Health Reform is a Matter of Life and Death

The graph below shows cancer survival rates by patients, depending on their health insurance status. It was posted last Thursday by Sarah Kliff, who says she got it from Zeke Emanuel, the former White House health advisor who helped shape the Affordable Care Act (ObamaCare).

cancer survival rates by patientsI haven’t seen the study and it may not withstand scrutiny. It seems to contradict the economics literature, which finds that health insurance has very little impact on mortality.  But since it comes from “the other side” so to speak, I am going to take it as valid for present purposes.

What do you conclude by looking at this chart? My answer is below the fold.

 We are about to spend $1.8 trillion over the next ten years insuring about 32 million people. About half of the newly insured will go into Medicaid and half will get private insurance. If the above chart is to be believed, which half you’re in makes a real difference.

That tiny little sliver of difference between the green line and the red line is the differential survival between those who are uninsured and those who are in Medicaid. Even after five years, the differential survival is a little more than 1%.

So why are we spending all that money if the impact on health is so small? It gets worse. The actual additions to the Medicaid population will be much greater than the newly insured. Given the opportunity, many people who currently have private coverage will drop their insurance to take advantage of free insurance from Medicaid. In fact, estimates are that 50% or more of people who become newly eligible for Medicaid will drop their private insurance to take advantage of free government coverage.

That implies that for millions of people we are about to spend billions of dollars and may — after all is said and done — leave them worse off than if we had done nothing at all!

There is more bad news. Many of the people who are newly insured with private coverage will be in health plans that are highly subsidized. We don’t really know what these plans will look like. However, if the Massachusetts model is followed, the subsidized private insurance plans will pay doctors and hospitals only a bit more than Medicaid pays. In other words a good part of the increase in private coverage may be nothing more than Medicaid plus.

And here again, given the opportunity to have free private coverage that pays, say, 10% over Medicaid, many people will drop their standard BlueCross coverage to take advantage of the offer. In so doing they will be giving up coverage that promises a greater chance of survival for coverage that reduces those chances.

The upshot is that the Affordable Care Act may actually lower overall health outcomes for the country as a whole!

You have to wonder why ObamaCare is so rigid. Why can’t people who qualify for Medicaid have the opportunity to opt into private coverage instead. For example, the average amount that Medicaid spends on an adult is about $3,000. The average amount spent on a child is $2,000. So why can’t we give the adults a $3,000 voucher and the children a $2,000 voucher and let them apply these amounts to private insurance premiums instead?

Comments (42)

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  1. Nichole says:

    Instead of a voucher, why not just give a health tax credit.

  2. Ron Luke says:

    I know this is not a graph you developed, but the omission of Medicare seems odd. Knowing the Medicare results might also give an indication of how well the data were age-adjusted.

  3. Brian says:

    Answer to Question 1: Because the goal of PPACA has nothing to do with access or affordability of healthcare. If you examine it in the context of the medical environment a lot of it doesn’t even make sense. No, it’s real purpose was the mandated expansion of an entitlement society, amplifying the role of government at the expense of freedom of choice. And if you analyze it from that perspective a lot of pieces of the puzzle fall conveniently in place.

    Answer to Question 2: We could. But fostering private market solutions, individual needs, freedom of choice and teaching economic independence isn’t the goal. See above.

    Note on the graph: I suspect that your apprehensions about the graph are correct, especially given the agenda from which it was created. The result published is not “because” of the 3 variables, but rather these variables are just facts which apply to other underlying demographics–finances, education, individual medical history, etc. Invalid statistics.

  4. Greg Scandlen says:

    The graph presents a number of problems. One is that the privately insured may be diagnosed earlier in the course of the disease, so may live longer from the point of diagnosis even without any change in the course of the disease. In other words, if it is a ten year course from onset to death, people who are diagnosed in Year Two will have an 8 year survival, but people who are diagnosed in Year Four will have only a 6 year survival — without any difference in the course of the disease.

    The other problem, of course, is the old correlation versus causation problem. People who are poor and uneducated are more likely to die early. If Medicaid and the uninsured include more of those people (which is true), they will have higher mortality regardless of any insurance effects.

  5. Roget says:

    I fully agree with Brian. None of this is about concern for the uninsured, it’s just setting a dramatic precedent.

  6. Ken says:

    Wow. You mean Obama Care might kill people?

  7. Brian Williams. says:

    The Medicaid and Unisured lines are so close together, one wonders why we have Medicaid at all.

