Medical Insurance Is About Asset Protection, Not Health

Before I had this blog I used to talk (my wife would say "pontificate") about my theories to anyone who would listen.  In the health insurance debate leading up to Obamacare a few years ago, one of the points I would make endlessly was that "medical insurance is about asset protection, not health."  Of course, like my famous prediction in the 80s that Communism would shortly collapse, there is no written record of my saying this.  But I do have many witnesses.

Anyway, additional results from a major randomized study out of Oregon are just in, and to summarize the results in one short phrase:  medical insurance is about asset protection, not health.​

Whether medical insurance is about asset protection versus health is a big deal.  ​The argument justifying massive government intervention in health insurance is almost entirely about alleged improvement in health outcomes, as in "By refusing to allow government to provide health insurance for all, you are causing people to die!!!!!!!"  That argument goes away if the health outcomes for the insured and uninsured are basically the same.  A few people (most notably the execrable now Senator from Massachusetts Elizabeth Warren) have made the different argument that government has an interest in providing health insurance even if it is not about health, because lack of health insurance was causing millions of "medical bankruptcies."  But I never understood why that was a good argument for universal medical insurance -- if a person has substantial assets, such as large equity in a house, and chooses not to buy medical insurance, why exactly shouldn't he have to contribute that value to his own medical care before the taxpayers step in?  If you have substantial assets, by definition you can afford insurance to protect the assets.  If you are uninsurable, use your brain and don't keep major assets in your own name.

When I made my point about health insurance a few years ago, the main evidence cited against me was a large study from the Institute of Medicine in 2002 called "Care Without Coverage."   That study purported to show that lack of health insurance led to 18,000 additional deaths per year among the uninsured population.  When I got the Institute of Medicine study, it looked like so much hocus pocus.  There was no randomized trial, but rather a meta-analysis of some hundred or more studies in the medical literature.  There is extensive recognition in the report of numerous confounding factors that I would say make it impossible to come up with any number like the supposed 18,000 additional deaths from any study of this sort.  For example, the insured tend to be wealthier and more educated than the uninsured, and to smoke less.  How to weigh such factors in a study of this type is not a matter of statistics, but rather entirely a judgment call, here made by people who were clear advocates of universal health insurance.  But none of that slowed the authors down from making their highly politicized conclusion, and claiming the imprimatur of the IOM brand for their conclusions.  The report was not funded by the government, but rather by the Robert Wood Johnson Foundation.  That's the Johnsons of Johnson & Johnson -- do you think they might have any interest in increasing government spending on health care?

The run-up to Obamacare in 2009 then led to a frenzy of advocates putting out increasingly imaginary numbers as to the "additional deaths" among the uninsured.  A report from the Urban Institute in 2008 upped the IOM's number to 22,000 additional deaths per year.  If you look at their abstract, the result comes entirely from an assumption that the uninsured have a mortality rate 25% higher than the insured.  The basis for that?  They claim to rely on the IOM's previous hocus pocus.   In September 2009, as the Obamacare bill approached its end game in Congress, Harvard released a study purporting to estimate the additional annual deaths at 44,789.  Again, no randomized study.  This time it is based on an assumption of 40% increased risk of death among the uninsured.  Perhaps we should note that two of the three authors were co-founders of something called Physicians for a National Health Program.

Meanwhile, a guy named Richard Kronick, who had been a senior health policy advisor in the Clinton administration, and became chief of the division of Health Care Services at the Department of Family and Preventative Medicine at the University of California at San Diego, did his own careful review of the IOM's findings and published a paper in 2009.  His conclusion:  after adjusting for demographic and health factors (such as smoking), the uninsured were at no greater risk of dying earlier than people who had employer-sponsored group insurance.  I don't even remember coming across Kronick's study at the time.  As a former Clintonista, he clearly would not have minded coming to the opposite conclusion, and he should be congratulated for his honesty.  But he was drowned out by advocates making up their own numbers.​

Anyway, the world has been waiting for the results of an actual randomized controlled experiment.  (Actually, there was one previous randomized study, done by the Rand Corporation in the 70s.  It found no mortality benefit from health insurance according to Megan McArdle here.)  ​Recently Oregon has handed the world an opportunity for randomized study, in the form of a 2008 Medicaid expansion that was underfunded, so they allowed people into it by lottery.  Two years of data are now in, and the results of analysis of that data were published in the New England Journal of Medicine last week.  Conclusions:

This randomized, controlled study showed that Medicaid coverage generated no significant improvements in measured physical health outcomes in the first 2 years, but it did increase use of health care services, raise rates of diabetes detection and management, lower rates of depression, and reduce financial strain.

​Hmmm.  "No significant improvements in measured physical health outcomes."  And as to that business of "reduced financial strain" -- do we get to count financial strain on the government here?  How many trillions are we spending on Obamacare again?

​As I said, medical insurance is about asset protection, not health.