Response to Austin Frakt

I have an editorial at Kaiser Health News this morning noting that under health reform we are about to spend close to $1 trillion enrolling 32  million people in Medicaid and in Medicaid-like private plans and asking what we expect to get in return for all that money. I argue that the 32 million may not get more care or better care; and in any event, low-income families as a group are almost certainly going to get less care than if there had been no health reform at all.

Austin Frakt responds with what has now become a familiar refrain at his blog: He dismisses studies showing that Medicaid enrollees do worse than the uninsured, touts studies that show the reverse and claims that new Medicaid enrollees are going to get more care than otherwise.

My problem with Austin is the same problem I have with virtually all the defenders of health reform. It has nothing to do with the studies. It is a matter of logic. Namely: what is true for the part is not true for the whole.

Defenders of the new law invariably ignore the supply side of the market. They assume that if you insure the uninsured or give people more generous coverage that they will all get more health care without ever asking: who is going to provide that extra care?

If you assume that primary care resources are already fully utilized (and in urban areas the evidence for that is overwhelming) then one group can get more primary care only if some other group gets less. The absolute worst feature of Obama Care (and it truly is inexplicable) is that close to 310 million Americans are going to get more primary care coverage than they had before. Not just welfare mothers, but Bill Gates, Bill Gates’ father, Warren Buffett — everyone in the whole country is going to have access to a long list of preventive care services with no deductible or copayment. If they respond to their new incentives, they will all try to get more care than they were getting before. But since more care will not be forthcoming, the waiting times will grow at every emergency room and in every primary care doctor’s office — just as they have in Massachusetts.

Everyone who pays below market is going to be pushed to the rear of the waiting lines. This includes the elderly and disabled on Medicare, the poor and near poor on Medicaid and the newly insured in subsidized private plans that pay little better than what Medicaid pays. In other words, all the vulnerable populations are going to have worse access than before.

Moreover, as doctors leave the system in droves to provide concierge services to everyone who has money and doesn’t want to wait for care, access for everyone left behind will get even worse.

So I ask again: what are we going to get in return for almost $1 trillion in taxpayer dollars that we are about to spend insuring the uninsured?

Comments (13)

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  1. Tom H. says:

    Good post. I have no idea why Frakt is so enamored with Medicaid. It’s not much different from free care offered by safety net institutions — as you point out.

  2. LKarry C. says:

    Here’s a suggestion: Austin ought to put aside his instrumental variables for a while and go spend a few hours in a safety net hospital emergency waiting room. Nothing like hands on observation to bring people out of their ivory tower.

  3. Devon Herrick says:

    That’s an important point. The ACA will boost demand for medical care without boosting the supply of doctors willing to provide that care. Add to that the demographic time bomb of 78 million Baby Boomers nearing retirement (not to mention Baby Boomer doctors retiring) and you have the perfect storm of a physician shortage. More than 100 million people will have public coverage paying below-market fees. If there is a shortage and one-third of the market pays low fees, guess who will lose access to care? It will be those with health coverage paying the lowest fees.

  4. Nancy says:

    When Barack Obama ran for president, he talked about “universal coverage.” He never said a word about putting everyone in Medicaid. If he had, he might not have been elected.

  5. Linda Gorman says:

    Another minor point is that state expenditures could easily go up even if people don’t demand more primary care. At present, a lot of people who could enroll in Medicaid do not. They’re effectively covered for big stuff as they can be enrolled retroactively if/when they show up at the hospital.

    However, as states push people into managed care Medicaid (ACOs and the like), this means that people who previously used very little care will now be enrolled in a health system that demands monthly payments for the actuarial amount of care experts determine that people are supposed to receive (and don’t seem to consume even when fully insured).

    The states could therefore end up paying for Medicaid managed care services whether people use them or not.

  6. Paul H. says:

    Good point, which I also have noticed. The enthusiasts for the Affordable Care Act never talk about supply. They seem to be fixated on health insurance, but not health care. There must be some psychological explanation for this. I have no idea what it is.