  8. Kent Lyon says:

    The likely response to the increase in the number of Medicaid (short for “medical apartheid”)beneficiaries is that doctors will stop seeing them. People will find out that they can more easily access medical care if they are self-pay than if they have Medicaid. You will then revert to a first payer system for these patients, and doctors will likely be more willing to see them and provide care in exchange for whatever payment the patient can make, even in kind. We will in considerable part revert to the pre-1929 status before health insurance came in to being in America. We may see the return of a fully private market for a good share of the public, and the costs of health insurance may be so onerous that most simply pay the fine and drop the coverage, and will pay out of pocket for minor medical expenses, signing up for insurance only for catastrophic events. The healthcare financing system may function as a private pay system with a virtual backup of insurance. If Obama is re-elected, and Obamacare entrenched, it may induce a reversion to a prior era in healthcare financing. It will be interesting to see what unfolds.

  9. Sean Parnell says:

    Ron Luke – the omission of Medicare actually makes perfect sense, it ensures that you’re comparing age-identical populations. The privately insured market consists almost entirely of under-65, as does the uninsured and Medicaid population (not counting dual eligibles). The confounding factor might be if the Medicare/Medicaid dual-eligibles were to have been included in the Medicaid figure.

  10. Don McCanne says:

    Greg Scandlen has it right.

    The socioeconomic factors which are predominant amongst low-income and Medicaid patients would not be altered by giving Medicaid patients a voucher for private insurance. Though insurance, whether private or public, has been well documented to improve outcomes, insurance alone is not enough.

    The fundamental socioeconomic problems extend well beyond our health care system. It still comes down to the age-old question, are we in this together, or are we each on our own? Although socioeconomic problems are too complex for a simple yes or no answer, it is clear that we do need more togetherness, that is if we are going to improve outcomes for all of us. Maybe most readers of this post don’t care about others, but some of us do.

  11. Dr R Frater Professor Emeritus says:

    I have lived and worked on three continents and made medical visits to 28 countries. I spent 36 years in the Bronx treating self insured , well insured , HMO, medicaid, medicare, homeless, illegal immigrants as my personal patients. I generated enough on the paying patients to give meenough to buy ahouse and send the kids to school.
    The only way we are going to get first class care for rich and poor alike is to separate health care from the profit motive and make it into the vocation it should be. Despite statements to the contrary the Brits get good care. My brother’s knee replacement was done extremely well and not a penny changed hands. No business has to provide health insurance for its employees, noone has to worry about loss of coverage. It is achieved spending 8% of GDP instead of 18%.

  12. Greg Scandlen says:

    Thanks, Don. Some time ago I looked at the health status of poor versus middle class people in the UK. They all have the same coverage, but the poor have the same health disparity there as in the U.S. So real the question is how to improve their socio/demo status.

    You will disagree, of course, but I think the past fifty years have proven that maximizing capitalism is the absolute best way to do that, as we’ve seen all over the globe.

  13. Harry Cain says:

    John, I believe that ACA allows people between 100 and 133% FPL to be in either Medicaid or in private insurance through an Exchange on a subsidized basis — which is why 3 States have petitioned HHS to allow them to expand their Medicaid up to 100%, not 133%. If HHS approves their request the States will get a good deal (they would eventually have to pick up part of an expanded Medicaid, but not any part of subsidized private insurance), more poor folk will be covered (more than if those States do not expand Medicaid at all), the hospitals and docs will get a good deal (private insurance pays better than Medicaid). Only the taxpayers will feel it (CBO estimates that the Federal cost per customer in Medicaid is about half the Fed cost of subsidizing private insurance.)

  14. Don McCanne says:

    Greg says that maximizing capitalism is the absolute best way to improve the socio/demo status of the poor, and I keep hearing that our greater reliance on capitalism and markets instead of the government is what places us above the European countries with their social welfare programs. Yet, if you check the OECD findings, the United States compares quite unfavorably with the European nations in the extent of poverty. American exceptionalism has provided us with one of the highest poverty rates of all industrialized nations.

    See Figure 3:
    http://www.oecd.org/els/socialpoliciesanddata/41494435.pdf

  15. Uwe Reinhardt says:

    At the risk of seeming pedantic about it, John, it would be good to know the origin of the chart you feature. As it is, I would have prefered some music –Gangnam style, even, although it is not American.

    Who are the authors of the study that produced the chart? What is the link to it. For what covariates could they make adjustments, and how reliable are those adjustments. What is their sample? And so on.

    There is the added problem with survival rates that Greg points out. It is particularly prevalent in cancer studies.

