Guessing the health effects of Obamacare
March 14, 2012 10:44 AM Subscribe
A new working paper by economists Charles Courtemanche (University of Louisville) and Daniela Zapata (UNC-Greensboro) shows that Massachusetts 2006 uniform healthcare coverage caused improvements for numerous health outcomes. To the degree that the Massachusetts experiment is a guide for the federal Affordable Care Act, this study provides some guidance for guessing which individuals and approximately how much the benefits of the program will be.
Does Universal Coverage Improve Health? The Massachusetts Experience
Charles J. Courtemanche, Daniela Zapata
NBER Working Paper No. 17893
Issued in March 2012
ABSTRACT - In 2006, Massachusetts passed health care reform legislation designed to achieve nearly universal coverage through a combination of insurance market reforms, mandates, and subsidies that later served as the model for national health care reform. Using individual-level data from the Behavioral Risk Factor Surveillance System, we provide evidence that health care reform in Massachusetts led to better overall self-assessed health. An assortment of robustness checks and placebo tests support a causal interpretation of the results. We also document improvements in several determinants of overall health, including physical health, mental health, functional limitations, joint disorders, body mass index, and moderate physical activity. The health effects were strongest among women, minorities, near-elderly adults, and those with incomes low enough to qualify for the law’s subsidies. Finally, we use the reform to instrument for health insurance and estimate a sizeable impact of coverage on health. The effects on coverage were strongest for men, non-black minorities, young adults, and those who qualified for the subsidies, while the effects of coverage were strongest for women, blacks, the near-elderly, and middle-to-upper income individuals.
Does Universal Coverage Improve Health? The Massachusetts Experience
Charles J. Courtemanche, Daniela Zapata
NBER Working Paper No. 17893
Issued in March 2012
ABSTRACT - In 2006, Massachusetts passed health care reform legislation designed to achieve nearly universal coverage through a combination of insurance market reforms, mandates, and subsidies that later served as the model for national health care reform. Using individual-level data from the Behavioral Risk Factor Surveillance System, we provide evidence that health care reform in Massachusetts led to better overall self-assessed health. An assortment of robustness checks and placebo tests support a causal interpretation of the results. We also document improvements in several determinants of overall health, including physical health, mental health, functional limitations, joint disorders, body mass index, and moderate physical activity. The health effects were strongest among women, minorities, near-elderly adults, and those with incomes low enough to qualify for the law’s subsidies. Finally, we use the reform to instrument for health insurance and estimate a sizeable impact of coverage on health. The effects on coverage were strongest for men, non-black minorities, young adults, and those who qualified for the subsidies, while the effects of coverage were strongest for women, blacks, the near-elderly, and middle-to-upper income individuals.
Man bites dog: having health insurance coverage is good for your health!
Although, mind you, the number of soi-disant progressives who have strenuously decried the ACA because, um, health insurance is just an evil scam designed to feather the nests of the insurance companies (or something) suggests that this really is 'news.'
The saddest thing about the coming election season is that Obama isn't going to be able to trumpet the extraordinary, epochal achievement of his first term because the lying liars on both sides have so thoroughly distorted the issue that almost nobody recognizes what an extraordinary step the ACA really is.
If it can just survive the Roberts court and actually go into full implementation I predict it will end up being like Medicare--an all but untouchable third-rail of US politics.
posted by yoink at 10:52 AM on March 14, 2012 [4 favorites]
Although, mind you, the number of soi-disant progressives who have strenuously decried the ACA because, um, health insurance is just an evil scam designed to feather the nests of the insurance companies (or something) suggests that this really is 'news.'
The saddest thing about the coming election season is that Obama isn't going to be able to trumpet the extraordinary, epochal achievement of his first term because the lying liars on both sides have so thoroughly distorted the issue that almost nobody recognizes what an extraordinary step the ACA really is.
If it can just survive the Roberts court and actually go into full implementation I predict it will end up being like Medicare--an all but untouchable third-rail of US politics.
posted by yoink at 10:52 AM on March 14, 2012 [4 favorites]
Although, mind you, the number of soi-disant progressives who have strenuously decried the ACA because, um, health insurance is just an evil scam designed to feather the nests of the insurance companies (or something) suggests that this really is 'news.'
