• The ACA really does solve an old problem

    So I could quote text and excerpt figures, Rex Santerre kindly sent me electronic versions of chapters of his textbook, Health Economics: Theories, Insights, and Industries Studies, co-authored with Stephen Neun. I’m going to gradually comb through it. I began moments ago with Chapter 1 and the following figure caught my eye.

    Two things to note, both of which I (and likely you) already knew:

    • Health insurance is largely a post-war phenomenon. Between 1940 and 1970 the uninsurance rate fell by 75 percentage points. Thirty years of amazing progress. Wow!
    • Essentially no reduction in the uninsurance rate has occurred since 1970. It’s fluctuated a bit but stayed pretty close to 15%. Forty years of zero progress. Wow!

    And then we passed the ACA. In four years there will (or should be) a major new feature in graphs like this. The graph helps us see that on the problem of access–and health insurance does facilitate access to care–the ACA is a big milestone. Historic.

    (Insert usual disclaimer that the ACA does not do enough on cost and quality.)

    • Also, it should be pointed out, but not shown in the graph, that the percentage of the population with private health insurance was nearly the same in 1960 as it is today–around 68 percent.

    • I hope he ties this in with more general economic numbers. The poverty rate for the elderly also dropped during this period. Also, I have always wondered if it was just a coincidence that after Medicare was passed was when we saw such a boom in medical progress. CAT scans, MRIs, cardiac caths and surgery. Would it have economically feasible to develop those without reliable payments from those most likely to need them, the elderly.


    • There is an implied assumption here that more people with health insurance is good. But really it’s not the insurance we care about per se; it’s the actual care people are getting. Today we use health insurance to pay for almost everything in healthcare…

      This bring up several questions about how things were before this sea change happened:
      1. Did 90% of people go without healthcare or was it just paid for by different means?
      2. Assuming most people got access to care what were those means?
      3. How were the poor handled?
      4. Accounting for the difference in technology over time, is our healthcare better or worse as a result of moving to an insurance-based economic model for healthcare?

      I’m not trying to argue that health insurance for some things is bad, but I find it odd that we use “insurance” for the routine things that in other spheres we wouldn’t. e.g. while we use insurance to pay for routine physicals, we don’t get home insurance to pay for every little knickknack or paint job that we buy for our houses…

      • @Ben – It’d be nice to point you to a comprehensive history of health care and health insurance in the US that I’ve read. I’ll bet one source is The Social Transformation of American Medicine, but I haven’t read it yet. (Aaron Carroll has.) Another place to look is the Economic History Association.

        My impression from whatever I’ve read over the years in my profession are that: (1) In general people did not go without medical care before insurance was widespread, but people consumed less of it, not always with good outcomes! (2) The means of paying for care was out-of-pocket or in kind (my chicken for your tooth extraction?). (3) Except in the case of charity care, the poor were not “handled.” They went without. How widespread was charity care? I don’t know. The problem inadequate care for the poor (and elderly) is the reason for Medicare and Medicaid. (4) Is our health care better or worse due to insurance? You want the causal effect of insurance coverage on health outcomes? We’ve been over that before.

        Your point about coverage for routine things is well taken, but it misses one key element. We should want to cover routine things that are effective and lead to lower downstream costs or better health. Small co-pays have been shown to cause individuals to reduce use of both effective and ineffective care. Perhaps we call it “insurance” when we shouldn’t. I’ve advocated the term “health incentive plans.”