    But suppose I abstract from all that and take the graph at face value, as a revelation of the truth. If all other socio-economic, health-status and other and demographic factors have been properly adjusted for and the shifts of the curve show only the effect of health insurance coverage on survival rates, then what does the graph tell us?

    Unless you assume that the kind of patients who are uninsured and on Medicaid are slobs in the sense that they deliberately disregard doctors’ orders more so than do privately insured patients and literally are more suicidal, the chart suggests that somehow American doctors and hospitals in our health system — the best in the world, remember! — give uninsured patients or those on Medicaid different and far inferior treatments than they give privately insured patients — to the point that Medecaid patients and the uninsured demonstrably die ealier, ceteris paribus, than would have been necessary.

    Is that what it is, John? Is this what you want me to tell folks in Europe and Asia, where I often speak? Do I tell folks abroad that American doctors and hospitals ration health care by insurance status, that is, by income class, to the point of calmly watching patients die earlier, even though they could have prevented many of those deaths with better medical care?

    If this were true, of course, then doctors and hospitals treat Medicaid patients alsmost as badly as they treat the uninsured and Brian Williams’ question makes sense: why have Medicaid in the first place, since doctors and hospitals leave these folks to die earlier than is clinically necessary anyways?

  16. Alex says:

    What concerns me is that Medicaid appears to be little better than just being uninsured.

  17. Uwe Reinhardt says:

    To Alex:

    You are right, and John needs to come down from the Mountain an explain it to us. Why is this so?

    I offered two hypothesis in my earlier comment.

    Uwe

  18. Charlotte Spencer says:

    I wonder if people are fully aware of the risks it entails to switch from private insurance to free government coverage. It just makes no sense that people could be so blind and clueless to accept such a bargain knowing that the number 1 consequence of switching is a shorter mortality rate.

    So scary.

  19. Robert says:

    What I see is the Medicaid is only slightly better than no insurance at all.

  20. Uwe Reinhardt says:

    To Charlotte Spencer:

    You seem to believe that people have a free choice between private health insurance and Medicaid. Do you know how low the income thresholds is in many states above which one is not even entitled to Medicaid?

    Furthermore, even vaguely comprehensive health insurance would cost a huge amount in the individual market, even more so if the applicant had any health issue.

    So you are way off describing people on Medicaid as “clueless and blind.” In general, it is the best deal they can get.

  21. JayB says:

    Prof Reinhardt:

    In your estimation, how much of the survival rate differential in the chart above is due to Medicaid patients getting inferior care, and how much is due to demographic factors that vary immensely between the privately insured population and those covered by Medicaid?

  22. John Goodman says:

    Uwe: The graph apparently comes from your friend Zeke, who helped give us Obama Care. It has been posted at Ezra Klein’s blog and has been the subject of commentary at several left-of-center blog sites.

    I don’t know why the left is drawing attention to it. You would think they would want to bury it. Surely it’s prima facie embarrassing if you like Obama Care.

    I have made inquiries. I am still trying to find out the source.

  23. Linda Gorman says:

    And, as we have come to expect, the left reacted to charts like this by concluding that private insurance was better and therefore that government should control every aspect of how private insurers run their businesses and force everyone to purchase it, through government run health exchanges, if necessary.

    The level of analysis behind ObamaCare accords well with the apparent intellectual sophistication behind the chart.

    We know that the Medicaid population and the uninsured population differ from the privately insured population in important ways including their attitudes towards risk and their health behaviors. One wonders how this was controlled for.

  24. Greg Scandlen says:

    Uwe, you wrote –

    “Unless you assume that the kind of patients who are uninsured and on Medicaid are slobs in the sense that they deliberately disregard doctors’ orders more so than do privately insured patients and literally are more suicidal,”

    Laying aside the snark (just can’t help yourself, can you?), surely you are aware that the poor and the uninsured are far more likely to engage in unhealthy behaviors than the middle class. Is this really news to you?

  25. Uwe Reinhardt says:

    Greg:

    I don’t think John interpreted the graph to represent behavioral factors, most probably because the vertical axis in the graph represents “covariate adjusted survival rates.” One would think that the behavioral factors you impute to the uninsured and poor would be included in these covariates somehow and be controlled for, leading us to assume that type of insurance is the shift variable in the graph. Surely that approach of covariate adjustment would not be news to you, Greg.

    As to style, you yours and John has his and I have mine, so why don’t we leave it at that. You and John may not realize it, but you do exhibit a certain consistent degree of condescension to people who, in your view, just don’t seem to understand how the health care sector works and how people make decisions. John is often quite explicit about it, when he argues that most health policy analysts seem to work on less than full mental capacity when they write about health policy.I take it in stride or poke fun at him for it. Just relax, Greg, and don’t let it get to you.

