Good news everyone, health insurance doesn’t work

The passage of the AHCA through the House and the subsequent BCRA written in the Senate has made society at large anxious about the implications of these bills for the health of working Americans. Much of this fear has been fanned by politicians claiming that the bills will kill Americans. Bernie started off the parade:

Then Hillary jumped in:

Elizabeth Warren then accused the GOP of criminal activity:

These cuts are blood money. People will die. Let’s be very clear. Senate Republicans are paying for tax cuts for the wealthy with American lives.

— Elizabeth Warren

And then Nancy Pelosi gave an estimate of how bad the damage will be:

We do know that many more people, hundreds of thousands of people, will die if this bill passes

-Nancy Pelosi

If I was the average citizen, I would be terrified at this point. Fortunately, I’ve been trained to think like an engineer and I don’t get scared until the data tells me that I should be scared. There are several observational reports out there demonstrating that health insurance improves outcomes, some showing no effect, and some even showing that health insurance kills people overall. This is the problem with observational studies; they are especially vulnerable to vulnerable to selection bias and confounding and therefore are inconclusive and unreliable evidence. What we really want is experiments. Fortunately, there have been two major randomized controlled trials (aka real science) of the impact of health insurance coverage on health outcomes and mortality, the RAND health insurance experiment and the Oregon Medicaid experiment. What does the data tell us then? Good news everyone, you have nothing to worry about, because health insurance doesn’t do a damn thing.

The RAND Health Insurance Experiment is a gold standard study that ran between 1978 and 1983 on a sample of 3958 people by providing participants with health insurance with a randomized level of cost sharing ranging from 0% to 95% coinsurance . At the end of the experiment, the researchers concluded that:

For the average participant, as well as for subgroups differing in income and initial health status, no significant effects were detected on eight other measures of health status and health habits. Confidence intervals for these eight measures were sufficiently narrow to rule out all but a minimal influence, favorable or adverse, of free care for the average participant.

The Oregon Medicaid Experiment was the second randomized controlled trial, conducted between 2008 and 2010. In the study state of Oregon expanded Medicaid coverage to a random selection of 6387 beneficiaries out of a total of 12,229 eligible applicants, with the non-recipients being used as the control group. In the words of the researchers:

We found no significant effect of Medicaid coverage on the prevalence or diagnosis of hypertension or high cholesterol levels or on the use of medication for these conditions. Medicaid coverage significantly increased the probability of a diagnosis of diabetes and the use of diabetes medication, but we observed no significant effect on average glycated hemoglobin levels or on the percentage of participants with levels of 6.5% or higher. Medicaid coverage decreased the probability of a positive screening for depression , increased the use of many preventive services, and nearly eliminated catastrophic out-of-pocket medical expenditures.

Two major studies decades apart and they find the exact same thing: increased healthcare utilization, increased total healthcare spending (important finding: prevention doesn’t save money), increased financial security (and the corresponding mental health benefits), but no statistically significant effect on health status (they don’t teach you this part in school). The health insurance didn’t do anything to improve people’s health compared to those who didn’t receive insurance. Keep in mind that these are large studies involving thousands of subjects. They’re also not ‘partisan’ or biased. The Oregon study in particular was run by Finkelstein and Gruber, who worked on the ACA and would’ve loved to show a positive effect on health, they just couldn’t find one.

This is a surprising finding for most people. It’s pretty simple to establish a plausible relationship between health insurance and mortality. Person gets sick, person can’t get treatment, person dies. How can there be no positive impact of health insurance on mortality? There’s several reasons that are not immediately intuitive but are real scenarios. Consider the following:

Case 1. Man gets cancer. Man has health insurance. Man’s cancer has no treatment. Man dies. Health insurance had no effect on health.

Case 2. Man has a bad diet and doesn’t get exercise. Man gets diabetes. Man has health insurance. Doctor tells him what he needs to do. Man continues to eat poorly and not exercise. Man dies. Health insurance had no effect on health.

Case 3. Man gets cancer. Man has no health insurance. Man’s cancer has a treatment. Man partners with a charitable organization and gets his treatment paid for. Man lives. Health insurance had no effect on health.

Case 4. Man has a non-life threatening lesion on a scan. Man has health insurance, so the doctor orders a biopsy to check. Man acquires an infection during the biopsy and dies. He would’ve lived if he had no insurance and didn’t get the biopsy. Health insurance killed the man.

It must be noted how common these situations are. 1 in 25 hospital patients acquire an infection. 1 in 500 hospital patients get killed by a medical error. Medical errors are the 3rd leading cause of death in America. Let that sink in, your average internist is involved in involuntary manslaughter 1-2 times per month. On top of that the expensive stuff that kills people, we’re not even that good at treating it. Overall cancer survival is only 50-60%. We also don’t have the slightest clue on what to really do with heart disease, respiratory disease, diabetes and such, because we don’t know how to stop patients from being themselves. Raj Chetty’s megastudy from last spring (1.4 million individuals observed) showed that the biggest predictors of life expectancy wasn’t income but whether you drank, smoked and exercised. 9 out of the 10 leading causes of death in the U.S. are preventable by changing your behavior. The inconvenient truth is that no amount of health insurance is going to save a smoker from themselves, because you’re just throwing money into a fire. Health care simply does not work for people who don’t care about their health.

The sum of all this is that health insurance has some real cost/benefit tradeoffs, but none of them are to improve health or save lives, and politicians should be more careful about saying things that are scientifically untrue. If you want to save lives, then try prohibition (that went well the first time), because health insurance expansion doesn’t get you there.

(Obviously this is all in the context of marginal effects at US insurance coverage levels, your mileage may vary in other contexts)

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