Any system that rests on the best outcome being "profit" rather than "health" is...less than ideal. Insurance companies do not exist to keep you healthy. They exist to make money. If they can do that and make it affordable enough for you to get medical care, great. If not - you will be sacrificed, not their potential profits.
posted by rtha at 10:56 AM on March 14, 2012 [2 favorites]
Any system that rests on the best outcome being "profit" rather than "health" is...less than ideal. Insurance companies do not exist to keep you healthy. They exist to make money. If they can do that and make it affordable enough for you to get medical care, great. If not - you will be sacrificed, not their potential profits.
posted by rtha at 10:56 AM on March 14, 2012 [2 favorites]
What works in Massachusetts would work for other states as well. But only on a patchwork basis with 50 different regulatory solutions and 50 distinct sets of requirements for insuance companies, 50 different billing and coding systems, 50 different provider reimbursment forms and 50 different criteria for what is or is not covered under a given plan.
Once the Federal Government makes any attempt to impose uniform standards, that is the moment when the American experiment ends, the City on a Hill falls, Texas raises a white flag and turns into France, grandma gets euthanized by the Dutch and a drive through abortion clinic opens on every street corner in Alabama.
posted by T.D. Strange at 11:06 AM on March 14, 2012 [3 favorites]
Once the Federal Government makes any attempt to impose uniform standards, that is the moment when the American experiment ends, the City on a Hill falls, Texas raises a white flag and turns into France, grandma gets euthanized by the Dutch and a drive through abortion clinic opens on every street corner in Alabama.
posted by T.D. Strange at 11:06 AM on March 14, 2012 [3 favorites]
The main complaint is the economic downside, forcing me to pay for your health care. Because I'm free and this is America.
posted by stbalbach at 11:13 AM on March 14, 2012
posted by stbalbach at 11:13 AM on March 14, 2012
Any system that rests on the best outcome being "profit" rather than "health" is...less than ideal. Insurance companies do not exist to keep you healthy. They exist to make money. If they can do that and make it affordable enough for you to get medical care, great. If not - you will be sacrificed, not their potential profits.
To say that you believe private insurance companies are not the optimal means for paying for health care (as compared to, say, a government program) is one thing; it's a perfectly defensible position, although the arguments are rarely the slam-dunk that proponents seem to think. But that's not the argument I'm objecting to--it's the claim that somehow money spent on health insurance is just thrown into the bank account of the insurance company owners and nothing of value is received in return. I have had more arguments than I can think of with people claiming that because private insurers are involved in the ACA system, the system is a complete waste of money.
The one line refutation of this ridiculous argument is: "if a friend tells you that they just got a job that includes health benefits, is your response 'oh, what a bummer'?" Somehow the fact that we universally regard having health insurance in the real world as a Good Thing seems incapable of impinging on people's firm belief that having health insurance under the ACA will mean throwing money pointlessly down the sink.
Look, the ACA forces the insurance companies to accept a trade-off: you get a vastly increased pool of people paying into the system, but you accept far more stringent regulation of who and what you cover. Most of the things people (legitimately) hate the health insurance companies for (capricious pre-existing condition rules, arbitrary dropping of coverage, swingeing increases in premiums in response to actually using the insurance etc.) will be illegal for companies that participate in the ACA markets. And, furthermore, insurers who participate in the market have a hard cap on the percentage of premium money that they can take as profits. 85% of the money they receive has to be spent on actual medical coverage. To screw increased profits out of the system they have to work at reducing their administrative costs and keeping a lid on fraud--they can't just jack up premiums to pay for their gold-plated private jets.
In the end, insurance is not what is driving the inflation of healthcare costs in the US. It's the part of the healthcare industry that most middle class Americans actually get to deal with, moneywise, so it's the part that we tend to get most angsty about--but we're badly missing the forest for the trees. The liberals' beloved "public option" would have made essentially no difference in the total number of people covered or the quality of coverage received. We should be cheering the ACA loudly and publicly as one of the greatest pieces of progressive legislation in the last century.
posted by yoink at 11:13 AM on March 14, 2012
To say that you believe private insurance companies are not the optimal means for paying for health care (as compared to, say, a government program) is one thing; it's a perfectly defensible position, although the arguments are rarely the slam-dunk that proponents seem to think. But that's not the argument I'm objecting to--it's the claim that somehow money spent on health insurance is just thrown into the bank account of the insurance company owners and nothing of value is received in return. I have had more arguments than I can think of with people claiming that because private insurers are involved in the ACA system, the system is a complete waste of money.
The one line refutation of this ridiculous argument is: "if a friend tells you that they just got a job that includes health benefits, is your response 'oh, what a bummer'?" Somehow the fact that we universally regard having health insurance in the real world as a Good Thing seems incapable of impinging on people's firm belief that having health insurance under the ACA will mean throwing money pointlessly down the sink.
