Ross Douthat says that Republicans should retreat to a more modest bill, one that leaves taxes and Medicaid spending at a higher level. My latest Bloomberg View post argues that Douthat is wrong: Republicans would be better off directing any new resources to measures that would make it easier for people with low incomes to afford private health insurance rather than Medicaid.

In that post, and in a previous one, I say that Medicaid is low-quality insurance, citing a study that did not find it to improve physical health outcomes. As I have written on many occasions before, that’s not the only value that health insurance can have. Its chief value is to protect people from the financial setbacks that unpredictable medical expenses can cause. A well-designed catastrophic insurance plan can provide that protection at relatively low cost, though, and I favor making it possible for nearly everyone to have such a plan.

For people just above the poverty line—the people whose states might kick them off Medicaid, or never make them eligible for it, as a result of the changes in the Senate bill—that should mean a generous refundable tax credit that they could use in a market where premium-hiking regulation is kept as minimal as possible. (For that matter, this is what I favor for people under the poverty line too.)

Most of the pushback I’ve gotten to these posts has been, in a word, idiotic. Some of that pushback came after Avik Roy kindly tweeted a link to one of them with a comment that we should “liberate” people from Medicaid. Neither he nor I meant, as a great many liberals on twitter took it, that people should be “liberated” from having health coverage altogether. And the word “liberated” does not seem very hyperbolic when you consider that, by the very estimates of the Congressional Budget Office on which liberals have been relying, four million people have to be threatened with fines before they will go on Medicaid.

A more substantive critique has been that I underestimate the positive effects of Medicaid. Some correspondents have cited a recent New York Times article by Aaron Carroll and Austin Frakt in making this point. That article makes a number of good points which I do not contest, indeed points which I don’t think many people contest.

The problem with the article is that it conflates three different claims: that Medicaid worsens health outcomes, that it does not substantially improve health outcomes, and that policy changes that led some people to move from Medicaid to private insurance would not necessarily improve health. (I will pass over, as not deserving a response, C&F’s insinuation that conservatives believe that making people pay more for coverage will itself improve their health outcomes.)

C&F provide reasonably strong evidence that Medicaid does not actually harm its recipients—hooray!—but do much less to make a positive case for the program. What evidence they provide has recently been critiqued here and here. C&F do even less to make the case for Medicaid over alternative forms of coverage. Their complaint about private insurance is that poor people can’t afford very high deductibles and co-payments.

That isn’t an argument against helping people with low incomes pay their deductibles by depositing money into health saving accounts, or against giving them a larger tax credit to buy policies with lower deductibles, or against removing regulations to enable lower deductibles—all of which I’m advocating. C&F note in closing of the Republican bill that “no studies prove that removing millions from Medicaid in this way” would improve health outcomes. I suppose it’s also true that “no studies prove” that people just above the poverty line would have better health outcomes if the slightly modified Senate bill I’m discussing were adopted. But no studies prove the outcomes would be worse, either. Without relevant evidence, the case that private coverage could not yield better outcomes than Medicaid is a conjecture, and an implausible one. For more on this issue, I’d recommend reading Avik Roy’s How Medicaid Fails the Poor.

Go to Source

Which Way on Medicaid? – National Review