Does Expanding Health Insurance Affect Health?

Ezra Klein describes me as “honest, thoughtful, and very, very wrong on health care issues” before going on to characterize an op-ed that Mike Tanner and I authored for the L.A. Times as “violently, even surprisingly, misleading… [and] simply and blatantly misleading.”  Well.

Klein cites two claims Tanner and I make in that op-ed:

  1. [I]n reviewing all the academic literature on the subject, Helen Levy of the University of Michigan’s Economic Research Initiative on the Uninsured, and David Meltzer of the University of Chicago, were unable to establish a “causal relationship” between health insurance and better health.
  2. Believe it or not, there is “no evidence,” Levy and Meltzer wrote, that expanding insurance coverage is a cost-effective way to promote health.

Klein argues that with these two claims, Tanner and I are “misrepresenting [Levy and Meltzer’s] conclusions.”

Taking the second claim first, here is the full quote from Levy and Meltzer:

It is clear that expanding health insurance is not the only way to improve health… Policies could also be aimed at factors that may fundamentally contribute to poor health, such as poverty and low levels of education. There is no evidence at this time that money aimed at improving health would be better spent on expanding insurance coverage than on any of these other possibilities.

Thus our claim that there is no evidence that expanding coverage is a cost-effective way to improve health does not rest on a conclusion that expanding coverage produces no health improvements.  It merely states that whatever health gains expanding coverage achieves could plausibly be achieved at a lower cost by other interventions.

Regarding the first claim – that Levy and Meltzer were unable to conclude that the literature establishes a “causal relationship” between health insurance and better health – Klein counters by quoting Levy and Meltzer’s discussion of the literature:

Taken as a whole, these high-quality studies of the health effects of health insurance strongly suggest that policies to expand insurance can also promote health.

Elsewhere, Meltzer describes his work and conclusions:

Our work doesn’t argue that health insurance does not impact health, only that much of the evidence that claims to show that is less conclusive than one would like…

There are probably a thousand studies in the literature that show the correlation [between health insurance and better health], but less than a dozen really have a strategy that gets around interpreting this relationship as more than just being a correlation… 

The studies that have been done of so-called natural experiments or policy evaluations have in general suggested there are health benefits to expansions of insurance. The studies do suggest a connection. But the point is there are relatively few of them. They’ve looked at these expansions in relatively narrow contexts. A lot of them are focused around kids. Nevertheless, what we’ve got does seem to suggest that health insurance makes a difference; that it does improve health…

Do I really believe in the end that we’ll discover that health insurance will improve health? I do believe that, but it’s a belief. And I’m quite confident that beliefs won’t be the way to identify the perfect health insurance policy.  [Emphasis added.]

In sum, there are a lot of studies that purport to show that having health insurance improves health, but in fact show no such thing.  A handful of well-designed studies that focus on specific populations (children, the elderly, infants, people with HIV) do suggest a causal relationship between coverage expansions and improved health.  As Klein notes, one well-designed study suggests no causal relationship.  Levy and Meltzer do not dismiss that study; they merely note that it points in the opposite direction.  Finally, the literature is still in its infancy.

Note the language Levy and Meltzer use.  The literature suggests a causal relationship.  Expanding coverage can improve health.  This is the sort of language used by careful social scientists who do not want to make claims that go beyond the available evidence.  Because the literature so far does not establish a causal relationship, Levy and Meltzer stop short of concluding that it does.  Meltzer himself candidly admits that his belief that expanding health insurance will improve health is just that: a belief based on what little evidence is available – not an established fact.

For what it’s worth, I share the belief that policies that expand coverage will improve the health of some people.  But I also believe that many such policies – including those that would expand coverage to everyone willy-nilly – would also reduce health outcomes for many people.  (Proponents of universal coverage love to ignore those unintended consequences.)

Our claim that Levy and Meltzer “were unable to establish a ‘causal relationship’ between health insurance and better health” was, of course, a simplification of a very complex picture.  But it was also a reasonable simplification given that this was a 650-word oped, and particularly since our topic was universal coverage – i.e., expanding coverage to the entire population, where there is even less evidence to establish a causal relationship between health insurance and health than there is for discrete groups.  If Klein can suggest a better simplification in as many words – and with his talents, he probably can – we should be glad to hear it. 

