What to Make of the Oregon Health Study

The Oregon Health Study is another piece of evidence showing that we need some health care for all, but not too much.

Yesterday, we got results from the two-year Oregon Health Study, which randomly assigned some low-income people to receive Medicaid coverage while others did not. The study found that Medicaid led people to consume more health care and was effective in reducing both financial strains due to medical costs and depression. But it did not find significant effects on the physical health measures that were tracked.

Despite efforts to spin it to the contrary, this is bad news for advocates of the Medicaid expansion. While Medicaid is clearly good for some things, it was supposed to be good for all of the measures tracked.

It might be: The study did find that subjects on Medicaid did better on measures related to hypertension and diabetes than those without insurance, just not at levels anywhere close to statistical significance. But as Megan McArdle points out, the bigger the effect, the smaller the sample size that is needed to demonstrate significance; even if Medicaid does improve physical health outcomes, this study suggests the effects may not be large.

Still, the "I knew Obamacare was a waste of money" reactions are misplaced. The financial effect is a big deal. Having Medicaid reduces your likelihood of facing medical expenses that exceed 30 percent of your income by 80 percent. This reflects that Medicaid is, in large part, a redistributive income-support program, which is desirable given persistently high unemployment and widening wage gaps. The government should be taking steps to support people who are being left behind by the increasingly asymmetrical economy, and this is one of them.

The depression finding is important too. McArdle is skeptical, since depression went way down without anti-depressant use going up much. "Does the mere fact of knowing you have Medicaid make you less depressed?" she asks. It's plausible to me that the answer to that is "yes," since financial strain can be a cause of depression.

I think it makes more sense to read the study as an indictment of medical insurance broadly, rather than just one of Medicaid. If Medicaid is spending lots of money without clear improvements in physical health to show for it, isn't it likely that much more expensive private insurance -- which we can't do a random-assignment study of -- is doing the same? The study is yet another argument for "some health care for all, but not too much."

And the study tells us one thing that should make us quite hopeful: Individuals seem to possess a lot of information about which treatments are the most useful for improving their health. People without health insurance consume less health care but get physical health outcomes that can't easily be distinguished from those on Medicaid; that suggests they are prioritizing and getting the care that is really important.

The discovery mechanism that's used now is unacceptable: We're forcing people to ask themselves the question, "Is this medical treatment so important that it's worth going bankrupt over?" But maybe we can come up with other structures that divine the same information in a less punitive way.

All of this makes me wish even more that conservatives had been productive partners in health reform rather than trolls. If conservatives want a consumer-directed redesign of the U.S. health-care system that forces patients to pay at the margin more often for care -- in order to reveal what treatments are useful -- they could have gotten it as part of the health-care overhaul. They just also had to agree to include the progressive fiscal reforms that liberals wanted: ensuring universal coverage and transferring money toward poor people who can't keep up with the rapidly rising cost of health care.

They didn't, partly because Republicans care more about not spending money on poor people and not changing programs that old people like than they do about making the health-care system more efficient. They also would have entered a political minefield. Nobody likes being told they're getting too much health care. Just look at the bipartisan political outcry at the U.S. Preventive Services Task Force recommendation that women start receiving mammograms at 50 rather than 40.

I'd love to see this study shift the conversation on health reform toward how to use government and market mechanisms to ensure that money goes toward care that is actually useful. Obamacare includes a number of policies toward this end that could surely be improved, including by increased consumer direction. But given the right's consistent non-constructive approach toward health policy, I'm not holding my breath.

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