A thought experiment

This suggests I’ve not made something clear. I’ll try again. Aaron Carroll said it well.

A lot of it shows that people with private insurance do better than those with public insurance or those without insurance; that should not be a surprise.  Most people (and most of your docs) would rather have private insurance than Medicaid.  But would you really rather have no insurance than Medicaid?  If so, that is everyone’s right.  Don’t get the Medicaid.

He’s right. Medicaid is not mandatory.

Let’s dig deeper. You’re uninsured. Thus, with your own money you can select and pay for whatever care you can afford. You get the quality of care you choose to buy with the resources you have. That’s your lot.

You wake up one day in possession of a magic (or maybe evil) Medicaid card. Let’s presume it permits you to visit for no charge a small number of lower quality health care providers. You can still choose to leave the card at home and visit any provider you could before and pay the same prices you had been paying.

Will the quality of care you receive go up or down with the possession of the Medicaid card? This is an empirical question, but let’s first explore the theoretical possibilities. If it helps, replace “care” above with some other type of good like “food” or “clothes” and “Medicaid card” with a “discount card.”

Consider the options. If quality goes up (your outcomes improve) then we would believe that reducing your out-of-pocket price of care, even for lower quality providers, improves outcomes. We’d say, “Medicaid works!”

On the other hand, if quality goes down (your outcomes get worse) what can we say? What causes this? My best explanation would be that you are such a poor judge of your health care needs that you are seduced by lower out-of-pocket cost, Medicaid care and are harmed by its lower quality. Having access to cheap care induces you to use more care and more low quality care. Making care cheaper, but only for certain providers, actually makes outcomes worse. You’d be better off with no insurance because it imposes resource constraints causing you to receive less care overall and thereby avoid the low quality care offered by providers accepting Medicaid. (Do you believe this explanation? Can you suggest a better one without appealing to selection bias (I’m getting to that)?)

I bet you’d say, “Oh no, not me. I’m smarter than the typical Medicaid beneficiary. I would know not to get more care and, above all, to avoid low quality providers. I would not be seduced by the discount the Medicaid card provides.”

To say that suggests that there is something about the Medicaid population that is different from you. I bet you think you’re different than the typical uninsured individual too (provided you aren’t one). By the same token, it is reasonable to presume there are differences between Medicaid and uninsured populations as well. Some are observable and can be controlled for in a multivariate analysis. Some are not, requiring an instrumental variable analysis, exploitation of a natural experiment, or a randomized trial to obtain unbiased results.  Note that the relevant differences pertain to individual characteristics, not those of the providers they visit. The selection of providers is an effect of the Medicaid discount (again, assuming you don’t know enough about your health care needs to make more informed decisions).

There are undoubtedly studies that consider Medicaid vs. uninsured outcomes using the random variations provided by the natural experiment that is Medicaid. Characteristics of the program vary by state and year, making it a perfect set-up for such an analysis of this issue. This second I can’t point to a study. But I know where to look. One place to start would be to examine the literature cited by Stan Dorn on Ezra Klein’s blog at the Washington Post (tinyurl.com/StanDorn), Harold Pollack on The New Republic’s The Treatment blog (tinyurl.com/HPollack), and by J. Michael McWilliams on this blog (tinyurl.com/JMMcWill).

That’s it.  That’s my position, and it always has been. If you read carefully you ought to notice that I didn’t actually condemn or praise Medicaid. I didn’t actually say how it should be reformed. I just listed the possibilities. Which you believe depends on a combination of your personal views and your interpretation of the literature. What can actually happen depends on political forces so strong my opinion hardly matters.

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