Study Powerfully Demonstrates Importance of Health Insurance for Poor People

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July 7, 2011; Source: New York Times | The nonprofit sector has long been the informal default source of “medical insurance” for the poor.  We all know that when poor people without health insurance need treatment, they go to emergency rooms and nonprofit health clinics in search of charity care.  A significant slice of nonprofit health services are spent providing health coverage to people without insurance. Some people think that charity care and emergency rooms are adequate for protecting the health of poor people.

A new study published by the National Bureau of Economic Research compared the behavior of people with health insurance with those without insurance — 6,000 people randomly selected to have receive Medicaid and 6,000 not to receive Medicaid.  The first year results of the study are striking:

  • People with Medicaid were 35 percent more likely to go to a clinic or see a doctor.
  • People with Medicaid were 15 percent more likely to seek and use prescription drugs.
  • Women with Medicaid were 60 percent more likely to have mammograms.
  • People with Medicaid were 20 percent more likely to have their cholesterol checked. 
  • People with Medicaid insurance were 25 percent more likely to say that their health was good or excellent and “40 percent less likely to say that their health had worsened in the past year than those without insurance.”

How does a study randomly deprive test subjects of medical insurance?  It was due to a problem in Oregon, where in 2008 the state wanted to expand its Medicaid program and received 90,000 applicants, but could only add 10,000.  So it chose the 10,000 by lottery — those were the people randomly selected to receive Medicaid — and the researchers were able to select a comparison population from the 80,000 who didn’t receive insurance. If it hadn’t been for this program situation, the idea of withholding Medicaid from poor people would have of course been unethical. Later the state came up with money to provide Medicaid to the 80,000 not selected in the lottery, but for the time period in which those people were deprived of Medicaid, they formed a remarkable “control group” of people without insurance. 

Note one other finding from the first year of the research:  “The study found that those with insurance were 25 percent less likely to have an unpaid bill sent to a collection agency and were 40 percent less likely to borrow money or fail to pay other bills because they had to pay medical bills.”

Charity care, free clinics, and emergency rooms for basic health needs are important stopgaps, but the research shows that with health insurance, poor people will seek and receive the health care they need with positive health — and financial — results. Some people might say that the people with Medicaid end up costing the program more, because they seek health care they would not have otherwise. But the costs of not seeking and receiving health care end up falling on nonprofit clinics, free clinics, and nonprofit hospitals’ charity care budgets — in many ways a hidden and expensive form of partial health insurance. Poor people deserve to get the health care they need, and this study shows that health insurance is an important element of making that happen.—Rick Cohen