The Oregon Health Insurance Experiment

Two weeks ago the first paper was released reporting results from a new important medical study, the Oregon Health Insurance Experiment. Many are comparing it favorably to the RAND Health Insurance Experiment, which I call our best medical data ever. These new results are officially here, ungated here, and commentary is here, here, and here. I’ve now had time to read the new paper, talk to one of its authors, and ponder.

This new data is possible because for a short time Oregon assigned a limited number of available Medicaid slots by lottery. 89,824 people signed up for the lottery, about 70,000 of whom were plausible eligible. 35,169 of these folks won the lottery, and of those 8,704 (~30%) were enrolled in Medicaid medical insurance.

As Oregon ended the lottery within two years, we will at most see two years worth of data. This is probably too little data to see anything but implausibly large mortality effects, but they have been collecting many direct health measures like blood pressure. In this first paper, however, all we have are the results of surveys, which include self-reported health.

The big news is that lottery winners had substantially and significantly better self-reported health. The overall health difference is significant at a 10-4 level. Lottery winners reported, for example, being healthy (= unimpaired) an average of a half day more per month. If one assumes that being a lottery winner influences health mainly via giving health insurance, then health insurance gives people 1.6 more healthy days per month.

Sounds like solid proof that medicine is healthy, right? Not so fast. First, over two thirds of the health gains that appeared on the one-year-later survey also appeared on the very first survey, done before lottery winners got additional medical treatment. So clearly at least two thirds of the health gains here are due to the comfort of knowing one has insurance. (And since they’ll only directly measure health once per person, we may never get the timing data to see if any gains in direct measures also appeared right from the start.)

Second, the folks in this study aren’t remotely comparable to the folks in the RAND experiment. The RAND experiment was mainly on random people, though it over-sampled from people with the lowest 20% of income. The Oregon experiment, in contrast, is on very sick and poor folks. For example, “healthy days per month” above refers to to how people answered a survey question on the number of days in the last 30 that poor physical or mental health impaired their usual activity. On average people in this study were impaired for ten days per month! 28% of them have asthma, 30% high blood pressure, and 56% depression.

They are also very poor, with an average yearly income of $11,790. 67% have a high school education or less, and 55% are unemployed. While only 13-17% of Americans spend less that the federal poverty income level, 70% of these folks spend below that level, and 40% of them spend less than half that level. Just how poor, sick, and just plain dysfunctional these folks are is shown by the fact that only 30% of lottery winners actually managed to get insurance. For example, “only about 60 percent of those selected sent back applications.”

But if medicine is good for the poor and sick, can’t we presume it is good for everyone? No, because the most significant overall health result found in the RAND experiment was that medicine hurt the poor and healthy! The main pre-determined health measure in the RAND experiment was a “general health index” and they reported on how getting free medical insurance influenced four different groups: people were split by income, low (= lowest 20%) vs high, and by initial health, low (= lowest 20%) vs. high. At about a 6% significance level the RAND experiment found that poor but initially-well people got sicker when given free insurance (see Table 6.12, Page 210 of Free for All?).

My interpretation: such folks went wild getting stuff checked out that they’d been ignoring, and all that extra treatment of symptoms they could have ignored for longer led to lots of false positives on tests and over-treatment, making them worse on average.

Bottom line: So far, the new Oregon Health Insurance Experiment shows that for very poor and sick folks who go out of their way to request medical insurance, giving them such insurance makes them report feeling healthier. Two-thirds of this effect appears immediately on granting their request, and before they actually got more medical treatment. It remains to be seen if these healthy feelings will be reflected in more direct health measures, though that seems plausible, and we’ll probably never see mortality effects. The main results of the RAND experiment, which looked at all sorts of people, suggests doubts about presuming that if medicine helps the very poor and sick, it on average helps everyone.

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  • David

    Obviously this study is weak evidence of the efficacy of health care. But when you do your Bayesian updating Robin, did this increase or decrease the probability healthcare improves health relative to your prior? We know your prior is strongly against marginal medicine improving health. And frankly, so is mine. And while the effect is small, my posterior gives medicine a higher chance after reading about Oregon.

    • David I find myself in the same position as you about this data.

  • Brian Nachbar

    Cognitive dissonance hypothesis for why having insurance makes people report feeling better: People don’t want to get medical treatment for every problem they notice. Inattention to health is generally disapproved of, so they find another reason. Those without insurance use “I can’t afford it.” Those with insurance do not have this excuse, so instead go with “It’s nothing, I’m healthy.”

  • If I am reading the paper right, while uncollected bills fell slightly in the insured group, no other measure – such as bankruptcy – fell.

    • Alrenous

      So even if insurance increases health marginally, it doesn’t save anyone money?

      Though that could also be due to the inability of the test group to pay for insurance at all – they can’t exactly cut back.

      More importantly is that studies like these should be bog-standard. It’s the most basic of basic tests. Instead, there’s two.
      For example, opportunity cost: is there anything cheaper than can achieve 5% more healthy days? Probably! But we don’t know what, because nobody has bothered to look. It would be funny if one of those things was going to church.

      • > So even if insurance increases health marginally, it doesn’t save anyone money?

        Seems plausible to me. Hanson didn’t cover this (NRO did) but one of the interesting results was that emergency room use did not go down in the insurance group (and the author remark that while not statistically significant, use may have gone up).

        I don’t know about you, but I remember hearing it asserted in the health care debate that the poor overused emergency rooms as their ‘primary care’ and that this was a major source of waste that national health insurance would reduce. Well. Guess not.

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