  7. Austin Frakt says:


    Send me an email. The whole point of my blog is to be up front about research evidence. Beyond that, it’s all a matter of theory, speculation, and opinion. And, in those areas, we actually have considerable agreement (as you’ve noted many times on your own blog).

    If I could find your email address, I’d initiate.

  8. Avik Roy says:

    Great Medicaid piece today.


  9. Simon says:

    Unfortunately solving this epidemiological question of insurance type corresponding to health outcome is not as simple as John Snow removing the handle of the Broad street pump. There are a variety of confounding variables influencing the outcome of illness and disease, and studies are for the most part suggestive (even despite being prospective controlled studies) when associating a general insurance type to outcome.

    You can guarantee everyone a free meal, but without increasing the number of cooks you can’t feed everyone. So with the same number of cooks, who gets fed first?

  10. I’ve quietly been enjoying the ping-pong between Prof. Frakt and Avik Roy on Medicaid. I appreciate Prof. Frakt’s discussion of IVs, especially. I lean towards Dr. Goodman & Mr. Roy’s interpretation of the evidence on Medicaid outcomes, but I do respect that because Medicaid is guaranteed issue, there’s no reason to be on Medicaid unless you are already sick.

    So, we’d solve the problem (if it is a “problem”, which I have reason to doubt) by mandating continuous coverage, but the government cannot do that for the Medicaid population (or anyone, really). It can improve continuous coverage by voucherizing or giving a tax credit for insurance that is guaranteed renewable.

    With respect to the research discussion, there are some other issues. First, discussing the “Medicaid population” in a meta-dialogue of studies is frustrating because there is no generic “Medicaid population”. There are the mentally ill, the dual eligibles, etc. (Don’t get me started on the Medicaid Long-Term Care racket!)

    The literature reviewed by the people to whom Prof. Frakt refers us mixes apples and oranges by counting Medicaid, Medicare, & the privately insured all as insured. When jumbled together, the outcomes for the privately and Medicare insured will swamp the Medicaid population.

    Also, counting Medicaid alongside the privately insured is as absurd as counting welfare recipients alongside the employed as “receiving income” if you’re trying to reckon the total costs and benefits of what you’re observing, and come to a policy conclusion. (I.e receiving $1 of welfare income would be counted equivalent to earning $1 of wages. That would lead to horrific policy decisions!)

    Finally, if the point of indifference in getting an appointment between Medicaid patients and cash-paying patients in urgent-care clinics is $20 ability to pay, it certainly looks like Medicaid does not solve the problem it is meant to solve: Improving low-income earners access to care.

  11. Erik says:

    There are two repeated assumptions I keep seeing as a part of these blogs:

    1) There will be a doctor shortage – H1B Visas will ensure this is not the case (as supply follows demand and not the other way around or we would have too many doctors today) they will be paid salaries (driving down physician costs) and be incorporated into ACO’s. That is why John seems to be on the “Concierge” kick as it is simply an add-on service fee to cut to the front of the line. A very democratic proposal indeed.

    2) People will use more services – number 1 will solve number 2. Also, people already have access to these services yet do not apply to receive them, so how can anyone speculate this will change. Some people just simply do not go to doctors unless it is an emergency.

  12. steve says:

    I just hired two new docs. One was not American trained.


  13. Joe S. says:

    Erik, what you are ignoring is that there is a reason the authors of the PPACA (Obama Care) zeroed out all the funds to create more doctors. More doctors mean more care. That means more spending, espcially federal spending.

    What you are implicitly saying is, if the bill doesn’t pay for all the promises it has made, we can solve that problem by spending more money. Yes, but if Congress were willing to do that they would have already done it.

    Massachusetts has exactly the same problem. Do you see anyone in Massachusetts government calling for the importation of more doctors? I don’t think so.