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Now that it’s been a few months, we can all calm down and stop arguing over power calculations in the Oregon Medicaid Study and acknowledge that the most important finding in the study was this one:

p had them confidence intervals/values with the stastically significant to which they refer/the whole relevant academic community was looking at her/p hit the floor/next thing you know/p values got low, low, low, low, low, low, low, low

For all the talk about the state of American health, and whether Medicaid provides quality healthcare, people really neglected to discuss that health insurance is insurance, a fundamentally financial project in which customers exchange regular payments for a promise to be protected from the consequences of low-probability but high-cost events. It’s certainly an interesting question whether car insurance or homeowner insurance effect the rates of collisions or fires, but more importantly it is completely clear that these products eliminate people who have suffered those events from also being bankrupted. Similarly, health insurance is a way that people who contract cancer from not also contracting six-figure debts. Despite what is my very strong discomfort with conventional methods of statistical significance, it is clearly obvious from the above results that even the relatively-minimal insurance afforded by Medicaid succeeds somewhere between “substantially” and “wildly” in reducing the financial risk of illness.

Now, the health care market is a funny one, because of the weird ways we think about it and conceptualize, the expense of it, and the large hand the taxpayer has in it. But while we should definitely strive to increase the efficiency of health care, by encouraging good behavior and incentivizing preventative care and reducing wasteful care and introducing more cost-reduction pressure and reducing administrative costs and eliminating infections in hospitals, all that is separate from following the commitment our society has already made to guarantee at least some forms of medical care to those in need with a commitment to put a ceiling on the financial risk that individuals can incur when they elect to not simply wander off and die when catastrophic illness strikes.


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The latest episode of EconTalk stars Jim Manzi discussing the Oregon Medicaid experiment. Without getting too much into their (very interesting) discussion of the econometrics of the experiement – or into my substantial and growing skepticism of econometric methodology writ large – I want to take their jumping-off point and go in a totally different direction.

Manzi’s jumping-off point is noting that, of the ~35,000 individuals offered free or dirt-cheap health insurance through Medicaid, only about 60% of them actually took up the state’s offer. In other words, its only somewhat more likely than a coin toss that any given poor person, handed free or nearly-free health insurance on a platter, would submit the paperwork to procure it.

Forget about the econometric implications of that – from an individual standpoint, that’s nuts. Say what you will about health insurance, but ceteris paribus it’s a hell of a lot better to have it than not, and when the cost of getting it is an hour or so filling out forms plus a Forever Stamp® we would have to at the very least seriously puzzle over why someone wouldn’t do it.

Russ Roberts calls the active ingredient here "prudence" ("because it’s an Adam Smith word," and I swear if I hear him mention Smith or Hayek on his damn show one more time…) but I’m going to go ahead and say that’s probably not the deciding factor. Instead, I’m going to go with "life is complicated and people are busy."

Let’s take the following as axioms: 1) each individual has only so much time in a day; 2) everything takes some time; 3) individual computation power is limited and exhaustable within certain temporal boundaries. While behvaioral economics certainly has grappled with the third proposition, I’m not really sure economics as a field has dealt well with the first two, especially in conjunction with the third. But I would argue that they’re really, really important, and even more important in light of the broad political movement over the past few decades to shift from state provision or command-oriented economies to market mechanisms and consumer sovereignty. Because, while you can make a lot of compelling arguments in a set of cases considered in isolation for "more market," if you look at the aggregate impact of vastly increasing both the number and complexity of choices/time-unit average individuals need to make you might be looking at a recipe for disaster.

Now, the libertarian-inclined might say "I consider that on some fundamental level irrelevant, individual freedom of choice is a first principle." And while I am not particular inclined to guide public policy on an a-consequentalist political philosophy that doesn’t distinguish humans from computers, let’s stow the philosophical argument for now – certainly most libertarians are not anarchists so even that principle has its bending point – and arbitrarily accept that some individual decisions should/must be made collectively by agents of the group, and say, "well, what should they be?"

