Let Them Eat Psychic Comfort

Shikha Dalmia (at The Week) has no sympathy for those who decry proposed cuts to Medicaid. In fact, she thinks that we'd be better off if we eliminated the program entirely:  

Medicaid is perhaps the civilized world's worst program. It costs just as much as private plans — about $7,000 per patient — but produces worse outcomes, including higher mortality, than private coverage. So given that one of ObamaCare's dirty little secrets is that many of its Medicaid enrollees are folks kicked off their private plans due to the Medicaid expansion, the law may have actually cost — rather than saved — lives in this cohort.¹ 

Like many people who do not have a column at The Week by which they can misinform the public, Ms. Dalmia confuses health insurance with health care. Medicaid does not produce "outcomes"; it provides access to medical treatment, which treatment then produces outcomes (though qualified, to be sure, by factors such as patients' overall health, pre-existing conditions, compliance with treatment, etc.) 

It would seem difficult to argue that anyone would be better off without insurance for and access to health care, but that's Shikha Dalmia's take on the Medicaid population: 

But what about the uninsured? Extending Medicaid to these people improved their health and diminished mortality, right? Wrong. Plenty of reputable studies suggest that this might not be the case...and even if Medicaid's mortality outcomes were somewhat better for the uninsured, it would still not necessarily follow that extending the program would save lives on balance — or that eliminating the program would do the reverse. In a world with finite resources, one also has to consider the opportunity costs or other ways of spending that may potentially save more lives. 

Indeed, a 2016 study in the journal Health Affairs found that states that spent a smaller portion of their budgets on Medicaid and Medicare than on social programs such as housing, nutrition, and even public transportation, showed "significant" gains on a myriad of health factors, including mortality, over states that did the reverse. It is possible that this is purely coincidental. But it may also be the case that these programs improved general quality of life and lowered stress levels, thus bettering baseline health and preventing people from falling prey to life-sapping illnesses in the first place. 

Citing the "smaller portion of their budgets" that some states spend on Medicaid and Medicare is misleading; the budgetary portion may be smaller because those states are more generous about funding the other items Ms. Dalmia mentions, not because they are less generous with Medicaid and Medicare. It's certainly true that things like housing, education, transportation, nutrition, and the environment all contribute, for better or for worse, to health outcomes; but does Ms. Dalmia actually expect us to believe that Republicans are cutting Medicaid in order to invest more heavily in those other sectors? If you believe that, then Donald Trump has a big, beautiful, solar-powered wall he'd like to sell you. 

It turns out, according to Shikha Dalmia, that health insurance really has little or nothing to do with access to treatment, with keeping people healthy, or with saving lives. No, the purpose of insurance is to "provide a psychic comfort":   

The main advantage of health insurance in general and Medicaid in particular is not really to prevent death but to protect against catastrophic illnesses that wipe out patients financially — in other words, to provide a psychic comfort. But patients are not willing to pay any amount for any insurance product to receive that comfort, presumably because at some point, other uses of the money — like a car fitted with state-of-the-art safety features or a more expensive home in a low-crime neighborhood — can offer an even stronger sense of security...in Massachusetts, buy-in for Medicaid-like programs fell precipitously when patients were asked to bear more of their cost. Medicaid recipients value the program at about one-fifth its actual cost, research shows. 

Medicaid recipients undervalue their coverage because they underestimate the shockingly high costs of medical treatment, not because the coverage itself is not a good value. Ms. Dalmia's argument is that recipients, given the actual monies being expended for their insurance, might prefer (let's say) a voucher which they could use in any way they wanted to attain "psychic comfort". Again, if you believe that there is a constituency that would support replacing access to health care with a program that provides Medicaid-eligible (i.e. poor) individuals and families vouchers to buy better cars or more expensive homes: step right this way, President Trump would like to show you photos of his stupendous, record-setting inaugural crowd.  

http://theweek.com/articles/710150/medicaid-colossal-waste-money

¹ I won't bother pointing out the flaws in Ms. Dalmia's logic or questioning her assertions about the costs and benefits of Medicaid; suffice it to say that Medicaid recipients are poorer than most Americans, that they live in less healthy environments, that they have less education, and that they tend to have, prior to enrolling in Medicaid, a welter of untreated pre-existing conditions.  It shouldn't come as a surprise, then, that their health outcomes and mortality rates are worse than average.