insurance spent more money on health care than those without insurance. This also should be totally unsurprising to anyone who pays attention, and should put the lie to the notion that expanding health insurance to more people will reduce spending and government outlays. This was a mistaken assumption from the outset. It has led to huge cost overruns in Massachusetts, and according to the Congressional Budget Office, will lead to increasing red ink in the Federal treasury under the Patient Protection and Affordable Care Act (ObamaCare).
The additional spending is significant: Those who applied for the lottery and won, on average, spent $778 dollars per year more on health care coverage per year than lottery losers.
One myth that leads to a lot of bad policy arguments is the notion that an increase in preventive care – that is, screening and testing for severe illnesses and conditions – must necessarily save money. It may save or prolong lives – but there is nothing written in the stars that guarantees that preventative health care measures will save money. This is important to keep in mind, because there were some provisions in PPACA that took effect recently that made a wide variety of screenings and testings and preventative care procedures free to the consumer – simply meaning someone else besides the consumer directly pays for them.
Whether a specific preventive care measure is a long-term money saver or not depends on a variety of factors: The cost of the procedure, the number of people who elect to go through it, the number of positives identified for medical intervention, the cost of that medical intervention, the number of false positives, and the number of false negatives. It also depends on the difference between the mortality and morbidity of those screened or tested and not screened or tested.
It does no good, for example, to point to a single medical condition, such as breast cancer or prostate cancer and say “see, if you catch this at stage 1, it only costs $20,000 to treat, but if you catch it at stage 3, it may cost $50,000 to treat. You save $30,000 per patient!” Why? Because you ignore the cost of the screen itself.
A 2008 study, published by the New England Journal of Medicine, found that preventative care did not always make fiscal sense, and in some instances was an outright money-losing proposition.
Yes, we’re all delighted by a favorable outcome in an individual case. But the laws of finance are immutable. If you overspend on screening, there will be fewer available dollars to spend actually providing care. Ultimately, that cost differential will show up on some bureaucrat’s spreadsheet somewhere, and someone will necessarily be denied coverage because the resources are not available.
You don’t think that happens already? It does. Ask the lottery “losers.”
In the long run, we’re all better served by a rational cost-benefit analysis, accurately identifying the costs of treatment, the costs of preventative screening, and by looking at our policy alternatives as they actually are – rather than as dreamers wish them to be.
We may decide, as a state or as a country, that it’s worth it to us to fund money-losing preventative care procedures, because the benefit of a positive result can be huge to a given individual. And that is worth something right there. But we should make that decision with an accurate cost analysis, not without one. And that’s probably a decision better left to the individual, at any rate, anyway.