  26. Uwe Reinhardt says:

    To Linda Gorman:

    In principle, covariate adjustment should control for the behavioral and other characteristics of of the Medicaid and uninsured population. But you are correct, Ms. Gorman, in practice statistical analyses of the sort that appear to have begotten the chart featured by John may not have fully captured the effect of these characteristics on cancer survival rates.

    A number of us made this point in an article in the NEJM when a blog (it may have been this one) made something of a University of Virginia study purporting to show that being uninsured was better for one’s health than being on Medicaid. The Wall Street Journal trumpeted that study with some fanfare, although, in our view, it probably suffered from the same shortcoming you identify in your comment: insufficient control, for other factors driving health outcomes. In fact, a student in class pointed out to me that, according to that UVA study, being privately insured also was worse than being uninsured.

  27. Uwe Reinhardt says:

    John:

    I am afraid that for once I agree with you, much as that may upset you. I, too, wonder why anyone would trot out this chart without further explanation of what it actually may mean.

    It’s a good exercise for my class, though, and I intend to use it that way.

    Uwe

  28. Al says:

    Uwe writes: “Do I tell folks abroad that American doctors and hospitals ration health care by insurance status, that is, by **income class**, to the point of calmly watching patients die earlier, even though they could have prevented many of those deaths with better medical care?” (** mine)

    Tell them what you would tell the Canadians about the treatment of their native indians? I wonder if one sees the same thing in Germany between east and west?

    I love the curve presented. Meaningless, but quite typical.

  29. Uwe Reinhardt says:

    Al,

    Canadians probably treat Indians ( they are called First Nation there) pretty much as we treat Indians here.

    Both countries stole the land they now occupy from the Indians. The US then tilled much of it with slaves.. For reasons of which I am not aware Canadians did not do that.

    Your comment on Germany puzzle me. people have the same health insurance in both parts of the country. West Germans have paid huge sums to help the East from dig out from 40 years of DDR government.

    But in what way do East Germans resemble our uninsured and poor people on Medicaid. Have you ever been in Germany?

  30. John Goodman says:

    Uwe:

    “Both countries stole the land they now occupy from the Indians.”

    Whereas the Germans stole their land from whom? …..Hmmm ….. I can’t remember. But I don’t recall it being a gift from God.

    BTW, Europeans would not be surprised by the chart. It reflects a two tier health system. Germany, for example has a two tiered system, with 10% of the country opting out of the general system and presumably getting better care.

  31. Al says:

    Yes, Uwe I have been to Germany, but much prefer Asia . Mine was a question about Germany, not an answer. I believe that societal problems are a major contributor to problems often errantly attributed to health care policy and health care policy comparisons. That led to my question regarding a comparison of East to West Germany. I do not have the answer, nor do I know if it has been adequately studied to form a definitive conclusion.

    My comment about Canadians was a response pointing out that all countries have their warts and blemishes that anyone can point to. Germany despite their huge sums paid to East Germany has theirs as well and those blemishes certainly are not insignificant. All people have stolen land from someone else and slavery, though not to be dismissed, was practiced since ancient times ‘invented’ by others who long preceded the Americans. We paid dearly for that mistake, but otherwise in total, as far as nations go, I think America is great and exceptional.

    I think your comments on this blog with regard to the American health care system represent deconstruction rather than construction. Thus I note your frequent negative remarks about a society that is ethnically mixed and your comparisons to societies with one dominant ethnicity that have attempted to maintain that ethnic purity. I would like to see more recognition on your part that many of America’s perceived health care failures are due to societal problems rather than its health care system which I admit requires correction.

  32. Uwe Reinhardt says:

    Al:

    I think you got a little emotional about the discussion here and therefore missed what the discussion was all about. And thus, out of the blue, you dragged in Canadian Indians and East Germans.

    At issue here was how one should interpret the information conveyed by the chart John featured.

    One singular explanation might be that type of health insurance does not matter, and that the graph shows other effects, prominent among them the socio-economic and demographic characteristics of the uninsured, of Medicaid recipients and of privately insured patients. Several comments on this post took that position. In other words, typoce of insurance coverage merely stands as a proxy for these other variables.

    A problem with that interpretation is that, according to the chart, the authors of the study producing the chart claimed to have controlled statistically for such co-variates, although that always leaves open the question of how well they controlled for them.

    The alternative extreme interpretation, and the one I alluded to, is that the co-variates had been reasonably controlled for, and what we then saw here reflected the behavior of the health-care delivery system, notably doctors and hospitals.