However, we suspect that Klein’s negative reaction (as well as those we received from others) was motivated not by our failure to convey certain details about Levy and Meltzer’s research, but by our success at conveying its main thrust: that there is little evidence that expanding coverage improves health, and zero evidence that it is a cost-effective way of doing so.  That is a fairly powerful argument against running into the arms of a Mitt Romney or a Hillary Clinton or an Arnold Schwarzenegger or a John Edwards or an Ezra Klein who argues that the government should guarantee universal coverage.

It is noteworthy that although Klein cites both claims as “misrepresenting [Levy and Meltzer’s] conclusions,” he only attacks the first.  Yet the second is much more clear-cut and probably more damning to the cause of universal coverage.

Hollywood For the Stylish

I loved this. It seems that there is a push (led by a fashion lawyer and a fashion show consultant, no less) for Washington, D.C. to get its own version of Chicago’s Magnificent Mile. According to today’s Yeas and Nays column in the Examiner (second item), a few D.C. council members are pushing to create a “Commission on Fashion Arts and Events.” It will “recognize the achievements of D.C.’s burgeoning fashion community” (really) and dedicate a section of the “city’s landscape” for fashion retail.

Howard Dean Overwhelmingly Wrong Again

In the Democratic party’s weekly radio response to President Bush, Democratic National Chair Howard Dean said, “It’s time for the President to show respect to the American people, who voted overwhelmingly to leave Iraq.”

One can support withdrawal from the floundering war with Iraq without getting carried away.  The Democrats indeed took control of Congress in the last election, but the results were hardly overwhelming, nor is it clear that the vote was primarily about Iraq. In the House elections, Democrats carried the total popular vote by almost 5 million, or 52.0 to 45.6 percent. In the previous election, the Republicans had a margin of almost 3 million, but then about 37 million more people voted that year, so to some extent the shift in 2006 was a result of more Republicans than Democrats staying home.

As for Iraq, Democrats did best in 2006 among voters who said Iraq was “extremely important” or “not at all important” to them. A Democratic polling firm found that Iraq was the most important issue in the election, especially among people who voted for Democrats, though it was still only cited as most important by 37 percent. And in the exit polls corruption, terrorism, and the economy were all named as “extremely important” by slightly larger numbers of voters than Iraq.

Republican over-spending, corruption, the religious right, health care, perceptions of a weak economy, immigration, Iraq – lots of issues pushed voters toward the Democrats in 2006. We should be careful not to over-interpret the results of any election, as elections inevitably involve many factors. In any case, a swing of 3 or 4 percent toward the Democrats in a low-turnout election is hardly evidence of any “overwhelming” vote, much less an overwhelming referendum on any issue.

Getting Fit without the Government

At last – a big story about people deciding to work together to solve a widespread individual problem without asking for taxes, regulations, subsidies, or general pestering from the government.

Spearheaded by Ian Smith, a doctor and fitness guru, the 50 Million Pound Challenge is a national campaign underwritten by State Farm Insurance Co. to improve the health of African Americans.

Heart disease and diabetes are among the leading causes of death for African Americans. If that is to change, public health experts say, people must exercise more and eat better, which is easier said than done, given the dearth of high-quality supermarkets and restaurants in poorer black communities.

With the 50 Million Pound Challenge, organizers hope to rally African Americans to trim waistlines by keeping tabs on their blood pressure, cholesterol levels and body mass index and by trimming some of the fat out of their diets. 

Leave aside the reporter’s irresistible temptation to suggest that the lack of high-quality restaurants in poor neighborhoods is why many poor African Americans are overweight. I was in a high-quality restaurant last night, and it wasn’t easy to watch my diet there. (Besides, poor people presumably can’t afford expensive restaurants, even if they are in the neighborhood.)

The point is, most stories about obesity these days throw around misnomers like “public health” and call for government programs and restrictions on our freedom. In this case a doctor, an insurance company, and some popular entertainers got together to encourage individual people to improve their own health. Let’s hear it for the 50 Million Pound Challenge!

