healthcare

Socialized Medicine: From Anecdote to Data

The CNN debate on Obamacare saw Senators Bernie Sanders and Ted Cruz jousting on the benefits of a UK-style healthcare system. As is often effective in debates, Ted Cruz reached for some heartbreaking UK anecdotes that indicate some of the key downsides of socialized medicine. But survival rates for major conditions tell an even more damning story.

Federal R&D Funding

The federal government spent $147 billion on research and development in 2016, including $77 billion on defense and $70 billion on nondefense. Federal R&D spending has risen in recent decades on a constant-dollar basis, but has dipped as a share of gross domestic product. The AAAS has the data here.

Should You Take the Government’s Dietary Advice?

Recently, I’ve worked with the excellent Cato Multimedia team on the first edition of a project you’ll be seeing more of: Ask a Cato Expert.

In this first episode, I’ve answered the question of “Should you take the government’s dietary advice?” I highlight the history behind our current dietary guidelines, and come to the conclusion one should not. Please take a look at the video below, and tweet us new questions at #AskACatoExpert!

Surge in Emergency Department Use Persists in New Oregon Medicaid Study

One of the main arguments proponents of Medicaid expansion make, at least on the fiscal side, is that it would save money as people gaining Medicaid coverage would reduce their use of expensive visits to the Emergency Department (ED). An earlier study from the Oregon Health Insurance Experiment threw some cold water on that theory, as it found that getting Medicaid actually increased the number of ED visits by 40 percent. Some analysts postulated that this increase was only temporary because it was due to either pent-up demand for health care services, or because new enrollees did not have established relationships with doctors. The thinking was that after enrollees became familiar with their coverage or addressed long-gestating health problems, the reductions in ED use and the associated cost savings would materialize.

A new report analyzing a longer time horizon finds that this is not the case, and there is “no evidence that the increase in ED use due to Medicaid coverage is driven by pent-up demand that dissipates over time; the effect on ED use appears to persist over the first two years.” This is another blow to the oft-repeated claim that Medicaid expansion will lead to significant savings from reduced Emergency Department utilization, and the effect actually seems to work in the other direction.

The Oregon case is important because it is one of the few instances of random assignment in health insurance, as the state wanted to expand Medicaid but had funding constraints, so it employed a lottery to determine who would get coverage. 

In this new update, the researchers see if there are any time patterns or signs of dissipation when it comes to the impact of Medicaid percent of the population with an ED visit or the number of ED visits per person. They expand upon the earlier utilization study to analyze the two years following the 2008 lottery and break up into six-month segments to see if there are any signs of the effects dissipating.

As they explain, “there is no statistical or substantive evidence of any time pattern in the effect on ED use on either variable.” In the first six-month tranche Medicaid coverage increased the number of ED visits per person by about 65 percent relative to the control group, and the estimates for the following three periods were similar and mostly statistically indistinguishable from each other. They also find that Medicaid increases the probability of an ED visit in the first period by nine percent, and the impact in the subsequent periods does not differ significantly. 

Estimated Effect of Medicaid Coverage on Emergency Department Use over Time

Source: Finkelstein et al., New England Journal of Medicine (2016).

Berniecare Would Increase Federal Expenditure by $32 Trillion Over Next Decade, Twice as Much as Campaign Claimed

Fresh off his resounding victory in the West Virginia primary, Senator Bernie Sanders has intimated that he has no intent of dropping out of the race any time soon, even though he trails his rival Hillary Clinton significantly in pledged delegates. One of the cornerstones of the Sanders campaign has been his health care plan, which would replace the entirety of the current health care system with a more generous version of Medicare.

More Losses Ahead for Obamacare’s Troubled CO-OPs

Twelve of the 23 Obamacare health cooperatives (CO-OPs) have shut down already. 627,000 people were enrolled in CO-OPs that ceased operations, and the federal government had disbursed more than $1.2 billion to these CO-OPs, and it might be difficult to ever recover any of these taxpayer funds. A GAO report released this week reveals that the CO-OP losses could be far from over.

