I’ve got some original-ish research to report on.

Among the many controversial aspects of expanding medicaid to more Americans, there are debates on whether medicaid:

  • Is low quality care that ends up making its recipients worse off
  • Causes a decrease in the labor supply since some workers on the margin will be less inclined to find work if they already have health insurance
  • Causes significant increases in certain healthcare utilization like emergency room visits that cause a strain on the system
  • Causes an increase in happiness merely by reducing the financial stress of being uninsured

It can be tough to totally figure out the magnitude of these effects since comparing a population that has medicaid and a population that doesn’t can’t account for unobserved characteristics that will almost certainly bias estimates. But luckily, we have a social scientist’s dream.2000px-Oregon_in_United_States.svg

Oregon had decreased its medicaid rolls due to budget cuts and then in 2008 realized they had funding for 10,000 extra spots. Knowing they’d have more interest than availability, they left these spots up to a random lottery that ended up having ~90,000 applicants. Since the chosen households would be picked at random, it’d be possible to compare the population of those who were selected by the lottery to those who didn’t and evaluate their outcomes.

The NBER has already done a lot of good research on this. Their initial findings suggest that after being on Medicaid in Oregon’s Oregon Health Plan for 12 months increases medical utilization (for better or worse), decreases financial strain, and increases self-reported measures of happiness. One significant finding: “…if we compare our estimates to the literature on the impact of income on happiness, the impact of insurance is roughly equivalent to the impact of a doubling of income.”

But what about the effect on labor supply? The CBO and Casey Mulligan have suggested Obamacare will significantly reduce the number of workers in the labor force. Obamacare covers the entire country and the OHP only covers a subset of the Oregon population, so this is not an entirely apples to apples comparison. Nonetheless, I can say from doing initial estimates using the data from the OHP study that, controlling for a variety of individual and household characteristics, being on OHP because of the lottery has no significant effect on employment compared to those who were in the lottery and were not selected.

There has been some work getting to this conclusion, but I haven’t found any that goes as in depth as I have looked. For example, one theory is that this expansion could cause older people to exit the labor force since the only thing keeping them in a job until they’re medicare-eligible is the presence of healthcare. I have so far found that separating on quantiles of age does not produce significantly different results. The same can be said of dividing up the data into quantiles based on household income – the idea that people approaching the income threshold for medicaid will stop working to continue staying on government assistance has also been so far refuted.

The findings still need to be reviewed, but I think it’s a notable find.


One of the uglier moments during last night’s Republican primary debate came when, in response to Ron Paul’s claim that the government should not be in the business of providing health insurance, Wolf Blitzer asked, “are you saying that society should just let [a sick person without insurance] die?” and some knuckle-dragging spectators enthusiastically whooped, “Yeah!” Ron Paul responded, more reasonably, that private charities should support people who fall through the cracks.

Jacob Weisberg, writing in Slate, responds,

This was indeed an appalling, mob-mentality moment—more medieval, even, than the crowd applauding Gov. Rick Perry for winning the death-penalty derby at the previous debate. What it clarified, however, was less the cruelty of the Tea Party crowd than the absurdity of the health-care positions of all of the Republican candidates. The GOP contenders relentlessly attack “Obamacare” as “socialized medicine.” But they won’t speak up for either of the other two choices available to them: the arguably more socialized system we have hitherto lived with or the Blitzer option of letting the uninsured die in the streets.

What about private charity?

“[W]e no longer have an extensive system of charity hospitals. If emergency rooms treat the uninsured, whether because of a legal requirement or because they are good Samaritans, they will be passing the bulk of the cost along to the rest of us—and we’re back to our current system of socializing the costs of treatments for the uninsured.”

I just can’t help but feel frustrated when “the government shouldn’t provide x” is conflated with “society shouldn’t provide x”. Idiot spectators notwithstanding, saying that society should not provide health care to people who can’t afford it and will die without it is plainly absurd and immoral. Saying that the government shouldn’t provide health care because health care is better provided by institutions other than the government is an empirical claim.

Now, although Weisberg conflates these two positions throughout the article (for example, that our two health care policy options are the  “socialized system we have hitherto lived with or the Blitzer option of letting the uninsured die in the streets”), he clearly understands this, because he spends a couple of sentences arguing that the empirical claim is false. I’m skeptical myself that private charities would necessarily be better health care providers of last resort than the government, and clearly we couldn’t just take the government out of health care overnight without some pretty disastrous humanitarian consequences. But there is some evidence that private mutual aid societies did a decent job of providing basic necessities in the past. At the least, Weisberg and many other progressives are giving short shrift to what is actually a fascinating and difficult empirical question.

