Does giving people health insurance help control costs?
Conventional wisdom holds that it should, by diverting them from expensive emergency room use to less-expensive visits to doctors and nurse practitioners.
This argument was very popular with advocates for health reform in 2009, and it remains a sort of folk wisdom.
To health-care economists, though, the question is more complicated.
Health insurance does theoretically let you go to a primary care physician rather than relying on ER docs who are legally required to treat you.
And as the basic laws of economics tell us, when you reduce the price of something, people usually want to consume more of it.
Which of these effects is stronger?
Only two large-scale random tests have ever been done on health insurance, and both have come back with the same surprising result: giving people Medicaid, or more generous health insurance, doesn’t seem to significantly improve clinical measures of good health.
There’s a broader point to be made as well: Obamacare probably doesn’t solve the problems that most people were expecting it to solve.
When I talk to smart, educated, well-read people about Obamacare, I generally hear three major points advanced in its favor: first, that it means that people with pre-existing conditions will finally be able to buy insurance for the first time; second, that it prevents young people from free-riding by going without insurance and then sticking the rest of us with the bill for uncompensated emergency room care; and third, that it will allow poor people to go to a regular doctor rather than relying on expensive, unnecessary ER visits.
All three rely on a folk conception of how the health-care system works that isn’t quite right.
http://www.bloomberg.com/news/2014-01-02/another-problem-obamacare-won-t-solve-health-costs.html