I’m going to go ahead and say "access to medical care" (as opposed to all medical decisions) should be way, way, way up near the top of that list. Medicine is complicated. Really, really complicated. Medical decisions are loaded with moral and personal and interpersonal signficance about the value of life. So why should we a) complicate medical decision-making with the notoriously Byzantine private health insurance industry or b) complicate critical non-medical life decisions (like labor market decisions) with medical implications. It’s hard enough to decide whether to move your family to take a job; it’s hard enough to decide the best way to care for a dying loved one; and everything else in life – balancing checkbooks, balancing schedules, balancing obligations to friends and family and coworkers and community and the self, balancing pleasure and work – is hard and complicated enough without having to constantly worry about the status of your health insurance or whether your health problems will bankrupt you or which doctor or clinic or specialist takes which insurance and which jobs offer which kinds of insurance. Life is hard and complicated enough. Hard and complicated enough that you might not even notice if the state sends you an envelope with a too-good-to-be-true offer of free health care, or that you might not have the time, ability, or wherewithal to verify the offer or submit the paperwork if you did.

The other day I wrote two post on the same day, one that went like this:

If you were a potential candidate running for office in one of two districts, and District A had a middle-class incumbent and District B had a rich incumbent, you might be more inclined to run in District A. And I think you’d be right. But probably for the wrong reasons…[rich pols are] in politics strictly for the game. And because all their upside is on staying in office, they might fight a lot harder and a lot nastier to stay in office.

And one that went like this:

Unsurprisingly, many GOP governors have chosen the latter path, especially those who might be running for re-election, even those who were conservative darlings before hand. So instead of just one big Dolchstoss from Roberts, we now have a running clown car of conservative Dolchstosses across America and a big juicy political target for Democrats.

Yet I did not sum one and one to compute the mythical “two” until Dave Weigel wrote this:

When Florida Gov. Rick Scott buckled and said he’d support Obamacare’s Medicaid expansion, I urged caution, because the GOP-run state legislature would get a say on this. It could always reject the expansion “and make Scott seem—for the first time in recorded history—like a centrist” as he faces a 2014 re-election campaign…Pennsylvania Gov. Tom Corbett and Wisconsin Gov. Scott Walker also preside over reasonably-safe Republican legislatures, which might have blocked expansion anyway.

Tom Corbett and Scott Walker come from not-uncomfortable middle-to-upper-middle-class-itude; but Rick Scott has a personal net worth in the nine figures and that’s after he blew eight figures seizing Florida. So think about it this way – if Corbett and Walker get re-elected they’re Presidential candidates; if not they’re sitting pretty on wingnut welfare or corporate boards and getting rich. Rick Scott is already rich, and probably doesn’t care about running for President. He wants to stay in the statehouse and is willing to buck his own party strategically to do it.

Obviously this isn’t a deterministic or even primary factor, but I think we forget too often that politicians are people and are looking forward to their own possibility trees.


You may recall, oh those many moons ago, when Chief Justice John Roberts decided that basic economics (not to mention basic decency) could inform jurisprudence after all and therefore PPACA could stick around, making him Dolchstoss-er of the decade as far as the conservative movement was concerned.

You may also recall that, in order to throw said conservative movement a bone, Roberts led the SCOTUS into tossing out the stick in the enticement mechanisms for the Medicaid expansion, meaning governors suddenly had a lot less negative incentive to accept the giant wad of federal money.

However, the law of unintended consequences seems to have fully kicked-in – rather than be any kind of political win for conservatives, empowering governors to make this decision has been totally miserable. When governors didn’t have a choice, they didn’t have a choice – but now that they actually have to choose, they are faced with refusing the money, which is irresonsible bordering on evil, or taking it and therefore inviting the federal vampire into their home. Unsurprisingly, many GOP governors have chosen the latter path, especially those who might be running for re-election, even those who were conservative darlings before hand.

So instead of just one big Dolchstoss from Roberts, we now have a running clown car of conservative Dolchstosses across America and a big juicy political target for Democrats.

Well done, your honor!

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