• Raising the Medicare eligibility age is now a REALLY bad idea

    This post is co-authored by Aaron Carroll and Austin Frakt.

    We’ve written so many times on how raising the Medicare eligibility age to 67 is a bad idea that we hesitate to do so again. (See the FAQ.) But a recent revision by the CBO of federal savings it would generate compels us to do this one more time.

    Implementing this option would reduce federal budget deficits by $19 billion between 2016 and 2023, accord to new estimates by CBO and the staff of the Joint Committee on Taxation (see Table 1). That figure represents the net effect of a $23 billion decrease in outlays and a $4 billion decrease in revenues over that period. The decrease in outlays includes a reduction in federal spending for Medicare as well as a slight reduction in outlays for Social Security retirement benefits. However, those savings would be substantially offset by increases in federal spending for Medicaid and for subsidies to purchase health insurance through the new insurance exchanges and by the decrease in revenues.

    Do you get that? Phasing this in starting in 2016 could save $19 billion over the next 8 years. That’s less than $3 billion a year. That’s… insane.

    Why isn’t it more? Well, once again, the more people you kick of Medicare, the more you get on Medicaid. That increases federal expenditures. More people will also need exchange insurance, too, which means more people needing subsidies. That will also increase federal expenditures. These expenditures reduce the savings to the federal government from the $63.5 billion it would have cost to cover the 65 and 66 year olds to only $23 billion in savings.

    And we’re not even counting the increase to state expenditures for the added Medicaid, the increased cost to employers who have to provide insurance, the increased cost to all Americans in higher premiums for adding those elderly people to the private risk pools, or the increased out of pocket expenses to those seniors. (We covered these costs in prior posts.) If this was a bad deal before, it’s worse now.

    The last time the CBO estimated the savings from increasing the Medicare eligibility age, they pegged the savings to the federal government at $113 billion over 10 years. The new report has the savings as much, much less. Why? It turns out the CBO made a bit of a mistake last time*:

    CBO’s analysis highlighted two points. First, at ages 65 and 66, beneficiaries who enrolled in Medicare when they turned 65 tend to be in much better health—and thus are substantially less expensive, on average—than beneficiaries who were already enrolled upon turning 65 (because of disability or end-stage renal disease). Second, the many 65- and 66-year-old beneficiaries who are workers (or workers’ elderly spouses) with employment-based health insurance are less costly to Medicare, on average, than other beneficiaries at those ages.

    Two things here. The first is more important. Some people who are 65 and 66 who are on Medicare have been on Medicare for some time. That’s because they have renal failure or some other major disability that qualifies them for Medicare before age does. It should go without saying that these people are way more expensive than your otherwise average 65- or 66-year old Medicare beneficiary. These people are also completely unaffected by raising the eligibility age. They’re not eligible due to age, but due to disability or renal failure.

    It appears to us that in their original analysis, the CBO looked at average spending of all 65 and 66 year olds, including all of those extra unhealthy people. But they aren’t relevant here. We want to know how much will be saved by the new policy. So when you look only at people who are new to Medicare at 65 and those that were and then turn 66, the savings from raising the eligibility age is much, much less.

    Additionally, some 65 and 66 year olds still get insurance from their jobs and only use Medicare as a secondary source of coverage. This is much, much cheaper for the program, too. Savings from them will be less.

    Put these two things together, and the new estimate for federal savings is much lower than it was before. But all the non-federal costs (not in the CBO report but covered by us before — see links above) remain, as does the concern about the viability of the exchanges and the fact that Medicaid hasn’t expanded in all states. So if raising the Medicare eligibility age before was a bad idea (and it was), it’s an even worse idea now.

    *There are some who will use this opportunity to attack the CBO and their analyses. We will not be among those people. The CBO does amazing work, consistently and often thanklessly. The fact that they found this mistake and corrected it – publicly – is to be respected, if not lauded.

    @aaronecarroll and @afrakt

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  • The individual mandate penalty and Medicaid

    This post is jointly authored by Austin Frakt and Adrianna McIntyre. 

    In a post last week reminding readers how the individual mandate penalty works, Ezra Klein wrote

    That $95 floor [in 2014] is there to encourage people to sign up for Medicaid (in states where Medicaid isn’t being expanded, people making that little money will be exempted from the mandate on affordability grounds).

    Perhaps this is the designed purpose of the mandate penalty for Medicaid-eligible individuals, but explaining why relies a different logic than that for encouraging people to enroll in an exchange plan.*

    With respect to the exchange-eligible population, the purpose of the mandate penalty is twofold. First, it serves to manage risk selection, i.e., balancing premiums with expected health care costs. It does so by encouraging relatively healthier people to enroll. Relatively sicker individuals who will use more health services don’t need such an incentive. If the premium and cost sharing are lower than the cost of their care, they have ample motivation to purchase coverage. Encouraging those for whom this would not be the case to also purchase coverage will keep premiums, and therefore subsidy cost, lower than they would otherwise be. The mandate penalty is supposed to provide that encouragement.

    Second, the penalty will generate revenue from non-enrollees. This revenue will offset at least some of the cost of the uncompensated care they may use.

    Neither of these rationales for the mandate apply for the Medicaid population.** Medicaid enrollees don’t pay premiums; they aren’t permitted, with the exception of some beneficiaries above 150% FPL. Therefore, risk selection of the program is irrelevant. There are no premiums to balance against costs. With respect to program financing, every enrollee can only add cost. So, using a penalty to encourage Medicaid enrollment costs tax payers more, never less, and has no impact on the costs for other enrollees.

