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Romneycare Improved Health Outcomes, Thanks To Private-Sector Coverage

May 07, 2014

By Avik Roy

As you may know if you're a regular reader of The Apothecary, the left has systematically ignored the mountains of clinical evidence showing that the Medicaid program doesn't actually make people healthier. Given that Obamacare is designed to achieve half of its coverage expansion via Medicaid, you can understand why: if Medicaid doesn't make people healthier, a significant chunk of Obamacare is wasted money. But the other chunk of Obamacare—the one that expands coverage using subsidized private-sector coverage—could indeed have an impact on health outcomes. An important new study, following the health outcomes of Romneycare in Massachusetts, shows us how.

The Romneycare backstory

First, we have to look back and understand how Romneycare—the health reforms signed into law by then-Governor Mitt Romney in 2006—changed health coverage in Massachusetts. (For a very detailed look at how Romney's reform came to be, look through my exhaustive treatment of the subject from April 2012, or read Josh Archambault's excellent book The Great Experiment. As a matter of disclosure, I advised Gov. Romney when he ran for President in 2012.)

Here are the nuts and bolts of it. In the mid-1990s, Massachusetts passed a series of laws that dramatically expanded the Bay State's Medicaid program, and instituted many of the insurance regulations we now associate with Obamacare: requiring insurers to cover everyone regardless of pre-existing conditions, and also requiring them to charge similar rates to the healthy and the sick, and the young and the old.

In 2005, Massachusetts was due to lose $385 million a year in federal Medicaid funding that it was receiving because it had expanded its version of Medicaid—called MassHealth—by so much. In addition, the market for individually-purchased insurance had collapsed, because the Obamacare-like regulations had driven healthy people out of the market.

So in 2006, Massachusetts' heavily Democratic legislature, working with Gov. Romney, passed a bill to address these problems. It slightly expanded MassHealth, the Medicaid program, so as to ensure that the state didn't lose its federal support. It built an entirely new institution, a regulated private insurance exchange, to offer subsidized coverage to Commonwealth residents making less than 300 percent of the federal poverty level—around $30,000 for a childless adult—who weren't eligible for Medicaid.

Romneycare expanded private coverage more than public coverage

The end result was a substantial, albeit costly, expansion of health insurance coverage for Bay State residents. But the bulk of that expansion took place through private health insurers.

According to the Massachusetts Medicaid Policy Institute, approximately 61,000 Massachusetts residents gained coverage under Romneycare's Medicaid expansion, between June 2006 and December 2010. (Around the country, and also in Massachusetts, the overall Medicaid rolls expanded during this period due to the recession; the 61,000 figure is separate from that underlying national enlargement.)

Over the same period of time, according to the Massachusetts government, the Massachusetts private insurance exchange (called Commonwealth Care) enrolled 158,973 individuals. An additional 77,330 residents bought insurance in the individual market, outside of the exchange: an increase of 192 percent, compared to 4.5 percent nationally.

Employer-sponsored coverage declined slightly, by 17,974 individuals: a decline of 0.4 percent, compared to a nationwide decline of 4.1 percent (according to the Census). Adjusting for this national trend, Massachusetts actually outperformed the country on employer-sponsored coverage by the equivalent of 212,338 residents. This may be, at least in part, a result of Romneycare's employer mandate requiring mid-to-large firms to offer coverage. (Gov. Romney vetoed the employer mandate; his veto was overridden by the legislature.)

What do we learn from all these numbers? That over the period of 2006 to 2010, the vast majority of the expansion of coverage in Massachusetts—in relation to trends in the country overall—was achieved through an expansion of private insurance: the Massachusetts exchange, other individually-purchased private insurance, and employer-sponsored coverage. The pie chart above summarizes this data.

New study: Romneycare improved health outcomes

That brings us to this week's news. A new study, published in Annals of Internal Medicine, concludes that “health reform in Massachusetts was associated with significant reductions in all-cause mortality and deaths from causes amenable to health care.”

The study was authored by Ben Sommers of the Obama administration and Harvard, Sharon Long of the Urban Institute, and Kate Baicker of Harvard. I've written a few times about Sommers' work; he was the guy behind the misleading and tendentious claim that 3 million people gained coverage from Obamacare's under-26 “slacker mandate.”

In addition, Sommers and Baicker co-authored a sloppy study that tried to demonstrate that Medicaid improved health outcomes, by employing a biased comparison of healthy states with large Medicaid programs to less healthy states with smaller programs. If you took just one of their three comparisons out of the equation, their work showed no difference in outcomes.

(A better study, co-authored by Baicker, found that Medicaid had no impact on “measured physical health outcomes” like mortality, diabetes, blood pressure, and the like, despite the fact that the study was biased in ways that favored the Medicaid population. While health outcomes didn't improve, Medicaid enrollees did go to the emergency room more frequently than did the uninsured.)

The AIM study employs a rigorous approach

The new study by Sommers, Long, and Baicker does a very nice job of responding to my earlier criticisms. Instead of simply comparing Massachusetts to neighboring states, they compared the Commonwealth's 14 counties to a control group of 513 other counties, outside of Massachusetts, that were as demographically comparable as possible to the Bay State. As you can see in the table below, the two groups of counties—Massachusetts and non-Massachusetts—were fairly similar in terms of age, race, income, health, and insurance status.

