• Levy and Meltzer on the impact of health insurance on health

    Levy and Meltzer’s update of their 2004 book chapter on the effect of health insurance on health is not new. It was published in 2008, but I’ve never blogged on it. It’s a great and concise resource. Here’s an ungated PDF.

    Their Table 1, below, rounds up the best evidence available at the time of publication (click to enlarge).


    Most, but not all, of these studies find that expansions of health insurance result in health improvements. The fact that only some of these studies find an effect on health illustrates one important limitation of this type of study: The results of natural experiments may be specific to the population studied. As a result, different natural experiments may yield different conclusions. For example, Card et al. (3) show that the transition onto Medicare at age 65 does not reduce mortality at that age, but Currie & Gruber (4, 5) show that Medicaid expansions reduced child and infant mortality. These varying results are not necessarily contradictory, however, because they apply to different populations. But these differences underscore the fact that the question “How does health insurance affect health?” is complicated, and the answer will depend on (among other things) what we mean by health insurance and whose health is being considered.

    Does health insurance improve people’s health? You’ll find Levy and Meltzer cited by both those who answer “yes” and “no” to this question. Of course, as they plainly write, the real answer is nuanced. It depends on which type of people you examine and what you mean by “health.” Just mortality and all Medicare beneficiaries, no discernible effect. Other physical health outcomes and/or other (perhaps sicker) populations, the effect is apparent.

    Are those benefits worth the expense? That’s a completely different question and a subjective one. Your answer to it cannot change the objective facts about whether insurance improves health.


    • “Are those benefits worth the expense? ”

      Since health care has costs associated with it and those costs could have been used differently I would think one has to also make sure to compare the benefit to another benefit that could have been realized if that money had been spent on something else. My assumption is that is what your statement meant, however all too frequently studies and popular articles do not deal with the trade offs.

      The Finkelstein study mentioned that I was already familiar with with adds a lot of fuel to the fire we face on such questions because its conclusion is so contrary to the beliefs of so many and is quite chilling to the arguments many make when defending our health care system or promoting the one recently passed.

      We study the impact of the introduction of one of the major pillars of the social insurance system in the United States: the introduction of Medicare in 1965. Our results suggest that, in its first 10 years, the establishment of universal health insurance for the elderly had no discernible impact on their mortality. However, we find that the introduction of Medicare was associated with a substantial reduction in the elderly’s exposure to out of pocket medical expenditure risk. Specifically, we estimate that Medicare’s introduction is associated with a forty percent decline in out of pocket spending for the top quartile of the out of pocket spending distribution. A stylized expected utility framework suggests that the welfare gains from such reductions in risk exposure alone may be sufficient to cover between half and three-quarters of the costs of the Medicare program. These findings underscore the importance of considering the direct insurance benefits from public health insurance programs, in addition to any indirect benefits from an effect on health

      “The overall spread of health insurance between 1950 and 1990 may be able to explain at least 40 percent of that period’s dramatic rise in real per capita health spending.”

    • The issue of out of pocket expenditures for an elderly couple is major. My father cared for my mother for the last years of her life, during which time she required 4 hours of home health care service a day. It was simply not clear that his (generous) retirement plans plus savings would be adequate. An aunt passed away and left me a chunk of money, and that helped. By the time that was gone, mother required occasional surgeries, and the 60 days of insurance-covered rehab gave us enough respite from the home health care service bills that father’s income could cover it.

      (And then there was the problem that father was not one to suffer fools and blew up at the case manager (who thought mother needed 24-hour care (at US$25 an hour) and insisted we hire people who turned out to be incompetent (and slept on the job)), and who then took us to court to take mother away from father on the grounds that he wasn’t competent. If we hadn’t had two neighbors who were lawyers and not amused at their friends being abused, things could have gotten very ugly.)

      But the bottom line is that, in general, medical costs can easily leave the surviving spouse impoverished. We lucked out, but having to worry about that isn’t fun.

      The idea that medical insurance doesn’t do any good is insane.

    • the theoretical argument for improving health by expanding health insurance is that people with insurance get effective care (care that makes people healthier) more often and/or get care whose efficacy depends in part on timing more quickly. I know that there are studies looking at things like blood pressure, diabetes, and prenatal care. Has anyone presented a more comprehensive model for how insurance might improve health?
      In part, this might involving listing proven treatments, describing their impact (e.g. reducing hospitalization by 10%, shortening an episode by 5 days, etc.), and presenting information about their costs and the prevalence of the conditions for which they are effective.