Look, the ACA forces the insurance companies to accept a trade-off: you get a vastly increased pool of people paying into the system, but you accept far more stringent regulation of who and what you cover. Most of the things people (legitimately) hate the health insurance companies for (capricious pre-existing condition rules, arbitrary dropping of coverage, swingeing increases in premiums in response to actually using the insurance etc.) will be illegal for companies that participate in the ACA markets. And, furthermore, insurers who participate in the market have a hard cap on the percentage of premium money that they can take as profits. 85% of the money they receive has to be spent on actual medical coverage. To screw increased profits out of the system they have to work at reducing their administrative costs and keeping a lid on fraud--they can't just jack up premiums to pay for their gold-plated private jets.
In the end, insurance is not what is driving the inflation of healthcare costs in the US. It's the part of the healthcare industry that most middle class Americans actually get to deal with, moneywise, so it's the part that we tend to get most angsty about--but we're badly missing the forest for the trees. The liberals' beloved "public option" would have made essentially no difference in the total number of people covered or the quality of coverage received. We should be cheering the ACA loudly and publicly as one of the greatest pieces of progressive legislation in the last century.
posted by yoink at 11:13 AM on March 14, 2012
But that's not the argument I'm objecting to--it's the claim that somehow money spent on health insurance is just thrown into the bank account of the insurance company owners and nothing of value is received in return. I have had more arguments than I can think of with people claiming that because private insurers are involved in the ACA system, the system is a complete waste of money.
Well, okay, and that's not the argument I'm making, and it's not the argument that anyone I work with (at a health policy think-tank-y kind of place) makes either. I mean, I'm sure it's an argument that gets made, but it isn't one I've encountered here there and everywhere, the way you seem to have.
What I'm saying is I'm not sure why you're bringing up an argument that no one in this thread has made, and does not seem to be appear in the fpp.
posted by rtha at 11:18 AM on March 14, 2012
Well, okay, and that's not the argument I'm making, and it's not the argument that anyone I work with (at a health policy think-tank-y kind of place) makes either. I mean, I'm sure it's an argument that gets made, but it isn't one I've encountered here there and everywhere, the way you seem to have.
What I'm saying is I'm not sure why you're bringing up an argument that no one in this thread has made, and does not seem to be appear in the fpp.
posted by rtha at 11:18 AM on March 14, 2012
The liberals' beloved "public option" would have made essentially no difference in the total number of people covered or the quality of coverage received.
I've read (somewhere, during the whole ACA debate) that the administrative costs of an insurance company could be 5%, should execs not be compensated at 6-7 figures.
That potential 10% increase in funding for any kind of health-care benefit isn't inconsequential.
posted by Slackermagee at 11:23 AM on March 14, 2012 [1 favorite]
I've read (somewhere, during the whole ACA debate) that the administrative costs of an insurance company could be 5%, should execs not be compensated at 6-7 figures.
That potential 10% increase in funding for any kind of health-care benefit isn't inconsequential.
posted by Slackermagee at 11:23 AM on March 14, 2012 [1 favorite]
What I'm saying is I'm not sure why you're bringing up an argument that no one in this thread has made, and does not seem to be appear in the fpp.
Yes, because this is the first time this topic has ever been discussed and there are no well-established positions that we have encountered numerous times on this site and elsewhere.
If you haven't encountered the "ACA is a rip off designed only to feather the nests of the insurance companies" argument then I suggest you are reading a rather narrow pool of opinions on the matter.
posted by yoink at 11:27 AM on March 14, 2012
Yes, because this is the first time this topic has ever been discussed and there are no well-established positions that we have encountered numerous times on this site and elsewhere.
If you haven't encountered the "ACA is a rip off designed only to feather the nests of the insurance companies" argument then I suggest you are reading a rather narrow pool of opinions on the matter.
posted by yoink at 11:27 AM on March 14, 2012
If ACA capped insurer profits at 0% and set executive compensation to one penny, it still would be vastly inferior to a federal single payer system. One which would be subject to GAO oversight and could negotiate prices.
I'm not saying I want ACA repealed. It literally saved my cousin's life. But it's nowhere near good enough.
posted by clarknova at 11:31 AM on March 14, 2012 [2 favorites]
I'm not saying I want ACA repealed. It literally saved my cousin's life. But it's nowhere near good enough.
posted by clarknova at 11:31 AM on March 14, 2012 [2 favorites]
Yes, but socialism
Massive giveaways to insurance companies is not socialism.
What I'd like to see is a comparison of how much the increase in health "outcomes" cost vs what a true public system would have cost.
The main complaint is the economic downside, forcing me to pay for your health care.