    I simply wanted to ask John to offer us his interpretation. Another way to put it is: why would there be such a sizeable difference between Medicaid coverage and private insurance coverage.

    So, I’m afraid that discussion about the interpretation of the chart was not illuminates by the plight of Canadian Indians or East Germans.

    But now that I am at it, what do you think the chart tells us, leaving aside extraneous mischief in the world?

  33. Al says:

    Uwe:

    Emotional? I don’t quite know what you mean. I know the basis of the discussion, but without further information that graph is near meaningless to me. There is something there, however, that I think could demonstrate a societal problem that has been pointed out by others including you along with the proxy effect which I believe all too frequently exists. You made the rather snarky comparisons referring to “income class” and I responded to help you in formulating the response to your own question “Do I tell folks abroad…?” so perhaps I am responding not to the graph rather your own emotional question. The graph as I have said numerous times tells us little without further information. I don’t disagree with the logic behind your interpretation of the graph, but you do have my response as to how to answer the question you raised about what to tell folks abroad.

  34. Uwe Reinhardt says:

    Al:

    Econometricians are not known as emotional people, but I’m sure they would be very happy to use “uninsured” and “on Medicaid” as proxies for income class in their analysis.

  35. Sean Parnell says:

    Uwe: Medicaid can indeed be a proxy for income class (although since some states provide eligibility beyond 200% of FPL, which can be solidly middle-income in some parts of the country, it has its limits), but that can’t be said for the uninsured, which includes a large number of middle-income or above persons and families. A recent summary of the 2011 Census Bureau data showed, for example, that 37 percent of the uninsured are above $50,000 in annual income, again solidly middle-income or better for most.

  36. Al says:

    Uwe: “Econometricians are not known as emotional people, but I’m sure they would be very happy to use “uninsured” and “on Medicaid” as proxies for income class in their analysis.”

    That linkage might tell us a bit about sociological problems, but does that tell us about the efficacy or lack of efficacy of our health policy? Isn’t health policy what is under discussion? Additionally are the emotional attack and class warfare the way some econometricians prefer to debate health care policy?

  37. Uwe Reinhardt says:

    Al:

    “Class warfare”, now that is an emotional term. Please spare me!

  38. Al says:

    Uwe, I agree, but that seems to be a recurrent theme by some that believe healthcare can among other things be used to redistribute wealth. Remember it was you that asked the emotional question “Do I tell folks abroad …”?

  39. Don McCanne says:

    Al – “…some that believe healthcare can among other things be used to redistribute wealth.”

    The Milliman Medical Index – the amount spent for health care for a typical family of four with an employer-sponsored PPO – is now $20,728. Median household income (not an identical family unit but one that provides perspective) is now $50,964.

    Redistribution has always been essential for low-income individuals, but now redistribtion is also essential for working families if they are to receive the health care that some of us believe they should have. All of the talk about consumer-directed care and catastrophic (high-deductible) coverage does not get around this fundamental fact.

  40. Al says:

    Don, I suspect that helping those in need is a form of redistribution, but at a point it becomes blatantly redistributive and that is where we might part ways. I think we both want all to have the ability to obtain quality care timely provided.

    By the way I think high deductibles and other market reforms would make healthcare better, less costly and be of great benefit to the poor.

  41. Nate Purpura says:

    Uwe:

    I just wanted to point out that there are some misconceptions about the costs and benefits of health insurance people can buy in the non-group health insurance market.

    We (eHealthInsurance) publish this report (http://news.ehealthinsurance.com/pr/ehi/document/2011_Cost__and__Benefits_Report_FINAL.pdf) every year on the costs and benefits in that market.

    In most states, the prices are significantly less than group coverage. And, the benefits are good as well.

    From the report:
    • A majority of February 2011 policyholders selected plans that included coverage for lab/x-ray services (98.9%), emergency room services (99.9%), prescription drugs (88.4% overall) and chiropractic care (72.4% overall)
    • A majority of February 2011 policyholders selected plans offering preventive care services such as OB/GYN care (92%), periodic exams (89%), and well-baby care (88%)
    • Between February 2009 and February 2011 there has been a slight decrease in the percentage of selected plans providing maternity benefits (19%)

    The national average was $183 dollars in 2011. But, the majority of the states in the report (and in the country) do allow applications to be declined based on preexisting conditions.

  42. Samantha Prabhu says:

    The Graph clearly shows why the people always prefer going for private insurance as they are the ones which provide the best equipment to the patients with the best Nursing facility !