Ross Douthat: Reform won't cure all ills

May 7, 2013 

In one of the most famous studies of health insurance, conducted during the 1970s, thousands of participants were divided into five groups, with each receiving a different amount of insurance coverage. The study, run by the RAND Corp., tracked the medical care each group sought, and not surprisingly found that people with more comprehensive coverage tended to make use of it, visiting the doctor and checking into the hospital more often than people with less generous insurance.

The study also tracked health outcomes. And there the results were surprising: With a few modest exceptions, the level of insurance had no significant effect on actual wellness.

Needless to say, experts have been arguing about the RAND results ever since. But the basic finding -- that more expensive health insurance doesn't necessarily lead to better health -- just got a major boost. The state of Oregon expanded its Medicaid program via lottery a few years ago, and researchers released the latest data on how health outcomes for the new Medicaid users differed from those for the uninsured.

The answer: not much.

Being on Medicaid helped people avoid huge medical bills, and it reduced depression rates, but better care seemed to have little or no impact on common medical conditions such as hypertension and diabetes.

As liberals have been quick to point out, these findings do not necessarily make a case against the new health care law, which includes a big Medicaid expansion and subsidies for private insurance. After all, the first purpose of insurance is economic protection, and the Oregon data shows that expanding coverage does protect people from ruinous medical expenses. The links between insurance, medicine and health might be impressively mysterious, but staving off medical bankruptcies among low-income Americans is not a small policy achievement. This is true.

But it's also true that the health care law was sold with the promise that it would save tens of thousands of American lives. This was not supposed to be just a big redistribution program; it was supposed to be a matter of life and death.

If it turns out that health insurance is useful mostly because it averts financial catastrophe -- which seems to be the consensus liberal position since the Oregon data came out -- then the new health care law looks vulnerable to two interconnected critiques.

First, if the benefit of health insurance is mostly financial, then shouldn't health insurance policies work more like fire, flood and car insurance, which exist to protect people against actual disasters -- not to pay for ordinary repairs. If the best evidence suggests that health insurance is most helpful in protecting people's pocketbooks, and that more comprehensive coverage often just pays for doctor visits that don't improve actual health, then shouldn't we be promoting better catastrophic health coverage? Liberals don't like catastrophic plans because they're stingier than what most Americans have now.

This is where the second critique comes in: If the marginal dollar of health care coverage doesn't deliver better health, shouldn't policy-makers be stingier while looking for better ways to improve the prospects of the poor?

Some kind of expanded health security is clearly a good thing -- but if we want to promote economic mobility as well, does it really make sense to pour a trillion dollars into a health care system that everyone agrees is dysfunctional, when some of that money could be returned to their paychecks instead?

The goal would be to help people rise by giving them more money and more options, rather than expanding '60s-vintage programs that pay medical bills and only medical bills.

It's to the Republican Party's discredit that these goals don't have enough conservative champions. It's to liberals' discredit that they remain wedded to the dream of a health care bureaucracy that pays and pays and pays, when in all likelihood we could be spending much less with similar results.


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