    Also, if a Medicaid-eligible but uninsured individual uses hospital services, s/he will be enrolled in Medicaid at that time. The ACA includes “presumptive eligibility” regulations that allow hospitals to enroll patients at point of service, given some basic information about household size and income. There is no limited open enrollment period for Medicaid. Therefore, the penalty does not recover a cost that the system must otherwise incur. (Hospitals cannot turn away patients requiring urgent care, but physicians can refuse them for office visits.)

    So, for the Medicaid eligible population, the penalty is just a penalty. It doesn’t serve to balance risk in an important way. It doesn’t recover costs, even though it would generate revenue. That’s just extra revenue. Of course the penalty will serve the role of encouraging additional enrollment. And that might be a benefit insofar as that causally increases the use of valuable, preventive or chronic condition management care.

    But recognize that for what it is: pure paternalism. Are we are penalizing Medicaid-eligible individuals just because we think they’d be better off with coverage?

    * What follows doesn’t apply to Arkansas, where the Medicaid expansion is operating under a waiver that caps contributions on an aggregate per capita basis; enrolling disproportionately sicker individuals could drive the expansion costs above that ceiling. More on that later.

    ** Some people who are eligible for Medicaid in expansion states will have incomes below the threshold for filing income taxes ($10,000 for someone filing individually in 2013) and will not have to pay the penalty because they have a “hardship exemption”. This also applies to all individuals below the poverty line in states not expanding Medicaid.

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  • The Republican Study Committee has a “replace” plan.

    The following is jointly authored by Aaron and Austin

    For years now, we have heard that those opposed to Obamacare had a plan to “repeal and replace” it. They’ve certainly been working on the “repeal” part. In fact, some House Republicans are willing to shut down the government, if not risk U.S. default on its debt obligations, if Obamacare is not repealed. So, we know what they’re against, but what are they for. We’ve not heard a word about “replace”.

    That’s not terribly surprising. Reforming the health care system to cover more people and to reduce the rate of growth of health spending is hard. The Affordable care Act (ACA), love it or hate it, was designed to do these things. It reforms the individual insurance market through exchanges and provides subsidies to those with low to moderate incomes to help them purchase insurance. It also includes some reforms aimed at lowering the rate of growth of health care spending, though it is not yet clear to what extent it will do so. The law was designed to balance its costs (coverage expansion) with reduced health care spending (Medicare payment cuts) and new revenue (taxes).

    The law’s opponents have claimed it costs too much, will result in rationing, and limit freedom. Today, a group of House conservatives presented their version of a replacement plan, endorsed by the Republican Study Committee. In short, it throws poor Americans under the bus.

    The centerpiece of the plan is a universal, standard tax deduction of health insurance premiums, up to $7,500 for an individual and $20,000 for a family. This would level a playing field that is uneven today.

    Today, only insurance purchased through work is tax deductible. People who don’t get insurance through their jobs don’t get a deduction.

    There are two problems with the House plan though. The first is that it will obviously cost a lot of money. How much is not clear, but it won’t be insignificant. How will that be paid for? The second is that a tax deduction is much more valuable to someone who makes a lot of money than someone who makes little. But people with large incomes aren’t the ones who need help affording coverage. It’s those at the lower end of the socioeconomic spectrum who need the most assistance. Because of their low marginal tax rates, a tax deduction is of very little help.

    Sick Americans would receive very little help under the plan too. One of the ways the ACA helps the sick is by eliminating the ability of insurers to refuse to cover them (guaranteed issue) or to charge them more for being ill (community rating). The House plan weakens the guaranteed issue protection by extending it only to those who have continuous coverage. If you dropped (or were forced out) of prior coverage, you may not be able to get back in the market.

    For sick Americans, it replaces the ACA’s protections with a high risk pool in which premiums are capped at 200% of what healthy people pay in the rest of the market. To help offset the cost, the proposal sets aside $25 billion over 10 years. Still, sick people will pay very high premiums. If they become poor due to loss of work from their illness, they still have to pay those high premiums, or go uninsured.

    The plan includes a number of provisions that would encourage and expand the use of health savings accounts (HSAs). These are personal accounts that can be used to buy health care services or pay cost-sharing tax free. Again, the favorable tax treatment is of very little value to low income Americans. Moreover, low income Americans don’t have a lot of money to put aside for their future health care use. HSAs might be a helpful step. But they alone won’t help everyone.

    The rest of the proposal is a grab bag of old ideas that cannot work well as sketched out, won’t do very much, or are wasteful giveaways. For example, allowing insurers to sell policies across state lines would invite a “race to the bottom.” In time, all insurance would originate from states with the least regulation. The policies will be cheaper. But they’ll also be skimpier. They’ll be great if you’re young, healthy, or wealthy enough to afford to fill in the coverage gaps. They’ll be terrible if you are older, have a chronic condition, or, again, if you’re low income.

    The plan would reform medical malpractice by capping damages. However, studies show, malpractice suits doesn’t contribute as much to higher health spending as people think.

    Finally, the plan includes giveaways to the wellness industry, increasing the amount by which plans can increase premiums for those who don’t meet health standards. This is unlikely to do more than make sick people pay more for coverage. It would also permit gym memberships and nutritional supplements to be purchased tax free, up to a cap. These are giveaways to the fitness and supplements industry, as well as to people at the higher end of the socioeconomic spectrum who are more likely to go to gyms and use supplements anyway.

    There are some other provisions, including removing government support for comparative effectiveness research, but these are the high notes.

    The Affordable Care Act is intended to help people who don’t have insurance, especially those who are less than healthy, get it. The House proposal is intended to make insurance cheaper and easier to get if you are healthy.

