Instead of Obamacare, How About Puppycare?

Published May 13, 2013

Consumer Power Report #373

Robert Samuelson has an interesting column on the Oregon Medicaid study and what it means, finding increased costs, increased use of care, but no improved health outcomes.

The most overlooked finding is that the uninsured already receive considerable health care. On average, the uninsured had 5.5 office visits annually, used 1.8 prescription drugs and visited the emergency room once. Almost half (46 percent) said they “had a usual place of care” and 61 percent said they “received all needed care” in the past year. About three-quarters (78 percent) who received care judged it “of high quality.” Health spending for them averaged $3,257. True, when people were covered by Medicaid, many of these figures rose. But none of this was found to have a serious impact on people’s physical health: “The only major health gain was psychological. Depression dropped from about 30 percent to 21 percent between the groups. One reason may have been that Medicaid recipients don’t fear huge medical bills. Their out-of-pocket health costs were $337. For the uninsured, out-of-pocket costs were 64 percent higher. (Presumably, most non-out-of-pocket costs for the uninsured were covered by free clinics, charity care and uncollected debt.)”

This creates an interesting circumstance where those who believe in the Medicaid approach as if it was an item of faith have to maintain its defense even as something other than a health care program. Those on the left have spent much of the past week doing exactly this, arguing that these effects on depression are real and very important. Of course, functionally, the real reason people with Medicaid were less depressed is not actually because they were getting treatment for depression. From the study itself: “[T]here was no significant increase in the use of medication for depression[.]” Instead, they probably felt better because Medicaid offers the closest thing we have to a government-funded placebo (for more on this, see Avik Roy’s piece below) – or it is until you have need of it, as patients find out when they discover the Medicaid card is more often “a useless piece of plastic”. But knowing you have something, the illusion of that card, will make you feel better.

The sugar pill works on your mental state even if it is just a sugar pill. But couldn’t we find a less-expensive sugar pill? Is it possible other things could have a similar impact on people’s mental state without the burden of a $7 trillion pricetag over the next decade?

The primary focus of the Oregon study was on blood pressure and cardiovascular health. But there are a host of other things, things that have nothing to do with government health care, that have positive impacts on blood pressure, cardiovascular health, and depression. One example from the New York Times: owning a dog.

The nation’s largest cardiovascular health organization has a new message for Americans: Owning a dog may protect you from heart disease. The unusual message was contained in a scientific statement published on Thursday by the American Heart Association, which convened a panel of experts to review years of data on the cardiovascular benefits of owning a pet. The group concluded that owning a dog, in particular, was probably associated with a reduced risk of heart disease.

There’s more here on this story. In fact, just interacting with a dog has been shown to lower your blood pressure. And pet ownership generally shows all sorts of positive effects when it comes to warding off depression. And if you’re allergic to animals, no worries – try another Medicaid substitute on for size: religion.

Diastolic blood pressures of persons with high church attendance and high religious importance were significantly lower than those in the low attendance, low importance group. These differences persisted after adjusting the analyses for age, socioeconomic status, smoking, and weight-height ratio.

A recent study in Canada provides a comprehensive look over a 14-year period at the anti-depressive effects of regular attendance of religious services, finding that just going to church monthly has a huge impact on preventing depression. It can’t be explained away by churchgoers being better about taking their medicine, either.

Among participants who both attended religious services and prayed or studied the Bible frequently, the likelihood of having a diastolic blood pressure of 90 mm Hg or higher was 40 percent lower than found in participants who attended religious services infrequently and prayed or studied the Bible infrequently. Among participants told they had high blood pressure, religiously active persons were more likely to be taking their blood pressure medication; this could not, however, explain the differences in blood pressure observed.

Now, this is all very tongue in cheek, of course. The point here is that Medicaid defenders like Paul Krugman are willing to accept a much smaller aim for the program – namely, that it won’t make you healthier than being uninsured – but still claim there’s no downside to it as a $7 trillion substitute for puppies and religion. Medicaid is supposed to be a health program, and should be evaluated as such.

To be serious for a moment: It seems to me that if you assume the lack of health insurance is what caused people to be depressed, and acknowledge Medicaid doesn’t make people healthier, but having health insurance makes them happier (or at least less depressed), it leads to a troublesome conclusion for the left. Consider: It’s only marginally easier to get an appointment with Medicaid than if you’re uninsured and offer to pay a doctor only $20. So the logical solution, if you actually care about people being healthier and not just feeling less depressed, is to end Medicaid and simply give people the monetary value of the program to purchase a private health plan. In other words, the answer is cold hard cash for smaller health care costs and a catastrophic plan to ward off larger ones … the central aim of consumer-driven health care.

