• Are RomneyCare and ObamaCare too expensive?

    Adrianna has a great post this morning summarizing the new study in the Annals of Internal Medicine by Sommers and his colleagues reporting that the 2006 Massachusetts health reform law (‘RomneyCare’) improved health outcomes. I want to comment on a response to Sommers’ article, to the effect that the study shows that although being insured may save your life, providing that insurance costs too much per life saved.

    Sommers and his colleagues found that

    Reform in Massachusetts was associated with a significant decrease in all-cause mortality compared with the control group (−2.9%; P = 0.003, or an absolute decrease of 8.2 deaths per 100 000 adults). Deaths from causes amenable to health care also significantly decreased (−4.5%; P < 0.001). Changes were larger in counties with lower household incomes and higher pre-reform uninsured rates. Secondary analyses showed significant gains in coverage, access to care, and self-reported health.

    As Austin notes in his accompanying editorial, this adds to the strong evidence against widely repeated claims that getting health insurance has no effect on your health.

    Looking at insurance as if it were a medical treatment, the researchers estimated how many uninsured persons would need to receive health insurance so that a single additional life would be saved.

    The number needed to treat was approximately 830 adults gaining health insurance to prevent 1 death per year.

    Michael Cannon points out that this suggests that

    success has come at a very high cost… If we assume the per-person cost of covering those 830 adults is roughly the per-person premium for employer-sponsored coverage in Massachusetts in 2010 (about $5,000), then a back-of-the-envelope calculation suggests that RomneyCare spent $4 million or more per life saved… The World Health Organization considers a medical intervention to be “not cost-effective” if it costs more than three times a nation’s per-capita GDP per year of life saved.

    Cannon concludes that

    this means there are likely to be policies out there that could save a lot more lives than RomneyCare does per dollar spent. Or as Sarah Palin might put it, even if RomneyCare saved as many lives as this study suggests, it still probably deserves to be death-paneled.

    Cannon is asking the right question: Given limited budgets, is insuring the uninsured the best way to spend our resources? But his next step is weak. Cannon is right that the study shows that the mortality benefits of health insurance would not by themselves justify its purchase. But that’s an absurd requirement. Health insurance gives you access not just to live saving care, but also to the rest of medical care, including things like hip replacements that allow you to walk and run, and free you from chronic pain. Insurance also protects your family from financial ruin. It’s the total contribution of health insurance to well-being that needs to be considered in deciding whether we should support universal coverage. If Cannon is going to place a value on being insured, he needs to consider the total benefit a person experiences from having health insurance, not just the chance that it will save her life.

    There are also two moral considerations that critics of Romney- or ObamaCare need to consider if they endorse Cannon’s arguments.

    First, Cannon believes that there are policies that would deliver more benefit than Romney- or ObamaCare. If you are a critic of the ACA and this is what you believe, Cannon’s argument obligates you to do that better thing with the money. This poses an acute test for leaders in the 24 states that refused the ACA’s expansion of Medicaid. How many of those states refused to expand Medicaid, but then did nothing else for the health of their uninsured? If politicians in those states just refused the money and let the poor die, they do not have standing to make Cannon’s criticism about paths not taken.

    Second, is it just to worry about the cost of health insurance only when we are considering insuring the poor? 55% of the US population had employer-based health insurance in 2011. Because this benefit isn’t taxed, this meant that 55% received a large subsidy for their insurance, including many affluent people. (And I’m sure Michael Cannon hates this, probably more than I do!) If you oppose the expansion of Medicaid, you should also favor the taxation of employee health benefits. Otherwise, you are arguing that we can afford to subsidize the health insurance of the rich, but that it costs too much to do it for the poor.

    @Bill_Gardner

     

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