Empirical issues aside, I think that it’s usually harmful to the cause of constructive political discourse when empirical disagreements are misconcieved as disagreements over principle. Two people who disagree about whether health care would be better without government involvement at least have a chance of having a productive discussion. Dialogue isn’t really possible, on the other hand, when an entire ideology is understood to be arguing that society should let uninsured sick people rot in their gurneys.

While debating healthcare reform, many people on the left liked to heave emotionally-charged statements like “well, I guess if you’re against this, you’re ok with X number of people dying each year from not being covered.” I won’t address the absurdity of reducing the healthcare debate down to a simple matter of caring whether X people die or not.

The true issue is the validity of the point that lacking health insurance causes early death. Surely, health insurance must help, because what else would it be for? Megan McArdle begs to differ:

The possibility that no one risks death by going without health insurance may be startling, but some research supports it. Richard Kronick of the University of California at San Diego’s Department of Family and Preventive Medicine, an adviser to the Clinton administration, recently published the results of what may be the largest and most comprehensive analysis yet done of the effect of insurance on mortality. He used a sample of more than 600,000, and controlled not only for the standard factors, but for how long the subjects went without insurance, whether their disease was particularly amenable to early intervention, and even whether they lived in a mobile home. In test after test, he found no significantly elevated risk of death among the uninsured.

I am willing to accept that people overstate the dire need for health coverage for prolonging death or living a generally healthy life (good diet and exercise does more than any medicine can do, in my expert medical opinion). But what does health coverage do if it doesn’t give longer life expectancy? Why do we see a positive correlation between life expectancy and development in countries’ medical technology?

Maybe the difference is between living a long and healthy life versus living a long and miserably unhealthy life. Nonetheless, this seems to defy all common sense, in my opinion. Lesson learned? Before we hurl insults at people against ObamaCare mentioning their disdain for hugs, puppies, or poor people living longer, we need to get down to the actual facts.

From Feministing, a video slamming the Hyde amendment (and by extension the Stupak-Pitts amendment to the current health care bill), which bars the use of federal funds to pay for abortions:

An excerpt the transcript:

Jay Smooth: There are some members of Congress who are committed to stripping abortion from our health care, and the Hyde Amendment is how they do it.  Everyone in America disagrees with where some of their tax money goes, but nobody else ever gets to pick and choose where their tax money goes.  So we need to speak out on this right now.

[graphic] And you did.


IAmDrTiller: Some members of Congress don’t want tax dollars spent on abortion.

Jen: Well, I don’t want my tax dollars to fund the death penalty.

Omer: I don’t want more than a billion of my tax dollars going to fund the F-22 bomber, a plane the military doesn’t even want.

Am I missing something, or is this a pathetic, bizarre argument?  “Anti-abortion activists have successfully passed legislation that blocks their tax dollars from going towards a practice that they disapprove of.  However, all of us pro-choice taxpayers have done a horrible job of stopping our tax dollars from funding bunch of stupid, wasteful, immoral crap that we object to.  Therefore, it’s wrong that funding for abortions is excluded from federally funded health care programs.”

But that’s just how democracy works! Groups of citizens lobby for the support of policies they prefer, and organize opposition for policies they oppose.  The Hyde amendment is just an instance of successful democratic participation.  So if you don’t want your tax dollars paying for death penalties or useless military equipment, then you should be organizing political campaigns and lobbying efforts aimed at ending those practices.  Pro-life activists are very good at this.  Maybe those of us who want to end the death penalty and reduce national defense spending could learn something from them.

I’m pro-choice, and I think that some tax payer money should go towards funding abortions for disadvantaged women.  I also happen to agree with every “Well, I don’t want my tax dollars to fund x” statement from the video.  But the point is that the Hyde and Stupak amendments aren’t wrong because they are an example of a certain group of citizens doing a better job than other groups of citizens at successfully pushing through policy that advances their values.  The Stupak and Hyde amendments are wrong because they restrict federal funding for abortion, which is something that federal money should be spent on.  For Christ’s sake, just argue for the policy on its merits.

No wonder public support for abortion has been slipping in recent years.

