Recently Oregon did a field experiment (the experiment part was initially unintentional, but intentional as soon as famous health economists Kate Baicker and Amy Finklestein heard about their plans) in which they expanded Medicaid to some people and not to others.
More and more of the results are coming out. They’ve found that Medicaid stops catastrophic medical expenses. They’ve found improvements in mental health just from having coverage. At this point, they haven’t found improvements in health compared to the control group. Some conservative groups are citing this last fact as evidence that health insurance is unnecessary for poor people.
Now, there’s several reasons they might not have found improvements in health compared to the control group. Oregon might have a better social safety net than other places. Or, Oregon may have a worse problem with the ability to find doctors who take Medicaid because it doesn’t reimburse enough, in which case both insured and uninsured people would be getting the same emergency room treatment. Or, we may see health improvements down the road as we see the effects of people taking their diabetes and heart medications more regularly.
It is, in fact, a little odd to think that health would be improved with access to coverage– after all, didn’t Mitt Romney say that anybody can get health care because emergency rooms can’t turn people away? Still, plenty of other evidence suggests that some baseline of insurance helps people to get preventative care, to stay away from emergency rooms for routine care, to take medications for chronic conditions, to see the doctor before problems become complicated, and so on.
But even if Medicaid expansions don’t improve health, that doesn’t mean they’re a failed policy (unless, of course, it is lack of access to doctors who will take Medicaid that is the problem, but the solution to that problem is to increase reimbursements). The purpose of insurance isn’t to provide access to care, although it may have that effect.
The purpose of insurance is to smooth consumption over states of the world. It is there to make sure that you don’t end up with a catastrophic loss when times are bad. Car insurance doesn’t prevent you from getting into a car wreck, but it helps pay out when you get into an accident. Life insurance doesn’t prevent you from dying, but it compensates your heirs when you lose your life. Home insurance doesn’t prevent you from getting robbed or keep your house from burning down, but it pays you back when you suffer a loss. Unemployment insurance pays out when you lose your job through no fault of your own but doesn’t do much to keep you from getting laid off.
Medical insurance is the same thing– it provides financial protection when you’re hit with large medical bills. In the case of Medicaid, the government is picking up the premiums, but it is still health insurance. Better health would be a great outcome, and it’s one we were expecting, but lack of better health doesn’t mean we should toss out Medicaid expansions.
What do you think the purpose of health insurance is? Why (or why not) do you buy coverage?