4 of the 11 CO-OPs still operating in 2016 have not yet reached the benchmark of 25,000 enrollees, which CMS officials say is the minimum needed for a CO-OP to have financial solvency. More than 69,000 people were enrolled in these plans as of January 2016, and the federal government has already disbursed $265 million of the $407.8 million in loans awarded to them. The people enrolled in these plans and millions of dollars in government outlays are both at risk in the coming year. The map below, based on a figure from the report, shows how level of attrition so far, with the addition of highlighting the states where the CO-OPs have failed to reach the enrollment benchmark.

Wave of Health Insurance CO-OPs to Shut Down in Latest ACA Failure

Hundreds of thousands people will lose their insurance plans as a raft of health insurance cooperatives (CO-OPs) created by the Affordable Care Act will cease operations. Just last week, CO-OPs in Oregon, Colorado, Tennessee and Kentucky announced that they would be winding down operations due to lower than expected enrollment and solvency concerns (although the one in Colorado is suing the state over the shutdown order).  They join four other CO-OPs that have announced that they would be closing their doors. In total, only 15 out of the 23 CO-OPs created by the law remain. These closures reveal how ill-advised this aspect of the ACA was both in terms of lost money and the turmoil for the people who enrolled in them. The eight that have failed have received almost $1 billion in loans, and overall CO-OPs received loans totaling $2.4 billion that might never get paid back. In addition, roughly 400,000 people will lose their plans.

Sources:  Sabrina Corlette et al. “The Affordable Care Act CO-OP Program: Facing Both Barriers and Opportunities for More Competitive Health Insurance Markets,” The Commonwealth Fund, March 12, 2015; Erin Marshal, “8 Things to Know About Insurance CO-OP Closures,” Becker’s Hospital Review, October 20, 2015. Created using Tableau.

Notes: Hawaii and Alaska not shown. Neither state had a CO-OP. CoOportunity Health served both Iowa and Nebraska.

Obamacare’s Not-So-Hidden Tax: Thank You for Smoking

Without government interference, insurance markets will naturally charge higher premiums for riskier individuals. For example, life insurance premiums vary considerably based on factors that increase the likelihood of death, such as age, gender, smoking status, and health.

Under Obamacare, many factors that influence healthcare expenditures are excluded from premiums. For example, premiums make no distinction for obesity, likelihood of having a baby, alcoholism or pre-existing conditions. One notable exception is for smokers, where premiums may be up to 50 percent higher than that for non-smokers. I have collected data on premiums for smokers and non-smokers in 35 states, and the data shows large variation in the extent to which smokers are charged more for their choice.

The Obamacare Giveaway, Connecticut Edition: Earn $62k and Get Health Insurance for less than $58/Year

Several days ago, I pointed out that a married couple earning $62,000 in Wisconsin could get health insurance under Obamacare with no monthly premiums. Now it’s time to move onto Connecticut. Connecticut runs its own exchange, known as access health CT.

Among the 114,000 individuals aged 55 to 64 in Fairfield County, Connecticut, roughly two-thirds – or 77,000 people – rely on employer coverage, where the odds are high that they’re paying something out of their own pocket for monthly premiums.

Consider married couple earning $62,000. Each is 64-years-old, a non-smoker, and lives in Fairfield County, Connecticut. The structure of Obamacare subsidies means that many individuals who are not poor can find health plans with such large subsidies that they pay virtually nothing for premiums out of their own pocket. In this case, the couple would qualify for the HealthyCT Bronze Basic HSA 1 Plan for $4.79 per month in premium – or $2.40 per month for each person in that household. If the couple chooses this plan, it pays less than 0.1% of its total income towards health care premiums. That’s not a typo – and it doesn’t say one percent – the household would pay one-tenth of one percent of their income towards premiums. Subsidies pay for more than 99% of the monthly premium.

See the graphic below for this married couple:

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