This is in fact what insurance is. We all pay into a pot and those who need it take some. The only policy issue being debated is who administrates the pot. Foxes say they'll be good at guarding this henhouse, humans disagree.
posted by DU at 11:32 AM on March 14, 2012
Massive giveaways to insurance companies is not socialism.
What I'd like to see is a comparison of how much the increase in health "outcomes" cost vs what a true public system would have cost.
The main complaint is the economic downside, forcing me to pay for your health care.
This is in fact what insurance is. We all pay into a pot and those who need it take some. The only policy issue being debated is who administrates the pot. Foxes say they'll be good at guarding this henhouse, humans disagree.
posted by DU at 11:32 AM on March 14, 2012
Damn it big government, I'm a responsible and safe driver, stop making me pay for that guys Ferrari insurance! Grar!
posted by Slackermagee at 11:38 AM on March 14, 2012
posted by Slackermagee at 11:38 AM on March 14, 2012
I've read (somewhere, during the whole ACA debate) that the administrative costs of an insurance company could be 5%, should execs not be compensated at 6-7 figures.
That potential 10% increase in funding for any kind of health-care benefit isn't inconsequential.
You're getting that from the fact that Medicare admin costs are around 5% (depending whether you count support from related agencies etc.--it's a complicated issue with a lot of fuzzy math)--which is true. But it's true only if you take "administrative costs as a percentage of total outlay." But then stop and think about that for a second. Who gets covered by Medicare? Old people--the people with the highest per-person health costs in the country. But administrative costs don't scale directly with per-person expenditure (the cost to process paperwork for a humungously expensive drug or operation aren't that much higher than the cost to process paperwork for a relatively cheap drug or operation). So it's not an apples-to-apples comparison.
Also, looking at average administrative costs for private insurance is misleading, because it includes the administrative costs of a lot of really tiny plans--but obviously plans run through the insurance exchanges will be more comparable in their administrative costs to really large health-insurance plans; and those plans tend to come in with administrative costs that are pretty similar to Medicare's (about 7% or so).
So if health insurance plans can get administrative costs on ACA plans down to, say, 7%, that leaves them with max headroom of 8% for profit--which is hardly swingeing--and no guarantee, of course, of making even that much: the exchanges are, after all, designed to encourage competition for your insurance dollar and if the rules are written right price collusion could be made fairly difficult--at least in the bigger markets.
posted by yoink at 11:40 AM on March 14, 2012 [1 favorite]
If you haven't encountered the "ACA is a rip off designed only to feather the nests of the insurance companies" argument then I suggest you are reading a rather narrow pool of opinions on the matter.
Check your memail.
posted by rtha at 11:41 AM on March 14, 2012
Check your memail.
posted by rtha at 11:41 AM on March 14, 2012
that leaves them with max headroom of 8% for profit--which is hardly swingeing
That's still 8% more money that could be spent on something health related. Even if it weren't directly diagnostic or physically beneficial, a portion of that 8% profit from the insurance company going into academic research would yield miracles, if I'm remembering correctly how much that profit really is.
posted by Slackermagee at 11:45 AM on March 14, 2012
That's still 8% more money that could be spent on something health related. Even if it weren't directly diagnostic or physically beneficial, a portion of that 8% profit from the insurance company going into academic research would yield miracles, if I'm remembering correctly how much that profit really is.
posted by Slackermagee at 11:45 AM on March 14, 2012
If ACA capped insurer profits at 0% and set executive compensation to one penny, it still would be vastly inferior to a federal single payer system. One which would be subject to GAO oversight and could negotiate prices.
Well, yes, it would be vastly inferior in that case because not a single insurance company would enter the market and consequently health insurance via the ACA would be unobtainable. Unobtainable insurance is definitely worse than government-provided insurance.
But the claim that a strongly regulated market of private insurance like the ACA is "vastly inferior" to federal single payer is one with very little supporting evidence. The ACA system is highly comparable to, for example, the Swiss health system--which gets better marks from WHO than many single-payer systems. In fact, straight single-payer systems (like the Canadian and the British) perform generally a little worse than hybrid systems.
Even the most optimistic studies of the "public option" suggested that it would make only small marginal differences in terms of quality or extent of coverage if it was included in the ACA. The most extensive studies suggested that those differences would be vanishingly small.
posted by yoink at 11:45 AM on March 14, 2012 [1 favorite]
Well, yes, it would be vastly inferior in that case because not a single insurance company would enter the market and consequently health insurance via the ACA would be unobtainable. Unobtainable insurance is definitely worse than government-provided insurance.