I meant to respond to this a while ago, but a bunch of things came up, so I’m just now getting around to it.  But anyway, here goes.  In W. Jerome’s post on reducing health care costs, commenter Joe said,

We should stop requiring that people get drivers licenses to be able to drive. The government costs in running DMV’s and driver education programs are completely unnecessary. Driving accidents continue to occur even though so called “licenses” are issued every day.

I’m kidding. I’m just pointing out that you are completely neglecting the concept of safety standards in the name of capitalism and competition. The point is that standards and licensing procedures must be constantly reformed and changed as new problems arise, but never completely done away with. It seems that system you propose would result in a class based system of doctors where the rich get “gold star” doctors and the poor get doctors that by today’s standards would be completely illegitimate.

I realize you probably have a good point to make here, but you must understand the ridiculousness of the idea of a medical free for all.

First of all, comparing drivers licenses to medical licenses just doesn’t make sense. When you drive, you have very little control over whom you are sharing the road with. Having a lot of people driving around without the basic driving skills you need to get a drivers license would make driving more dangerous for everybody. It’s completely different for doctors. If there’s a bad doctor, anybody can choose not to go to her. When we drive, we can’t choose whether or not to interact with inept drivers; when we shop for medical services, we can choose to avoid inept doctors. Now, this doesn’t show that medical licenses don’t make sense and drivers licenses do. It just shows that, in certain respects, medical licenses need to be justified on different grounds than drivers licenses.

As W. Jerome said in his post, I tend to be skeptical of medical licensing. The state-enforced monopoly on medical certification creates artificial scarcity in the medical profession and prohibits a lot of voluntary transactions. Doctors have to go through an enormous amount of training to get their MDs: undergraduate pre-med courses, four years of medical school, residency. Buying services from anybody with this much training is enormously costly. And for many complicated medical procedures, this makes sense. Your really do need tons of training to perform brain surgeries. But for many tasks that doctors commonly perform, this amount of training seems unnecessary. Do you really need eight years of undergrad and graduate training to prescribe drugs, set broken bones, and diagnose basic illnesses? But the American Medical Association actively tries to limit the ability of non-MDs, such as nurse practitioners, to do these things. This results in higher health care costs and huge rents for doctors.

But how would you know the difference between good and bad medical care providers under a health care system without licensing?  Well, for one, the internet makes it much easier to get information about things like this.  Right now, I can go to Google Maps, search for restaurants and other businesses, and find user generated reviews.  There’s no reason why this couldn’t exist for medical care.  I think one reason that it currently doesn’t is that our state-enforced medical licensing system creates a false sense of security among health care consumers.  The fact that the government guarantees the quality of licensed doctors makes it so that the consumer doesn’t have to worry about it as much (although consumers probably still should worry, because we have plenty bad doctors providing care despite the government guarantee).  Having a strong consumer feedback system would give medical care providers a strong incentive to give high quality service.  All that said, there probably is still a place for government regulation of medical care provision, but I think that we would be better off if we moved to a system with lower entry barriers where a body other than the AMA determines licensing standards.

Gary Becker writes:

The Swiss health care system has several important properties that I (and many others) have been advocating should be incorporated into any reform of the US health care system. One major advantage of the Swiss system is that employer-provided health care does not receive any special tax breaks, whereas the US system is built on these tax breaks. As a result, only a rather a small fraction of Swiss health care is obtained through employment. Mainly, Swiss families buy health care on their own, so that, unlike in the US, their health insurance does not reduce their incentives to change jobs because job changes do not endanger their health coverage. Unfortunately, probably due to union pressure, Congress is not planning to eliminate this tax break for employer-provided health care. Indeed, many Congressmen want to increase the pressure on employers to provide health care to their employees.

Read the rest of his excellent blog post here.

If I had to pick one book that has shaped my political philosophy, it would have to be Milton Friedman’s Capitalism and Freedom. It was a wakeup call, of sorts. All of his ideas made sense to me and were written from a radical perspective that I had never even thought of.

Many of the things he recommended seemed radical at the time but have now become accepted or at least respectable ideas: school vouchers, flexible exchange rates for currency, negative income tax instead of traditional welfare state measures, and a flat tax. However, I found it most difficult to grasp his recommendation to end the mandatory licensing of doctors. I still feel fairly uneasy about such a proposition and more importantly I think it is the least politically feasible of all his views.