The authors took these two groups of counties, and compared their performance over two time periods: post-reform (2007 to 2010) and pre-reform (2001 to 2005). The primary measure they looked at was “all-cause mortality”: simply put, the change in the proportion of people who died each year, in the post-reform and pre-reform periods, for each cohort. They also looked at “conditions that are more likely to be preventable or treatable with timely care, including heart disease, stroke, cancer, infections, and other conditions,” which is wise: after all, if you die in a gun fight or a car crash, that's not the fault of the health-care system.

Statistically significant reductions in mortality

Their findings are compelling. Among non-elderly adults, the authors found a statistically significant reduction in all-cause mortality of 2.9 percent. The finding had a p-value of 0.003, which means that it had a 0.3 percent chance of being the result of statistical noise. They also found a meaningful reduction in health care-amenable mortality—4.5 percent—with a p value of less than 0.001 (less than a 0.1 percent chance of being statistical noise).

If you look under the hood of the data, it's even more convincing. People living in counties with below-average incomes, and high uninsured rates, showed a significant reduction in mortality, whereas higher-income and low-uninsured counties showed a lesser, statistically insignificant trend. Both whites and non-whites fared better after reform.

Access to health care—things like doctors' visits—also improved in a statistically significant fashion. While mortality improved in the non-elderly adult population, it didn't improve for people over 65—which further strengthens the findings, since most people over 65 are on Medicare, and Romneycare didn't affect them one way or the other.

Now, this was a retrospective study, not a controlled experiment like a clinical trial. So we can't say with certainty that Romneycare caused improved health outcomes. But this study was constructed with sufficient care, and the findings are robust enough, to be persuasive, at least to me.

We've long known that private health insurance improves outcomes

The Annals of Internal Medicine study, using a rigorous methodology, tells us something that actually isn't very surprising: that expanding coverage using private-sector health insurance improves health outcomes. The very same medical literature that overwhelmingly highlights Medicaid's poor outcomes also highlights the substantial benefits of private health insurance.

For example, the University of Virginia outcomes study—to date, the largest of its kind—found that surgical patients on Medicaid were 93 percent more likely to die before leaving the hospital than those with private insurance. The uninsured were 74 percent more likely to die than those with private insurance. That is to say, while Medicaid did not perform better than being uninsured, private insurance did—much better, in fact.

More reason for states to oppose Medicaid expansion

The usual Obamacare cheerleaders on the left are arguing that the AIM study is one more reason to expand Medicaid. But the opposite is true. The study gives us no evidence that Medicaid improved health outcomes, because Romneycare expanded coverage primarily through private insurance.

And it turns out that the number of people with private coverage actually goes up if you don't expand Medicaid in your state.

There are two reasons for this. The first is that eligibility for Obamacare's exchanges expands if you don't expand Medicaid. In states that do expand Medicaid, exchange subsidies are available for people whose incomes are between 138 and 400 percent of the federal poverty level. In states that don't expand Medicaid, people with incomes between 100-138 percent of FPL also become eligible for the exchanges.

In addition, a good chunk of those who are uninsured and would qualify for Medicaid under an expansion already have access to coverage through their employers. For example, a study of Medicaid expansion in New Hampshire by the Lewin Group found that, of the state population eligible for the Medicaid expansion, three-fifths would gain private coverage through either their employers or the exchanges if the state didn't expand Medicaid.

For the remainder, all it would take is a full-time job to qualify for subsidies; 97 percent of individuals working full-time have incomes above the poverty line, and thereby exchange subsidies.

Obamacare's exchanges should also improve health outcomes, but at great cost

While opposing the Medicaid expansion remains good policy, it's important to note the upside for Obamacare. Expanding coverage through the exchanges should, indeed, improve health outcomes. Indeed, we should expect that health outcomes should improve at equal or greater rates in states that don't expand Medicaid, because the Obamacare exchanges and employer-sponsored coverage will be larger in those states.

It's completely fair to ask whether or not this coverage expansion is being achieved at a reasonable cost. My colleague Michael Cannon calculates that for every life saved due to the coverage expansion, taxpayers spent more than $4 million.

If you're inclined to think, “it's worth it to spend $4 million to save one life,” consider this: if you multiply that $4 million-per-life-saved figure by annual U.S. mortality—around 2.5 million—you get an annual cost of $10 trillion. That's an extreme amount of money.

Massachusetts has some of the highest health insurance premiums in the country, and Obamacare works to make every state as costly as Massachusetts, through the law's blizzard of mandates and regulations.

The policy lesson: Everyone should have private health insurance

What's the policy lesson? If we really want to improve health outcomes in America, we should work to replace the dinosaur legacies of the Great Society—Medicare and Medicaid—with private health coverage, subsidized for those who need the help. We could achieve better health, cover more people, and spend less money.

Gov. Romney's reforms, unfortunately, did nothing to make health care less expensive in his state. In fact, Massachusetts taxpayers spend significantly more on health care today than they did before Romneycare. But the 2006 Massachusetts law does appear to have improved health outcomes—and that's not nothing.

What the latest research shows us is that “coverage” is not some kind of magic talisman. The type of coverage matters. The hard left despises private insurance companies, and seeks to obliterate them from the country using single-payer, government-run health care. But private insurers do a much better job of improving health outcomes than Medicaid does. If the left really cared about the poor, they'd work with Republicans to replace Medicaid and its terrible health outcomes with high-quality, subsidized private insurance. I know they'd find partners across the aisle if they did.

Original Source: http://www.forbes.com/sites/theapothecary/2014/05/07/romneycare-improved-health-outcomes-thanks-to-private-sector-coverage/

 

 
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