Bad Tax System and Predictable Bureaucratic Sloth Put Americans at Greater Risk of Adverse Consequences in Cases of Identity Theft

A story in reports on sloppy security at the IRS. The Treasury Inspector General for Tax Administration found numerous instances of confidential taxpayer information being improperly safeguarded. The article highlights the risks for taxpayers, mostly because of identity theft, but the untold story is that much of the risk is a function of the current tax system. Taxpayers today are forced to divulge information about their financial assets. Why? Because the internal revenue code contains pervasive double-taxation of income that is saved and invested. So if a thief steals an IRS laptop, he may be able to determine all of a taxpayer’s assets. Under a flat tax system, by contrast, there is no double-taxation. Income is taxed only one time, when first earned, and there is no additional tax if people save and invest their after-tax income. The only personal information the IRS would need to enforce a flat tax is the size of the taxpayer’s household and the level of wage and pension income. Under a national sales tax (assuming politicians could be trusted to completely eliminate the income tax), the IRS would have no personal taxpayer information:

…a new government report…has revealed just how vulnerable taxpayer data contained on employee laptops is to theft, fraud and other criminal abuses. The report by the Treasury Inspector General for Tax Administration (TIGTA) found that hundreds of IRS laptop computers and other computer devices had been lost or stolen, employees were not properly encrypting data on the computer devices, and password controls over laptop computers were not adequate. TIGTA concluded that as a result, “it is likely that sensitive data for a significant number of taxpayers have been unnecessarily exposed to potential identity theft and/or other fraudulent schemes.” The report prompted harsh criticism from Grassley, the senior Republican on the Finance Committee, who commented that: “Thieves are very good at mining sensitive data for their own end. One stolen IRS laptop could put thousands of taxpayers in jeopardy. It’s hard to see why this is still a problem when the IRS knew about it more than three years ago.” …The TIGTA report shows that theft of IRS computer equipment potentially containing sensitive information on thousands of taxpayers is running at alarmingly high levels. Between January 2, 2003, and June 13, 2006, IRS employees reported the loss or theft of at least 490 computers. A large number of IRS laptops were stolen from employees’ vehicles and residences, but 111 incidents occurred within IRS facilities, where employees were likely not storing their laptop computers in lockable cabinets while they were away from the office. …TIGTA also evaluated the security of backup data stored at four offsite facilities and found that data was not encrypted and adequately protected at the four sites. For example, at one site, non-IRS employees had full access to the storage area and the IRS backup media. Envelopes and boxes with backup media were open and not resealed. At another site, one employee who retired in March 2006 had full access rights to the non-IRS offsite facility when TIGTA inspectors visited in July 2006.

National Standards, Aussie Style

If the U.S. does decide to homogenize its education system with uniform national standards and tests, our misery may be lessened by some companionship from the land down under.

Australia is currently toying with the same idea, and columnist Kevin Donnelly is trying to keep his country from biting that particular bullet (or rather, the muzzle of the gun housing it).

Donnelly tempts fate, however, by suggesting a federal government role in evaluating national curricula proposed by independent sources. It’s a small political step from evaluation to prescription, and there’s no compelling reason to think that government involvement would help. 

Albania Joins the Flat Tax Club

Spurred by tax competition, the flat tax revolution continues to generate positive results. Albania will have a 10 percent flat tax beginning in January 2008. The corporate rate also will be 10 percent, as will the payroll tax. The latter reform is particularly interesting since many of the flat tax nations in Eastern Europe retain punnitive payroll tax rates - a policy that undermines the pro-growth and pro-employment effects of the flat tax. The Southest European Times reports:

In a bid to promote growth and improve the business climate, the administration of Albanian Prime Minister Sali Berisha plans a major overhaul of the tax system. The biggest change is a switch to a flat tax. “As of January 1st, 2008, Albania will have implemented the 10% flat tax system, one of the lowest in Europe,” Berisha told a business community meeting in late March. Corporate taxes, currently at 20%, are to be slashed in half. Social security contributions from businesses will likewise be capped at 10%. The government and other supporters of the reform say it will widen the taxable base and simplify tax administration, while also making Albania an easier place to invest. According to Finance Minister Ridvan Bode, the changes will lead to a more streamlined fiscal system. “The flat tax helps eliminate the potential arbitrage between corporate tax, dividend taxes and the income tax,” he says. VAT and other taxes will also be gradually reduced in order to woo investors, the minister added. …In the past, the IMF has been wary of plans to reduce taxes in Albania. This time, however, it seems more receptive – provided the overhaul is combined with more effective revenue collection. “We will negotiate with the Albanian government about the tax reduction, depending on the tax collection,” IMF representative Ann Margaret Westin told the press.