Tag: democratic health care plan

Average vs. Marginal Effects of Health Insurance

I have to thank Ezra Klein.  I have for some time been trying, without success, to spark a debate about whether expanding health insurance coverage would actually save any lives.  Even my bet with Karen Davenport seemed to go nowhere.  But when Klein accused Sen. Joe Lieberman (I-CT) of being “willing to cause the deaths of hundreds of thousands of people” because Lieberman was jeopardizing passage of legislation that would expand health insurance to 30 million people, Klein made a debate possible.

Following on my first response to Klein that the evidence supporting his claim is remarkably thin, others have joined the discussion.  Matt Yglesias of the Center for American Progress rose to Klein’s defense.  Megan McArdle (in The Atlantic magazine and her blog) and Tyler Cowen (at Marginal Revolution) both argue that we don’t really know if Klein’s claim is true.

Today, Yglesias poses the following question on his Twitter page:

Do rightwingers really believe that US health insurance has no mortality-curbing impact?

I see two problems.  First, there are no right-wingers in this debate.  McArdle, Cowen, and I all support gay marriage, for example.

Second, Yglesias sets up a straw man.  He asks whether health insurance on average has a positive impact on mortality, when the debate is actually over the effect of health insurance at the margin.  In other words, would covering the uninsured save lives?

I don’t know anyone who thinks health insurance has zero effect on mortality overall.  Yet it is entirely possible for the average effect to be positive and the marginal effect to be zero. One reason may be that the uninsured do benefit from the human and physical capital that health insurance makes possible.  It may also be the case that when the uninsured do obtain health insurance, the additional medical care they receive is more likely to harm them than to help them.  The researchers behind the RAND Health Insurance Experiment make essentially the same point.

If the marginal effect of health insurance on health is zero, it raises other interesting questions.  Would it also have zero effect on health outcomes if we were to reduce the number of people with health insurance?  What is the size of the margin over which health insurance has zero impact?  (Robin Hanson suggests it may be very, very large.)

Klein recently declined an invitation to debate these issues at Cato.  Too bad.  This is worth pursuing.