— Benjamin Domenech



Avik Roy on four ways the Oregon Medicaid study is actually worse than you think:

One key difference between the Oregon experiment and a traditional, FDA-quality clinical trial is that the Oregon study was what we call “open-label” or “unblinded.” People on Medicaid, for obvious reasons, knew they were on Medicaid, and those who were uninsured knew that too. Pharmaceutical and biotech companies are required to conduct blinded studies in nearly all instances, because it’s well documented that if you know you’re on the drug instead of the placebo, you can convince yourself that you feel better, even if you don’t. It’s called the “placebo effect.”

Those who are in denial about Medicaid’s poor physical outcomes point to the Oregon results on depression. 30 percent of uninsured patients at baseline screened positive for depression; relative to being uninsured, the authors estimate that Medicaid reduced depression diagnosis by 9 percent, with a p value of 0.02 (i.e., a 2 percent chance of statistical noise). “This is an astounding finding,” exclaimed Jonathan Gruber, the Oregon study co-author who is best known as the architect of Obamacare. “That is a huge improvement in mental health.”

There are a number of flaws in the way that the Oregon investigators measured depression; for a detailed look, go back to my comprehensive review of the results from last week. But here’s the kicker. In 2011, the authors noted that two-thirds of the improvement in patients’ “self-reported health” took place “about 1 month after [Medicaid] coverage was approved,” but before “any increase in health care utilization.” In other words, patients felt better once they knew they were on Medicaid, but before they had seen a doctor, or undergone a test, or filled out a prescription. That is the classic definition of a placebo effect. And it’s hardly “astounding” to anyone with experience in clinical trial design. And remember, the placebo effect works on objective health outcomes too, like blood pressure, high cholesterol, and diabetes, where the Oregon study showed no meaningful difference. How worse would those measures have been if the Medicaid enrollees hadn’t known they were on Medicaid?”

Indeed, you even see the effect in the last questions here.

Some people have completely lost track of what health insurance is supposed to be. We’re talking about somebody being able to get their broken arm fixed if they fall out of a tree … Most of the people who are going to be on Medicaid are going to be working. What are you supposed to do if you’re working at McDonalds’ 30 hours a week? You’re working all the hours they give you. Why shouldn’t they be able to go to the doctor? Why should they have to lose everything they own if they break their arm and have to go to the emergency room? Everybody can’t go to college and get a good job. Somebody is always going to work in the nursing home. Somebody is always going to work part-time at JC Penney even though they want to work full time, because the store only wants them there on Saturday and Sunday. Those people need to make enough money to live on, they need to have enough food to eat and they need to be able to go to the doctor when they’re sick.

This is as sound a case for catastrophic coverage and true insurance as you’ll ever hear.

SOURCE: Forbes


How is this legal?

Kathleen Sebelius, the secretary of health and human services, has solicited sizable donations from the Robert Wood Johnson Foundation and H&R Block, the tax preparation service, as part of a multimillion-dollar campaign to ensure the success of President Obama’s health care law, administration officials said Sunday, even as a leading Senate Republican raised questions about the legality of her efforts.

The foundation is expected to contribute as much as $10 million, while H&R Block is expected to make a smaller donation of about $500,000, the officials said.

The senior Republican on the Senate health committee, Senator Lamar Alexander of Tennessee, said the fund-raising “may be illegal.” He likened it to efforts by the Reagan administration to raise money for rebels fighting the leftist government of Nicaragua in the 1980s, after Congress had restricted the use of federal money. Aides to Mr. Alexander said Sunday that he would ask the Government Accountability Office, an investigative arm of Congress, to examine the propriety of the Obama administration’s fund-raising efforts.

The Department of Health and Human Services said that Ms. Sebelius’s actions to supplement money appropriated by Congress were proper and would continue, despite criticism from Republicans. After first denying that administration officials had engaged in fund-raising, the department confirmed Friday that Ms. Sebelius had made calls soliciting support from the health care industry, including insurance and pharmaceutical executives.

More on her effort here. Michael Cannon responds:

Kathleen Sebelius runs the Department of Health and Human Services. At nearly $1 trillion per year, HHS is the largest department in the U.S. government, spending 43 percent more than the Defense Department. Most of those subsidies go to the health care sector. Those subsidies will increase dramatically when ObamaCare takes full effect next year. Sebelius has been calling executives from the industry she regulates, including “multiple insurance executives,” and asking them to donate money to Enroll America – a private organization, headed by a former White House official, whose purpose is to help make ObamaCare a success. Sebelius has a history of threatening uncooperative companies with retaliation. But we are to believe it’s all on the up and up because …what? She never told these executives whether she is the Kathleen Sebelius who runs HHS, or some other Kathleen Sebelius?

SOURCE: New York Times


Beshear chooses to expand:

In Kentucky, the governor is revising the state’s Medicaid eligibility rules, said Beshear spokeswoman Kerri Richardson. Legislators have the power to review the changes and accept or reject them. But the governor can still implement them, she said …

The Medicaid expansion is one of the healthcare law’s biggest provisions. But a U.S. Supreme Court ruling last year allowed states to opt out. So far, 22 states and Washington, D.C., have accepted the expansion, while 18 states have turned it down, according to the consulting group Avalere Health.