    We understand that putting together a health plan is challenging. Nothing good comes without limitations and costs. That’s true of the House plan as well as the ACA. But if you’re committed to coming up with a way to expanding coverage while preserving the private insurance market, at least the ACA follows an established model. It happens to be how Massachusetts did it. It’s how Switzerland did it. And it’s how the conservative Heritage Foundation suggested doing it in 1989.

    The House is claiming it has a new way. But to us it only looks like a way back to the same problems that plague the system today.

    @aaronecarroll and @afrakt

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  • Singapore’s health system: commentary from the literature

    This post is coauthored by Austin Frakt and Aaron Carroll.

    We have already written many posts about Singapore’s health system (there’s a a tag for that), which is built around medical savings accounts (it’s Medisave program), though encompasses so much more. Unsurprisingly, we’re far from the first to comment on the system. But, contrary to what some have suggested, we’re not just interested in scoring political points. We want to know what data and evidence have to say about Singapore. This post summarizes a few points from some of the relevant literature from peer-reviewed journals.

    Scholarly literature on Singapore’s health system goes back at least as far as the 1995 Health Affairs paper by William Hsiao. (His paper is ungated. Ungated versions of those linked below may also exist. Use Google Scholar.) He described the country’s health spending trajectory just before and after Medisave was introduced. Medisave, you might remember, is the major source of cost-sharing for the people of Singapore:

    The per capita cost of health care in Singapore, in fact, rose faster after the introduction of the Medisave program in 1984 (Exhibit 2 [below]). Health expenditures per capita rose at an average rate of 13 percent per year-2 percent faster than the average before the introduction of Medisave. Part of this accelerated rate of increase was attributable to the upgrading of public hospital facilities but mostly caused by other factors. […]

    In spite of the high average rate of growth in GDP of 10 percent, Singapore’s health expenditures grew faster, rising from 2.5 percent to 3.2 percent of GDP between 1980 and 1993.

    NHE Singapore

    In other words, health care spending increased after the introduction of increased cost-sharing, which is not what most proponents of such changes would expect. These points are repeated in Michael Barr’s “critical inquiry” into Singapore’s medical savings account, published in the Journal of Health Politics, Policy and Law (JHPPL) in 2001. But this was not a randomized controlled trial, and causality is, of course, not proven.

    In an accompanying commentary, Mark Pauly responded with two valid points, among others. First, it’s been well established that the more something costs an individual, the less of it they buy. It’s even been established for health care. Cost sharing definitely matters. Second, casual, pre-post examination of time series is uninformative about the effects of an intervention. How would Singapore’s health spending have changed in the absence of the Medisave intervention? We don’t know.

    Compounding the difficulty in judging Medisave from a time series is that it was not the only intervention. It seems to be uncontroversial in Singapore that substantial government involvement (some may call it “intrusion”) in the health care market is necessary for good performance. Hsiao quoted a 1993 Singapore Ministerial Committee on Health Policy white paper, the first few pages of which can be viewed here:

    Market forces alone will not suffice to hold down medical costs to the minimum. The health care system is an example of market failure. The government has to intervene directly to structure and regulate the health system.

    Barr quoted a different passage of the same document justifies rationing, including by government intervention:

    We cannot avoid rationing medical care, implicitly or explicitly. Funding for health care will always be finite. There will always be competing demands for resources, whether the resources come from the State or the individual citizens. Using the latest in medical technology is expensive. Trade-offs among different areas of medical treatments, equipment, training and research are unavoidable.

    Intervene, the government did. In Health Affairs, Thomas Massaro and Yu-Ning Wong described some of the interventions, including control of physician and hospital supply, generous subsidization of hospital care, and hospital revenue caps. They wrote,

    Financing mechanisms alone do not define a health care system. Singapore has a clearly delineated policy that works in its setting. The state actively participates in every aspect of the delivery system, from physician supply to price setting and the establishment of service criteria. This willingness to intervene aggressively in the market (at levels probably unacceptable to most Americans) may be as important as the individual savings mechanism to its success.

    In a JHPPL commentary that accompanied Barr’s paper, Hsiao described other means of cost control.

    MediShield [Singapore’s opt-out, catastrophic health plan] adopted the risk selection practices of private insurance schemes by excluding as enrollees persons aged seventy and older and by not covering some expensive services, such as treatments for congenital abnormalities, mental illness, and HIV/AIDS. [Some of these policies may have changed since the paper’s publication in 2001.]

    Again, however, point granted to Pauly that some restrictions imposed by Singapore’s government are not altogether different from those imposed by commercial plans in the U.S., for better or worse. We take this to mean that there really aren’t all that many ways to control costs in all areas. Ultimately, you have to say “no” in some fashion.

    In another JHPPL commentary, Chris Ham makes what we think is the most important point:

    The broader lesson from Singapore is that health care reform continues to swing back and forth between a belief in market forces and the use of government regulation. In reality, health policy is replete with examples of market failures and government failures as policy makers experiment with different instruments. The variety of health care systems developed around the world indicates that the choice is neither pure markets nor government control but the balance to be struck between the two. And to return to our starting point, where the balance is struck will be shaped by social values and the political choices that follow from them.

    There’s one more challenge in assessing Singapore’s health system, raised by Barr.

    The government is highly secretive about the detailed operation of its system and has not made either the data source or method of its calculations available to anyone outside those in the Civil Service and the government who need to know—not to the public; not to academic researchers.

    This probably explains why, though there is a literature on the Singapore health system, it’s a modestly sized one. It should also cause anyone serious to hesitate before advocating that Singapore’s system, and its results, can be generalized without some concerns.

    By the way, JHPPL also published a letter to the editor by Meng-Kin Lim (we gather this is his homepage) and responses from Michael Barr and William Hsiao. Finally, here’s a paper that compares Shanghai’s experience with medical savings accounts to Singapore’s.