But the claim that a strongly regulated market of private insurance like the ACA is "vastly inferior" to federal single payer is one with very little supporting evidence. The ACA system is highly comparable to, for example, the Swiss health system--which gets better marks from WHO than many single-payer systems. In fact, straight single-payer systems (like the Canadian and the British) perform generally a little worse than hybrid systems.
Even the most optimistic studies of the "public option" suggested that it would make only small marginal differences in terms of quality or extent of coverage if it was included in the ACA. The most extensive studies suggested that those differences would be vanishingly small.
posted by yoink at 11:45 AM on March 14, 2012 [1 favorite]
health insurance is just an evil scam designed to feather the nests of the insurance companies
I worked for five years for a life insurance company and my father worked for over 30 years in liability insurance. One of the few things we agreed upon (as did a solid majority of our co-workers) was that the Private Insurance Industry was (and this we first discussed in the 1990s) the WORST possible entity to manage Health Care, in terms of costs AND management. We both knew how the Insurance businesses we were involved in worked and how anything even vaguely resembling them made zero sense for the essential job of providing Health Care. His quote (and he was a lifelong Conservative Republican) was "it's like having Insurance Companies in charge of building roads" (just even more vital, I'd add).
posted by oneswellfoop at 12:38 PM on March 14, 2012 [1 favorite]
I worked for five years for a life insurance company and my father worked for over 30 years in liability insurance. One of the few things we agreed upon (as did a solid majority of our co-workers) was that the Private Insurance Industry was (and this we first discussed in the 1990s) the WORST possible entity to manage Health Care, in terms of costs AND management. We both knew how the Insurance businesses we were involved in worked and how anything even vaguely resembling them made zero sense for the essential job of providing Health Care. His quote (and he was a lifelong Conservative Republican) was "it's like having Insurance Companies in charge of building roads" (just even more vital, I'd add).
posted by oneswellfoop at 12:38 PM on March 14, 2012 [1 favorite]
I believe Findland's healthcare administration costs are 1.2 percent. It's been a while since I took advanced math classes, 1.2% is less than 15%, isn't it? Why assume that a public option would necessarily be so inefficient as to burn up 15% of the money on administration costs?
posted by jsturgill at 1:05 PM on March 14, 2012
posted by jsturgill at 1:05 PM on March 14, 2012
The health effects were strongest among women, minorities, near-elderly adults, and those with incomes low enough to qualify for the law’s subsidies.
So........this can all be safely ignored by the Right, then. Or viewed as a bug, not a feature. OK, then.
posted by redbeard at 1:06 PM on March 14, 2012
So........this can all be safely ignored by the Right, then. Or viewed as a bug, not a feature. OK, then.
posted by redbeard at 1:06 PM on March 14, 2012
I think it's a mistake to argue outcomes between the ACA and single payer. In the current political climate, single payer is just not going to happen. In fact, we are at significant risk of having the ACA rolled back.
To me, the ACA is a step in the right direction. One that once implemented, will be impossible to rollback. (As I am of the opinion that once the public see's the benefits, it will become untouchable.)
That is why the republicans want to strangle this in the crib so badly, and why everyone who wants a modern and fair health system should be supporting it.
This is not the destination, but part of the journey.
posted by PissOnYourParade at 2:08 PM on March 14, 2012 [1 favorite]
To me, the ACA is a step in the right direction. One that once implemented, will be impossible to rollback. (As I am of the opinion that once the public see's the benefits, it will become untouchable.)
That is why the republicans want to strangle this in the crib so badly, and why everyone who wants a modern and fair health system should be supporting it.
This is not the destination, but part of the journey.
posted by PissOnYourParade at 2:08 PM on March 14, 2012 [1 favorite]
I think it's a mistake to argue [about X]. In the current political climate, X is just not going to happen.
Wonder how the political climate got that way.
posted by phrontist at 10:12 PM on March 14, 2012
Wonder how the political climate got that way.
posted by phrontist at 10:12 PM on March 14, 2012
The more money is at odds with the essentials of life, the crazier the politicians it needs to buy in order to distract you.
posted by clarknova at 3:35 AM on March 15, 2012
posted by clarknova at 3:35 AM on March 15, 2012
Late to the party, but I brought a draft of the full paper for those who can't get past the abstract.
People here in Greensboro are excited about UNCG's new basketball coach (former UNC guard Wes Miller, and, yes, I'm excited about that, too) but this research makes the university look really good.
posted by Buckley at 8:02 AM on March 15, 2012
People here in Greensboro are excited about UNCG's new basketball coach (former UNC guard Wes Miller, and, yes, I'm excited about that, too) but this research makes the university look really good.
posted by Buckley at 8:02 AM on March 15, 2012
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