The federal government is offering to pay 100 percent of the cost of the expansion for the first three years, falling to 90 percent by the end of the decade.

Beshear made the decision after an internal analysis and outside studies conducted by the University of Louisville and the Price Waterhouse Coopers accounting and actuarial firm. The research concluded that the expansion would create 17,000 new jobs and add $15.6 billion to the state’s economy between 2014 and 2021.

Beshear said Kentucky considered but ultimately rejected a plan like one proposed by Arkansas, which would expand coverage to low-income people by using federal Medicaid dollars to buy private insurance. The governor said that idea proved too costly.

SOURCE: Reuters


Linda Gorman:

Here are some sample calculations for a wage earner couple with two children living in a state that offers Medicaid to households with incomes at or below 133 percent of the federal poverty level (FPL). Because the law allows 5 percent of income to be “set aside,” this is functionally equivalent to offering Medicaid to families with incomes under 138 percent of the federal poverty level. The federal poverty level for a family of four is currently $23,550. Allowing for the income set-asides and multiplying by 1.38, this family would be eligible for Medicaid as long as it doesn’t earn more than $32,499.

Now, suppose that the family earns an additional $501. It will now be ineligible for Medicaid. If the employer does not offer affordable coverage, the family will have to turn to a health insurance exchange.

According to the Kaiser Health Reform Subsidy Calculator, the premium cost for family coverage purchased through an exchange will be $1,143 per year (3.46 percent of annual income). Yet, after paying this premium and paying the additional federal income taxes it owes, this family is actually worse off as a result of its higher earnings. (See the table).

On average, however, the family will be much worse off if the employer offers affordable coverage. To be affordable, the employee’s premium for his own coverage cannot exceed 9.5 percent of his W-2 wages, or $3,135. But the employer can charge any amount for other family members. Assuming the employee must pay the national average family premium ($4,316), the employee will have about $4,000 less take-home pay! …

If the family manages to increase its earnings by $17,501 to $50,000, roughly the U.S. median income, it will still be better off if its employer does not offer coverage, as it would be able to purchase a subsidized family exchange policy for about $1,000 less than if its employer offered coverage at average subsidy rates.

But a family that goes “bare,” ignoring the penalty/tax, would enjoy an income increase of $16,588 net of federal taxes. It would be able to buy a lot of routine medical care for the $3,385 that Kaiser says it would have to pay for a subsidized exchange policy, and it would still be able to sign up for coverage when it wants other people to bear its medical costs.

There are worse things than not having health insurance. One of them is enduring the high taxes and arbitrary, unfair, treatment meted out by comprehensive health reform. Apparently the reason why we had to pass the bill in order to find out what was in it is that had the proposed law been exposed to the normal deliberative process, no decent person would have voted to expose families to this kind of treatment.

SOURCE: National Center for Policy Analysis


Grace-Marie Turner:

The much-derided 21-page application was for families. It is now down to 11 pages, thanks to a trick. Eight pages in the longer application called for filling in information for four additional family members. The new form cuts these pages but says that if you have children, “make a copy of Step 2: Person 2 (pages 4 and 5) and complete.” The work required of the applicant remains the same.

Then there’s a 61-page online application form that is in the draft stage but hasn’t been officially released. This is the drill-down version of the three-page and 11-page printed documents. It has all of the if-then questions the government may need to have answered before it can determine if an applicant is eligible for subsidies.

For example, this online form has nine pages of questions and instructions to determine what a family is and how everyone is related. It announces that it is “governed by complex logic in order to ask the fewest number of questions possible.” Twenty-eight different options for family relationships will be displayed in drop boxes, including first cousin, former spouse and collateral dependent.

The family application (the paper version and the online draft) assumes that someone in the family has a job that offers insurance. There are two pages the applicant must complete on that front.

One question asks: Does your employer “offer a health plan that meets the minimum value standard*?” Following the asterisk is an explanation of how to make that determination: “*An employer-sponsored health plan meets the ‘minimum value standard’ if the plan’s share of the total allowed benefit costs covered by the plan is no less than 60 percent of such costs (Section 36B(c)(2)(C)(ii) of the Internal Revenue Code of 1986).”

But back to the new, 11-page form. It contains a strong warning not in the earlier, 21-page draft: “I’m signing this application under penalty of perjury … I know that I may be subject to penalties under federal law if I provide false and or untrue information.” That threat may unsettle applicants already not sure they’re correctly answering complicated questions. If they don’t, the consequences could be costly. If an applicant understates his income and receives a larger health-insurance subsidy than he is eligible for, the money must be paid back. That may mean thousands of dollars.

Applicants may be further disturbed when they encounter, on the signature page, this message: “We’ll check your answers using information in our electronic databases and databases from the Internal Revenue Service (IRS), Social Security, the Department of Homeland Security, and/or a consumer reporting agency. If the information doesn’t match, we may ask you to send us proof.”

SOURCE: Wall Street Journal