    The bottom line is that Singapore isn’t simply “cost-sharing”, “free market”, “competition”, and a “lack of government involvement”. If you endorse Singapore’s health care system, you’re buying into many things, and some truths, that libertarians and conservatives claim to dislike. We acknowledge that more cost sharing can reduce spending. But if that’s the only thing you endorse, then you’re not talking about Singapore.

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  • NEJM letters on the Oregon Medicaid study

    The following is jointly authored by Austin, Aaron, and Sam Richardson. Our letter to The New England Journal of Medicine (NEJM) was rejected on the grounds that our point of view would be adequately represented among the letters accepted for publication. Those letters are now published

    The letter that expresses ideas most similar to ours is by Ross Boylan:

    The abstract in the article by Baicker et al. states that “Medicaid coverage generated no significant improvements in measured physical health.” This is a misleading summary of the data reported in their article. The best estimates are that the Medicaid group had better outcomes than the control group according to most measures (see Table 2 of the article). The problem is that these findings are not statistically significant.

    So, the effects might have been zero. That is not the same as saying that they were zero, or even that they were small. Buried toward the end of the article is the statement, “The 95% confidence intervals for many of the estimates of effects . . . include changes that would be considered clinically significant.”

    Nevertheless, almost all the article, the related editorial, and related news reports, opinion pieces, and online discussions proceeded as if the effects had been found to be zero.

    If one objects, on the basis of a lack of statistical certainty, to the simple summary that the Medicaid group had better outcomes, then one should describe the substantive meaning of the confidence interval. An honest summary is that it is quite likely there were positive effects, though it is possible that they were zero or negative.

    Still, there is not one letter that dives deeply into the issues of power, as we have. (See also thisthat, and this.)

    Katherine Baicker and Amy Finkelstein, two of the original paper’s authors and leads on the wider study, wrote a response to the letters, which you can read in full at NEJM. One excerpt:

    In some cases, we can reject effect sizes seen in previous studies. For example, we can reject decreases in diastolic blood pressure of more than 2.7 mm Hg (or 3.2 mm Hg in patients with a preexisting diagnosis of hypertension) with 95% confidence. Quasi-experimental studies of the 1-year effect of Medicaid showed decreases in diastolic blood pressure of 6 to 9 mm Hg.

    Of course it is true that the study results reject, with 95% confidence, decreases in diastolic blood pressure mentioned in this quote. However, as Aaron wrote here and here, the prior work cited by the authors that suggests a 6-9 mm Hg drop in diastolic blood pressure was on a population of patients with hypertension. As he explained, and as I did again here, only a small fraction of the Oregon Health Study sample had high blood pressure:

    A key point is that blood pressure reduction should only be expected in a population with initially elevated blood pressure, which was the focus of the prior literature referenced above. In contrast, the headline OHIE result is for all study subjects, only a small percentage of whom had elevated blood pressure at baseline. Unfortunately, there is no reported OHIE subanalysis focused exclusively on subjects with hypertension at time of randomization. Depending on which metrics from the published results you examine, between 3% and 16% of the sample had elevated blood pressure at baseline. Taking the high end, 16% x 5 mm Hg = 0.8 mm Hg is in the ballpark of a reasonable expectation of the reduction in diastolic blood pressure the OHIE could have found (it was also the study’s point estimate) were it adequately powered to do so. Was it?

    No, which you can read about in full here. (And, no, power would still not be adequate even at twice this reasonable expectation.)

    We have high regard for the study and its authors. The limitations of power are functions of the sample well beyond their control. Nevertheless, we believe they need to be kept in mind for a complete understanding of the study’s findings.

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  • More Medicaid study power calculations (our rejected NEJM letter)

    Sam Richardson, Aaron, and Austin submitted a more efficiently worded version of the following as a letter to The New England Journal of Medicine (NEJM). They rejected it on the grounds that our point of view would be adequately represented among the letters accepted for publication. Those letters are not yet published.

    The Oregon Health Insurance Experiment (OHIE), a randomized controlled trial (RCT) of Medicaid, failed to show statistically significant improvements in physical health; some have argued that this rules out the possibility of large effects. However, the results are not as precisely estimated as expected from an RCT of its size (12,229 individuals) because of large crossover between treatment and control groups.

    The Experiment’s low precision is apparent in the wide confidence intervals reported.  For example, the 95% confidence interval around the estimated effect of Medicaid on the probability of elevated blood pressure spans a reduction of 44% to an increase of 28%.

    We simulated the Experiment’s power to detect physical health effects of various sizes and the sample size required to detect effects sizes with 80% power. As shown in the table below (click to enlarge), it is very underpowered to detect clinically meaningful effects of Medicaid on the reported physical health outcomes. For example, the study had only 39.3% power to detect a 30% reduction in subjects with elevated blood pressure. It would have required 36,100 participants to detect it at 80% power. Moreover, such a result is substantially more than could be expected from the application of health insurance.

    OHIE power table

    To estimate power levels shown in the table, we ran 10,000 simulations of a dataset with 5406 treatments and 4786 controls (the study’s reported effective sample sizes given survey weighting). We took random draws for Medicaid enrollment based on the probabilities reported in the study. We took random draws for each outcome: probabilities for the non-Medicaid population are given by the control group means from the study, adjusted for the 18.5% crossover of controls into Medicaid; the probability of the outcome for those on Medicaid is X% lower than the probability for those not on Medicaid, where X% is the postulated effect size.

    For each simulated dataset, we regressed the outcome on the indicator for treatment (winning the lottery), and the power is the percentage of the 10,000 iterations for which we rejected at p = 0.05 the hypothesis that winning the lottery had no effect on the outcome. To estimate the total sample size required for 80% power, we conducted a grid search for the lowest sample size that provided 80% probability of rejecting the null hypothesis, running 1000 simulations for each sample size. Our required sample sizes account for sampling weights, and are therefore comparable to the 12,229 total subjects from the study. We do not account for clustering at the household level or controls for household size (and demographic controls from the blood pressure analysis).

    Simulations were validated by comparing a subset of results to results that were computed analytically based on the 24.1 percentage point increase of Medicaid enrollment among treatments.Our simulation Stata code is available for download here. The analytic method is described here.

    The Experiment was carefully conducted and provides a wealth of new information about the effects of Medicaid on household finances, mental health, and healthcare utilization. However, it was underpowered to provide much insight into the physical health effects of Medicaid.

    ***

    Not included in our letter were the charts at the end of this post that relate effect size to power for all the measures in the study’s Table 2. To help you translate the proportional effect sizes into absolute values, first, here’s Table 2:

    Table 2 from the OHIE

    OHIE table 2

    You can multiply the relative effect sizes in the charts below by the control group mean to convert them to an approximation of the absolute, postulated effect size with Medicaid coverage. The horizontal line at 80% is the conventional cutoff for adequate power.

    The relative effect sizes in the middle chart below may seem small. But, remember, this is for the entire sample of subjects, most of whom are not candidates for improvement in these measures. They don’t have a blood pressure, cholesterol, or glycated hemoglobin problem. When you adjust effect sizes for the proportion of subjects with such issues and compare those to the literature, you find that the study was underpowered. We’ve already blogged about this here and here. For Framingham risk scores, the literature is uninformative, and we cannot conclude whether the study was adequately powered for those.

    Hopefully you can match up the lines in these charts with Table 2 from the study, above. If you have any questions, raise them in the comments.

    discrete

    continuous

    FRS

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  • On the obligation to oppose

    This is a joint post by Austin Frakt and Aaron Carroll.

    Ross Douthat has a measured and reasoned response to our support for a discussion about Medicaid reform simultaneous with encouragement of expansion. Stop now and go read it. Then come back.

    Douthat makes some excellent points, with which we largely agree, and one point with which we do not.

    America rarely just “tries out” major expansions of the welfare state: Rather, our history strongly suggests that programs in motion tend to stay in motion, and that the best time to change a potentially-dysfunctional system is before it gets entrenched — before interest groups organize themselves around perpetuating those dysfunctions, before voters become accustomed to the program’s guarantees, and before the political system learns to take its existence for granted and turns to other debates instead. Whereas once something becomes the Way We Redistribute, it’s both hard to pare back and harder to propose alternatives, no matter what the data ultimately show about the program’s actual effectiveness.

    It’s true, as Frakt and Carroll note, that no alternative reform is likely to be implemented as quickly as Obamacare itself. But it’s also true that if you favor a substantially-different alternative, cheering on the law’s full implementation while participating in a “conversation about how to make [it] more efficient and effective” is likely to lead to that alternative being passed sometime around the Fourth of Never. And this reality means, in turn, that for all the dilemmas that the current state of the Republican Party creates for thoughtful opponents of the new health care law, they still have an obligation to oppose.

    The “obligation to oppose” is an illogical leap from a premise with which we agree. It is true that it will be hard to change a redistributive program once it begins doing its redistributing. Path dependency is a real thing. The state of our health system and the difficulty in changing it demonstrates it.

    But recognizing that does not by itself obligate anyone to oppose Medicaid expansion. It only suggests one should weigh its likely inertia and imperfections against the moral implications of doing nothing. We, ourselves, have confronted this dilemma. There are many things we’d like to change about Medicaid and other facets of our health system. We understand that it will be hard, and some things we dislike may never change. Yet we are not obligated to oppose any more than we’re required to support. One has to do the moral calculus for oneself. One can still come down on the side that doing nothing is preferable to expanding Medicaid in one of the forms currently permitted by law. But, by no means is one obligated to do so.

    To suggest obligation is a direct appeal to political loyalty, is it not? If this is about politics then we will concede the point to Douthat and move on. But if we’re talking how to craft policy to help poor Americans, that’s a discussion in which we want to participate, but only if we shed this nonsensical idea that anyone is obligated to anything. Is this an open minded discussion or not?

    We want to re-emphasize the context of this discussion. Medicaid expansion, and the ACA in general, isn’t arbitrary policy. It had the support of the a majority of the House of Representatives, a supermajority in the Senate, and the President of the United States, who ran with health reform as a major plank of his platform. And then he won re-election. The policy was even examined and modified by the Supreme Court, on which sit a majority of conservative-appointed Justices.

    Moreover, it’s not like there isn’t room for movement within the law. Do you want more of a managed care option? That’s what Florida’s governor got. Do you want more private insurance options instead? That’s where Arkansas is headed. The Obama administration seems more than willing to negotiate. That some alternative to traditional Medicaid will be possible on the “Fourth of Never” is obviously not true. Beyond that, a future administration can use the same waiver process as the current one to further widen the scope of the possible. We doubt the next Republican president will take office on the “Fourth of Never.”

    The ACA, and those who support it, want to make sure people who earn below 138% of the poverty line get assistance with the high price of health care that they could never pay out of pocket. Period. Opposing the Medicaid expansion – in any of its forms – would deny many poor people that help. Some even oppose Arkansas’s private option. They are denying people access to the type of private insurance that most of the rest of us enjoy because, yes, we can afford it. But we do so with a lot of government money. We give people at the higher end of the socioeconomic spectrum thousands of dollars a year in tax breaks for their employer-sponsored insurance. It seems reasonable that we should be able to do this for people far less fortunate than ourselves.

    Just saying “no” is just that – saying “no”. We agree that Obamacare opponents need to do more than that. We don’t agree that they are obligated to oppose every policy option that isn’t exactly to their liking until they build a coalition in support of a preferred alternative. To conclude as much takes more reasoning than Douthat has offered.

    @aaronecarroll and @afrakt

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  • How should the new Medicaid study change our policy preferences?

    This is a joint post by Austin Frakt and Aaron Carroll, part of our continuing coverage of the new Medicaid study.

    Tyler Cowen isn’t the only one to have suggested that the new study should be an opportunity to reflect on policy preferences. His post is very good.

    The key question here is how we should marginally revise our beliefs, or perhaps should have revised them all along (the results of this study are not actually so surprising, given other work on the efficacy of health insurance).  For instance should we revise health care policy toward greater emphasis on catastrophic care, or how about toward public health measures, or maybe cash transfers?  (I would say all three.)  One might even use this study to revise our views on what should be included in the ACA mandate, yet I haven’t heard a peep on that topic.  I am instead seeing a lot of efforts to distract our attention toward other questions.

    We think it is important to keep striving for better policy, and evidence-informed policy in particular. We welcome new and different ideas, but insist on reconciling them with evidence. Austin’s evidence-based examination of health policy books like those by John Goodman and David Goldhill, along with consideration of all major, new health policy proposals by various authors here, is evidence of that. So, we welcome the conversation Cowen suggests and offer the following thoughts.

    First of all, as evidenced by our latest post, we’re still digging into the details of the new Oregon Health Study results. If, as it seems, it was underpowered, it does not provide as clear guidance as we might have hoped. Either way, as Cowen points out, the study doesn’t differ from what we know from prior work. How much should it change our thinking, then? Or yours? It’s quite reasonable to say, “Not that much,” though it depends on your starting point. And that is (or can be) an evidence-based interpretation, whether that is incorrectly spun as a distraction or a dodge or not. Shouldn’t we all want to interpret the evidence properly before applying it to policy? Well, that’s our ambition.

    Nevertheless, some reconsideration of the Medicaid policy space is a worthwhile exercise because elected officials in many states are still contemplating whether to expand Medicaid and, if so, how. Let’s step back and look at that space.

    We had a long, national conversation about health reform in 2008-2009. This followed about a century of many, similar conversations. It culminated in the passage of a law by a process that was, in our view, no more or less legitimate than the passage of most other laws. The law, or parts thereof, was considered in the courts, including by the Supreme Court, and then reconsidered as part of the 2012 presidential campaign.

    Through all this, the law remains, though the Supreme Court adjusted it to offer states a choice about Medicaid expansion. The choice is not binary, whether to expand or not, but offers a circumscribed span of policy options. The Administration has been more flexible than it could have been in welcoming options that seemed impossible a year ago (e.g., Arkansas’s private option).

    The upshot is states have a choice today, as provided by the law and regulations, that includes no expansion of Medicaid and a range of other options. To be sure, that range is not infinite. There are things that the law, regulations, and the Administration would not accept. Those may include policy options preferable to many people, including conservatives, including liberals, including us.

    Unless and until the law and/or administration change, those options are not likely to expand much, especially by 2014. Within this space, and in light of the findings of the latest Medicaid study, and consideration of the body of work that preceded it, it is our view that expansion of Medicaid, in some fashion permitted today, is preferable to no expansion at all.

    You need not hold that view, but it is not an unreasonable one, even acknowledging the latest study.

    Now, going forward, we certainly think it is reasonable to continue to discuss how Medicaid might evolve. That’s fine. But, as we do so, we would hope that poor Americans would be afforded the greater access to the financial and mental and physical benefits of coverage for health care that Medicaid (in some form) would provide. We spend a great deal assisting wealthier Americans to do the same, through the preferential tax treatment of employer-sponsored plans, as well as through Medicare. All of that can and should be examined too. But by what reasonable moral calculus is it just to not extend medical financial assistance to the poor as we do so?

    Let us be clear, we recognize that those who object to Medicaid expansion have also stated they want to assist the poor. They just have other ideas of how to do so. Fine. Our question is, which is stronger evidence that you want to help poor Americans, that you will support Medicaid expansion while inviting continued conversation about how to make the program more efficient and effective? Or by blocking expansion and offering alternatives, alternatives that will take well beyond 2014 to enact and implement, if they ever are?

    For, one way to justify doing nothing is to continually suggest something else.

    We do not object to something else, unless that something else includes leaving poor Americans without the financial and health protections of at least Medicaid in 2014. States have a fairly wide range of choices as to what “Medicaid” means in their domains. We encourage them to pick one, and, yes, by all means continue to fight for change. Our pledge is to continue to consider proposals for it on this blog and in light of evidence.

    @afrakt and @aaronecarroll

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  • Oregon Medicaid – Power problems are important

    This is a joint post by Aaron Carroll and Austin Frakt. This is part of our continuing coverage of the new Oregon Medicaid study paper. Prior posts are here: Post 1, Post 2, Post 3. More are forthcoming.

    People who assume we’re partisan hacks are going to take the following as a nitpicky defense, or obfuscating, or dissembling. It’s not, and we’re not. This is about the proper interpretation of research. The reason we did not have the discussion below after the initial round of Oregon Health Study results rolled out was that the debate was clearer. The results were significant, but people disagreed on their real-world importance. That’s a debate worth having, but not a technical research problem. This time, we’re disagreeing on the interpretation of the analysis, and that’s more weedy and jargony.

