Bad News for Obamacare: A New Study Suggests Universal Health Care Doesn’t Make People Healthier

The search for better economic policy.
May 1 2013 5:00 PM

Bad News for Obamacare

A new study suggests universal health care makes people happier but not healthier.

Paramedics and parents walk in an injured child into the emergency room on September 14, 2009 at the non-profit Children's Hospital in Aurora, Colorado. Although a proposed 'government option' in health care reform has stirred controversy nationally, hospital administrators say that almost half the children they admit are already covered by a government plan, mostly Medicaid.
An Oregon study found that having Medicaid proved particularly important in shielding participants from medically induced financial catastrophe.

Photo by John Moore/Getty Images

In 2008, the state of Oregon initiated an ambitious health care policy that allowed researchers to shed light on the effects of guaranteeing Medicaid coverage for low-income adults. The results have been closely followed in large part because insurance for the poor is a major component of the Affordable Care Act—aka Obamacare—that will soon be rolled out across the country.

A study published on Wednesday in the New England Journal of Medicine reports that—at least as far as health outcomes are concerned—the Oregon Medicaid experiment hasn’t lived up to the hopes of many universal care advocates. Two years after getting randomly assigned to Medicaid coverage, recipients fared no better than a control group of uninsured, low-income Oregonians in tests for hypertension, cholesterol, and diabetes treatment—all medical conditions that can be managed with proper care. The Medicaid recipients did report much lower rates of depression and—perhaps relatedly—were much less likely to be on shaky financial footing than those in the control group. But the Oregon study’s findings indicate that the claim that universal health care on its own will make Americans healthier, at least in these particular dimensions, may be wishful thinking.

The Oregon Medicaid experiment was initiated in 2008, when the state opened a waiting list for a limited number of new spots in the Oregon Health Plan Standard. OHP Standard provided Medicaid insurance to poor, able-bodied adults who didn't meet the usual conditions for Medicaid. Nearly 90,000 Oregonians applied for the 10,000 slots, and the state picked the lucky Medicaid recipients by lottery. This gave researchers a group of insurance applicants who were identical in every way. If the lottery winners ended up in better health, it wouldn’t be because of some pre-existing condition or circumstance: Their insurance status was quite literally the luck of the draw.

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The early results from the experiment, based on surveys performed a year following initial Medicaid assignment and released in the summer of 2011, seemed promising. I described them for Slate in an article titled “Does Health Coverage Make People Healthier?” The answer then was a tentative yes: Oregon Medicaid applicants who were randomly assigned to receive insurance reported that they utilized more preventive care, felt in better health, were more stable financially, and overall just a whole lot happier than those who didn’t win the insurance lottery. At the time, conservative commentators cautioned that the liberal media—of which I am a proud member—were overhyping the study’s implications. The results were promising but far from conclusive; they weren’t based on actual health outcomes but instead things like health care usage (trips to the doctor, use of preventive care, and so on) and self-reported health status (“Are you in poor, fair, or excellent health?”) rather than actual health outcomes.

Now that the clinical results have started to come in, it’s time for liberal media types like myself to eat some humble pie. Today’s New England Journal article presents a set of findings showing that Medicaid had no effect on a set of conditions where you would expect proper health management to make a difference. There are effective treatment protocols for hypertension, cholesterol, and diabetes, yet insurance status had no effect on blood pressure, cholesterol levels, or glycated hemoglobin (a measure of diabetic blood sugar control).

At the same time, some of the early hopes for the OHP are borne out in the recent data: Medicaid recipients had much better mental health than their control-group counterparts. Based on clinical diagnostic criteria, the insured were about one-third less likely to be depressed than those not assigned to Medicaid. And the financial benefits of insurance also remained: Insurance proved particularly important in shielding study participants from medically induced financial catastrophe—5.5 percent of the control group reported spending more than 30 percent of their annual income on health care, as compared to just about zero for those assigned to receive Medicaid. According to Amy Finkelstein, an MIT economics professor and one of two principal investigators on the study, this is a critical observation since, “a primary purpose of health insurance is to protect individuals financially in the event of adverse health events, and our findings show that Medicaid does just that.” (As in the earlier study, Medicaid also translated into more use of medical services, with coverage leading to increased doctor visits, use of medication, and compliance with recommended preventive care like mammograms and cholesterol screening.)

Overall, can the Oregon Medicaid experiment be declared a success or failure two years on? As the study’s other principal investigator, Katherine Baicker of the Harvard School of Public Health, puts it, the findings are like a health insurance ink blot—people see in it whatever they need to validate their existing position on Obamacare and universal coverage for the poor more generally. Those opposed to government care point to the lack of any measurable effect on health outcomes. Insurance advocates naturally highlight the importance of Medicare in reducing stress and its value as a financial cushion. Medicare is in large part health insurance that is meant to shield those covered from the ruinous effects of a health disaster. OHP seems to have been extremely effective in eliminating such catastrophic financial outcomes. And maybe two years isn’t enough time for researchers to see improvements in health, which may accrue over the longer term (though the researchers have focused on health outcomes where improvements should be seen within a two-year time frame).

At the same time, the findings should give pause to even those who are most committed to universal health insurance. We shouldn’t expect the Affordable Care Act to make Americans healthier (except in terms of mental well-being). The ACA will put millions of low-income individuals across the country into Medicaid programs that look a lot like what’s available in Oregon; such a rapid expansion could overwhelm health care service capacity. If anything, the results of the Oregon study might be optimistic about the results.

If you’re committed to better health for the poor, though, the latest Oregon results are not a reason to give up on the cause completely. Rather, the Oregon experiment is yet another argument in favor of the increasingly common view that access to medical care is necessary but far from sufficient for good health. What’s the use in prescribing statins to reduce cholesterol to patients who don’t take their meds, continue to consume potato chips and soda unabated, and ignore health care providers’ pleas to walk more and drive less?

But changing habits, compliance, and lifestyles is a much taller order, and viewing health care in this way can make the Affordable Care Act, despite its enormous ambitions, seem almost too timid or narrow in its focus. It requires that our conception of health care go beyond a passive delivery system of waiting for patients to come into the clinic and get out into the community to reach patients in their daily lives. At least some case studies of successful health interventions emphasize this brand of community-based systemic intervention. It may be that this approach of active outreach—whether delivered by the government directly or by medically minded social entrepreneurs—may be what’s required to make America healthier.

Ray Fisman is a professor of economics at the Columbia Business School and co-author of The Org: The Underlying Logic of the Office. Follow him on Twitter.

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