If you want to think about the benefits of doctor licensure in consequentialist terms, consider these points:

  • Do the licenses really completely protect consumers against medical malpractice (not really).
  • Do the licenses potentially raise overall medical costs (yes, because there is a much smaller supply of doctors, they charge more)
  • Are the requirements necessary to be certified set at the right level (potentially, but look how many years one has to go to medical school to get a license).
  • Does the fact that a doctor has a license make you more trustworthy of that doctor (yes, I am going to assume).
  • If there are no licenses, will people acting as doctors do a worse job because they can (maybe, but probably not. Think of other professions that don’t have licenses).

I remember reading a story a while ago that said the Florida attorney general tried taking the Florida Bar Exam and failed. The attorney general wouldn’t have been able to be a lawyer in Florida. This example shows that while occupational licensing may have the (supposed) intention of protecting the consumer, it can really just act as an effective cartel for those already in the profession. The cartel will limit the supply of those in the industry and effectively raise their wages. I think we can see this in the fact that some places require babysitters to have a license.

I am definitely not convinced completely that we don’t need licenses for doctors. If anything, I think we should have an “optional” licensing system. For example, doctors can be given a gold star if they have certain qualifications (which would make people more confident going to them) but doctors without those qualifications cannot be legally excluded from working. For instance, I could treat you with “alternative” medicines if you really trust me to do so. This seems more plausible. I know Carson supports the ending of licensing for doctors so maybe he’ll have something to say about it.

The following is a short video of Friedman speaking to the Mayo Clinic about the idea:

Video courtesy of Will Wilkinson.

The Post Office, in trouble financially, might get a bailout from Congress:

Democrats moved Thursday to give special relief to the financially strapped Postal Service, which would be allowed to defer $4 billion in payments due at the end of this month to cover retirement benefits for its employees.

This scares me because it makes me think that Obama’s Public Option for healthcare will eventually be in the same situation. The post office and the proposed public option for healthcare are both government-run entities set to compete with private firms. In theory, the post office or public option are not meant to get subsidies in order to get an unfair edge over the likes of UPS, FedEx, Blue Cross Blue Shield, etc. If the public option ran a deficit, I have to think the government would step in to help them out. As such, I am inclined to believe that the public option will, in time, just become a huge liability that will only increase the deficit.

An Upset Patterns reader writes in:

In all your politicalness, I don’t hear you talking much about healthcare.


A cookie-cutter libertarian answer to the problem of soaring cost in health care is similar to any issue: deregulate the industry, stop giving away goodies like medicare and medicaid, and don’t give tax-breaks to company-provided health care. All of these things distort the spontaneous order of the market for health care. Regulations drive up costs more than they benefit consumers. Freebies like medicare and medicaid mean that when people are buying healthcare, they aren’t using their own money, which means they’re more likely to buy more than they otherwise would. Tax-breaks to company-provided health care mean that companies are less responsible in buying the insurance, self-employed people are crowded out, etc.

All of this make sense to me. If one is to look at a graph showing the rising cost of health care over time, there are two major “blips” in the general trend: new tax policy related to employer-provided health care after world war II and the introduction of medicare. America, by having government currently spending 50 cents of every healthcare dollar, seems to have a tragic mix of socialized and capitalist medicine.

But maybe the “get the government out” answer is too simple. Do adverse selection problems in insurance mean that making everyone buy health insurance – even those who do not need it or want it – will lower costs and expand affordability? Is there a moral concern to provide health insurance to everyone, regardless of its effect on increasing the deficit? Are insurance companies actually – as people seem to believe – screwing people out of coverage?

Obama’s proposed “public option” is a relevant issue worth discussing. What needs to be considered:

  • Is this actually not going to raise the deficit? What makes it a public option if it’s not subsidized?
  • Obama himself said that “UPS and FedEx are doing just fine. It’s the Post Office that’s always having problems.” Why will a government-run system be more efficient than private ones?
  • This is a huge liability for the future. Programs like this one don’t go away. If costs of it get out of control in the future, as has happened with social security and medicare, it’ll be a gigantic strain on the budget.
  • The number of uninsured Americans is commonly said to be about 45 million. Well, of that number, a third make over $75,000. Those are people that could afford it but don’t buy it. Is making them be covered when they choose not to be really a good answer?
  • What about for people who decide, since they will get free health care no matter what, that they will start smoking, become obese, and become a crack addict? Should healthy people pay for them?

A last thought from The New Atlantic:

I’m a Democrat, and have long been concerned about America’s lack of a health safety net. But based on my own work experience, I also believe that unless we fix the problems at the foundation of our health system—largely problems of incentives—our reforms won’t do much good, and may do harm.

At least the American healthcare system hasn’t (to my knowledge) allowed this to happen: