Obamacare's Big Win: It Helps Some People Be a Little Less Poor

The U.S. spends $100 billion on this program, so Medicaid recipients can save $5.5 billion.

From Megan McArdle. Excerpts:

"Does Medicaid make people better off?"

"Medicaid may also make people financially better off. It is possible that most people manage to get medical care somehow, when they really need it (and are willing to comply with often onerous regimens). But those people will be left with debts, or have to cheat other priorities in order to ensure that the doctor gets paid. For the poor and near-poor, especially, this is a heavy burden: They have fewer resources to pay the bills, and for a variety of reasons, 1 are more likely to be sick in the first place.

And here, we have considerably better evidence for a benefit. A randomized controlled study of Medicaid access in Oregon, which ultimately failed to find any statistically significant improvement in objective health markers, unequivocally found that the people who got Medicaid experienced less financial distress than those who didn’t. Over at Mother Jones, Kevin Drum points to another recent study showing the same result, from the Consumer Financial Protection Bureau. It suggests that in the states that accepted Obamacare's Medicaid expansion, medical debt dropped dramatically compared to the states that declined the expansion. “So: Does Medicaid work?” writes Drum. “Yes indeed. It has moderate but positive effects on health, and very large effects on medical debt.”"

"While the CFPB does show that states that expanded Medicaid saw significant declines in the overall level of medical debt, it also shows that there’s basically no decline in bankruptcies. One would have expected at least a small noticeable effect on the rate of bankruptcy."

"It is also possible, of course, that the “classic medical bankruptcy” is more often found in the imagination than in reality. That’s not to say that sickness doesn’t drive people into bankruptcy, because it’s quite clear that it does. But it’s less clear how often medical bills play the driving role in those bankruptcies. Many people pay doctors with credit cards, so researchers can’t even reliably determine what percentage of consumer debt is medical. And families with catastrophic illnesses often also experience significant income loss, making all their other debts impossible to pay: even in Canada, which has a single-payer system, a significant number of people cite illness as the primary reason for their bankruptcy."

"When Obamacare was passing, its supporters were pretty clear about what the program was supposed to do: save thousands of lives every year, reduce health-care costs, lower premiums, and save thousands of families from the trauma, and stigma, of bankruptcy.

Have mortality rates dropped? No, they rose. Are premiums lower? No. Have bankruptcies dropped? Yes, but only dubiously related to Obamacare. The only outcome for which we have really strong evidence is a modest reduction in the financial stress of illness. According to the CFPB, we have reduced medical debt by about $5.5 billion, or roughly $10 per consumer."

"But we’re spending more than $100 billion a year on Obamacare. That is a lousy way to save people $5.5 billion in medical debt."

"1. The more affluent and successful you are, the less likely you are to have poor health, even in countries with universal health-care systems that -- in theory at least -- offer everyone the same level of care. Indeed, the seminal result on this comes from British civil servants, who were all getting their care from the National Health Service. There are a variety of mechanisms that could cause this: high-level civil servants may be able to get better doctors and hospitals; they may be the driven, exacting sort of people who are more likely to comply with treatment regimes; and they may simply experience less chronic stress. On the other side of the equation, being of poor health can make you poorer, as you find it harder to work."