    You see, the study did not prove Medicaid hurts people. Nor did it prove that Medicaid doesn’t help people. It failed to prove that Medicaid improved some metrics like A1C a certain predetermined amount. But what was that predetermined amount? That question is vitally important, because the study found that more people on Medicaid did improve their A1C, just not “enough”. Is that because the study was underpowered (had an insufficient number of participants)? We think that may be the case. But that question should be answerable…

    So an eagle eyed reader pointed us to the Supplementary Appendix. We’re in the weeds here, yes, but Table S14c, on page 45, is “Mean Values and Absolute Change in Clinical Measures and Health Outcomes: prerandomization specific diagnoses”.

    Before randomization, there were 2225 people with hypertension. If we assume that half got randomized to each arm, and then take the 24.1 percentage point increase in coverage the study reports, that means there were only 280 people with hypertension who got Medicaid, and who could be studied for this outcome. Further, those people had a baseline average blood pressure of 130/83. That’s remarkably well controlled! So there’s not nearly the room for improvement that you might assume.

    There’s a similar story for diabetes. Before randomization, there were 872 patients with diabetes. Half to each group, and then the 24.1% who actually got new  Medicaid, and you’ve got about 110 patients with diabetes in the Medicaid group. And again, their average baseline A1c was 6.7%, which is pretty well controlled. How much could the Medicaid do? With respect to the percentage of patients with a A1C>=6.5, there appears to be so much imprecision in the measurement that it’s in the 95% confidence interval that they got every single person in Medicaid with diabetes under control: the baseline percentage of A1C>=6.5 was 54.0, and the reduction in the Medicaid group was -27.0 (95% CI -71.91 to 17.92).

    But let’s say that these numbers were artificially low because people were undiagnosed. They still would have given us pause. With so few participants with disease, it’s hard to believe that you’d eventually amass enough people to detect a clinically significant difference. And when you look at the actual numbers in Table 2, concerns still exist. Take diabetes, for instance. Only 5.1% of the control group had an A1C>=6.5 (diabetes). Let’s assume that the starting prevalence was the same in the intervention group. That means that only 624 people (312 in each group) actually had a high A1C in the study. It appears they may also have been relatively well controlled. (Aside: With such low rates of poor health, by these measures, how generalizable are the results? We’ll consider that question another time.)

    This same discussion holds for the other metrics. This smacks of being underpowered.

    It appears that uncontrolled diabetes was not, in fact, especially prevalent in this population. That being the case, we’re not sure what effect, if any, you could expect Medicaid to have on this population with respect to A1C. Can we agree that if there are relatively few people in the study with diabetes, and that those who have it are relatively well controlled, then the study itself probably can’t detect a clinically significant change? This is a BIG difference than saying Medicaid could have had a significant impact, but didn’t.

    It should be possible to say something like the following, only with the numbers filled in: “We believed that there would be about X people in the study who would have diabetes, and that Y% of them would have A1Cs greater than 6.5. We believed that a clinically important reduction in this percentage would be Z, and given the variability in A1C levels, the study was powered to detect that change.” We’ve reached out to the study authors to try to fill in those numbers.

    Our concern remains that it appears unlikely that there were enough people with uncontrolled diabetes that you could detect a clinically significant change with statistical significance. If we’re wrong, we’re more than happy to be proven so. But if we’re right, then it has some pretty big implications for how this study should be interpreted. If we’re right, then it’s not possible that Medicaid could have achieved a statistically significant difference. The deck was stacked against the program.

    Lots of people are claiming this is a smoke screen and that the ex post confidence intervals are enough of a power calculation. They’re not. Let us put this another way: Our problem with the ex post way many are talking about the study is that the analysis did show improvements. And no one is claiming that the improvements aren’t good enough clinically. (See, for example, the annotated table at the end of this Kevin Drum post.) They’re only claiming they aren’t statistically significant.

    So was it that the improvements weren’t big enough, or that the sample was too small? We can clearly see from the confidence intervals how much bigger the improvements would have to be in order for them to be statistically significant with the sample available. But it’s also true that if the study was larger, by some amount, and found the same point estimates as statistically significant, we’d not be having this conversation. With a big enough sample, even the smallest differences are statistically significant, yet the study’s point estimates aren’t small. Was this study capable of finding clinically and statistically significant effects of reasonable size? This is what an ex ante power calculation is for. It informs the researcher as to what is even worth trying to examine.

    We understand there are people who will claim we’re changing our tune by now questioning things. We’re not. The design of the study is fantastic. The choice of these specific outcomes and this specific analysis is what we now question.

    More to come.

    @aaronecarroll and @afrakt

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  • Oregon and Medicaid and Evidence and CHILL, PEOPLE!

    This is a joint post by Aaron Carroll and Austin Frakt. Relevant to this post, recently we have published three papers arguing for expansion of Medicaid, not relative to all possible other reforms, but relative to the status quo.

    First of all, we’re somewhat annoyed that the NEJM sent out press releases and the study to journalists, but not people like us, because we now have to rebut the gazillion stories that have already been written on a study we just found out about an hour ago. Maybe they should let some knowledgeable people see it early, too. Or just wait until it goes live to tell everyone. But we digress. Let’s get into it.

    To recap: Oregon ran an RCT of Medicaid, because of a lack of funds to expand it fully. Early results showed some promising evidence that Medicaid improved process measures, self-reported health, and enhanced financial protection. This update, at 2 years, was intended to give us some harder outcomes. The results are “mixed”:

    We found no significant effect of Medicaid coverage on the prevalence or diagnosis of hypertension or high cholesterol levels or on the use of medication for these conditions. Medicaid coverage significantly increased the probability of a diagnosis of diabetes and the use of diabetes medication, but we observed no significant effect on average glycated hemoglobin levels or on the percentage of participants with levels of 6.5% or higher. Medicaid coverage decreased the probability of a positive screening for depression (−9.15 percentage points; 95% confidence interval, −16.70 to −1.60; P = 0.02), increased the use of many preventive services, and nearly eliminated catastrophic out-of-pocket medical expenditures.

