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Study: “Basic Economic Principle” Debunks ObamaCare Claim

“If you’ve got insurance, then … preventive care is going to be covered, and that should make a difference,” President Obama said in 2010, describing ways his unpopular health-care reform law “should save us all a lot of money. I mean, one of the toughest things about this health care debate was—and sometimes I fault myself for not having been able to make the case more clearly to the country—we spend—each of us who have health insurance spend about a thousand dollars of our premiums on somebody else’s care.”

How were we all spending that money on other patients’ care? “What happens is, you don’t have health insurance, you go to the emergency room,” and the costs for those expensive ER visits get passed along. “And that’s why,” Obama boldly declared, “we feel pretty confident that over the long term, as a consequence of the Affordable Care Act, premiums are going to be lower than they would be otherwise; health care costs overall are going to be lower than they would be otherwise. And that means, by the way, that the deficit is going to be lower than it would be otherwise.”

That sounded great, but as we’ve come to understand with ObamaCare’s selling points, that means it’s probably false. And indeed we are getting more evidence on that score. The New York Times reports on the latest data from Oregon’s Medicaid study:

Supporters of President Obama’s health care law had predicted that expanding insurance coverage for the poor would reduce costly emergency room visits because people would go to primary care doctors instead. But a rigorous new experiment in Oregon has raised questions about that assumption, finding that newly insured people actually went to the emergency room a good deal more often.

The study, published in the journal Science, compared thousands of low-income people in the Portland area who were randomly selected in a 2008 lottery to get Medicaid coverage with people who entered the lottery but remained uninsured. Those who gained coverage made 40 percent more visits to the emergency room than their uninsured counterparts during their first 18 months with insurance.

The pattern was so strong that it held true across most demographic groups, times of day and types of visits, including those for conditions that were treatable in primary care settings.

The findings, the Times correctly notes, “go against one of the central arguments of the law’s supporters”—a phrase we’re getting used to hearing by now. It’s another casualty not just of the dishonesty that marked the efforts to mislead the public enough to get the law through Congress but also of the degree of intellectual isolation so typical of ObamaCare’s supporters, who closed themselves off from the evidence that would have helped them make more informed decisions, as the Times adds:

“I suspect that the finding will be surprising to many in the policy debate,” said Katherine Baicker, an economist at Harvard University’s School of Public Health and one of the authors of the study.

Sure—when the government passes a major reform law first and asks questions about its bedrock assumptions later, don’t be surprised to be surprised as the facts reveal themselves. But is that intellectual isolation even an excuse? The Times piece not so subtly suggests that a combination of basic economics and common sense could have solved this puzzle for the administration’s pseudo-wonks:

Dr. Baicker and Amy Finkelstein, an economist at the Massachusetts Institute of Technology, another author, said the increased use of emergency rooms is driven by a basic economic principle: When services get less expensive, people use them more. Previous studies have found that uninsured people face substantial out-of-pocket costs that can put them in debt when they go to the emergency room. Medicaid reduces those costs.

No kidding. And that preempts a line in the story that might have put the administration’s ignorance in a better light—but is a blistering, if unintentional, condemnation of government in general. Readers are told that this Medicaid study is the “gold standard” in terms of being able to accurately analyze the effects of the policies under consideration, but that such experiments “are rarely used for domestic health care policy.”

The article is full of such now they tell us revelations, including doctors telling the Times that (contra President Obama) preventive care is quite limited in preventing ER visits, and policy experts saying that the cost savings would have been modest even if Obama had been right about such care—though he wasn’t.

But it’s actually worse for ObamaCare than it sounds, because the new health law risks exacerbating the situation—turning a minor increase in costs into a potentially more consequential expense. As CNN reported in October, “Obamacare is expected to increase patient demand for medical services. Combine that with a worsening shortage of doctors, and next year you may have to wait a little longer to get a doctor’s appointment.”

That wait time increase, according to one of the authors of the study, is a major factor, as might be expected, in the increase in ER visits:

Heidi Allen, an assistant professor at Columbia University and an author of the study, said much of the non-urgent emergency department use among patients she interviewed happened because those patients could not get same-day appointments with their primary care doctors.

Again, much of this is common sense, the rest basic economics. That neither seems to have been utilized in reforming America’s health-care system is both appalling and, by now, all too apparent.



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