    Let’s review. The good: Medicaid improved rates of diagnosis of depression, increased the use of preventive services, and improved the financial outlook for enrollees. The bad: It did not significantly affect the A1C levels of people with diabetes or levels of hypertension or cholesterol.

    This has led many to declare (and we’re not linking to them) that the ACA is now a failed promise, that Medicaid is bad, and that anyone who disagrees is a “Medicaid denier”. How many people saying that are ready to give up insurance for themselves or their family? If they are arguing that Medicaid needs to be reformed in some way, we’re open to that. If they’re arguing that insurance coverage shouldn’t be accessible to poor Americans in any form, we don’t agree. Medicaid may not be perfect, but we don’t think being uninsured is better. This new study supports this view, though certainly not as strongly as it might have.

    From our full reading of the paper, let us add the following to the conversation:

    1) Improvements in mental health are still improvements in health outcomes. The rate of positive screens for depression dropped from 30% to 21% in the Medicaid group. The rate of medication use for depression went from 16.8% to 22.3%. It wasn’t statistically significant (though it was close, p=0.07), but that doesn’t mean Medicaid failed. Which leads us to…

    2) Non-statistical significance does not mean failure. It means that either (a) there is no treatment effect or (b) the study is underpowered. Since there does not seem to be a power calculation, we can’t tell. How much of a difference would there need to be in order for statistical significance? We can’t tell. But just because this difference wasn’t significant in with the sample studied doesn’t mean it wouldn’t be significant with a larger sample. Indeed, the authors note this in the discussion:

    Hypertension, high cholesterol levels, diabetes, and depression are only a subgroup of the set of health outcomes potentially affected by Medicaid coverage. We chose these conditions because they are important contributors to morbidity and mortality, feasible to measure, prevalent in the low-income population in our study, and plausibly modifiable by effective treatment within a 2-year time frame. Nonetheless, our power to detect changes in health was limited by the relatively small numbers of patients with these conditions; indeed, the only condition in which we detected improvements was depression, which was by far the most prevalent of the four conditions examined. The 95% confidence intervals for many of the estimates of effects on individual physical health measures were wide enough to include changes that would be considered clinically significant — such as a 7.16-percentage-point reduction in the prevalence of hypertension. Moreover, although we did not find a significant change in glycated hemoglobin levels, the point estimate of the decrease we observed is consistent with that which would be expected on the basis of our estimated increase in the use of medication for diabetes.

    This is important, because the point estimates show that blood pressure did fall in Medicaid. Sure, it was a small amount. Medicaid lowered the percentage of people with elevated blood pressure from 16.3% to 15%. (p=0.65). It also increased the chance of being on meds from 13.9% to 14.6%. Remember that A1C “failure”? The percent of people with diabetes with a high A1C went from 5.1% off Medicaid to 4.2% (p=0.61). The percent of people with high total cholesterol went from 14.1% to 11.7% (p=0.45). In all of these, Medicaid improved the numbers, but not in a statistically significant manner. Was it powered to detect these differences? Moreover, what should we expect? Which brings us to…

    3) What is reasonable to expect? How much does private insurance affect these values? Do we know? No. There is no RCT of private insurance vs. no insurance. No one claims we have to have one. We just “know” private insurance works. The RAND HIE did not compare insurance to no insurance. It just looked at cost-sharing of insurance. That’s not the same.

    There has never been an RCT of Medicare vs. no insurance either, though we could point to some suggestive observational work (admitting that is not the same thing).

    So Medicaid, and Medicaid only, needs an RCT to prove it works. Never mind that it’s just intuitive that easier access to health care (by any insurance means) seems likely to improve your chance of getting it and getting it when you need to keep you healthy, if not alive.

    4) Financial hardship matters. Here Medicaid shined. It hugely reduced out of pocket spending, catastrophic expenditures, medical debt, and the need to borrow money or skip payments.

    5) Preventive care matters. We’ve been cautious about the ability of prevention to save money. But some preventive care improves outcomes. More people on Medicaid got colonoscopies, cholesterol screenings, and prostate cancer screens (whether or not you support them). The percent of women over 50 who got mammograms doubled from 28.9% to 58.6%. Results once again weren’t always “statistically significant”, so people can claim “Medicaid failed”. But colonscopies in people over 50 went from 10.4% to 14.6% (p=0.33). Failure?

    6) Health insurance is necessary, but not sufficient to improve health. It’s just the first step. We have never claimed that quality would go up just because of the ACA. Access will improve. We need to do a lot more work to improve quality. And, yes, maybe that will require a change to how Medicaid operates, but will quality improve if more poor people don’t have access to the means to afford care? We don’t see how.

    7) Most of these measures are still process measures. A1C is a marker. So is cholesterol. Did real outcomes change? Patient centered ones, like health related quality of life, did. Did mortality? Did morbidity? We still don’t know. That would take more time to see.

    So chill, people. This is another piece of evidence. It shows that some things improved for people who got Medicaid. For others, changes weren’t statistically significant, which isn’t the same thing as certainty of no effect. For still others, the jury is still out. But it didn’t show that Medicaid harms people, or that the ACA is a failure, or that anything supporters of Medicaid have said is a lie. Moreover, it certainly didn’t show that private insurance or Medicare succeeds in ways that Medicaid fails.

    People claiming otherwise need to go read the study and rebut these points.

    @aaronecarroll and @afrakt

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