Paul Krugman's Medicaid Myths
If Mitt Romney wins the presidential election next month, writes New York Times columnist Paul Krugman, "Medicaid — which now covers more than 50 million Americans, and which President Obama would expand further as part of his health reform — will face savage cuts." Which is apparently how Krugman prefers to describe increasing federal spending on the program by more than $55 billion over the next decade, as the plan put forth by Romney's running mate, Paul Ryan, calls for. The Ryan plan would decrease federal Medicaid spending as a percentage of the total economy, but the total federal contribution would still go up over the next decade.
Krugman would have readers believe that these unthinkably savage cuts would have catastrophic results. Medicaid is "quite literally a lifesaver," he says. "States that expand Medicaid coverage show striking drops in mortality." Which is apparently how he prefers to describe a recent New England Journal of Medicine (NEJM) study showing that after Medicaid was expanded in three states, two (Arizona and New York) showed reductions in mortality compared to surrounding states, but one (Maine) showed an increase in mortality. And only New York showed a statistically significant state wide result.
But even that result isn't clear proof. That's because New York's post-expansion reduction in mortality was based on a comparison with Pennsylvania, which as Forbes blogger (and outside Romney health policy adviser) Avik Roy has noted, does not provide a great point of comparison thanks to its substantially larger immigrant population. So the study of three states versus neighbors showed one relative increase in state mortality, two relative declines, and, of the thre, just a single statistically significant showing in a state with a problematic control. This is not exactly unambiguous evidence, especially given Medicaid's long record of poor performance when it comes to improving health outcomes.
But since the evidence is somewhat ambiguous, let's stipulate for a moment that Medicaid does improve mortality. That's still not necessarily an argument for doubling federal spending on it and massively increasing enrollment, as called for by ObamaCare. Even if Medicaid did improve mortality, the important questions would be: By how much? And: Are there more effective alternatives? The Medicaid study's results suggest that, at best, the cost per single averted death is roughly $1 million. The NEJM study's data, meanwhile, suggests that Medicaid has the largest effect on the poorest populations, but ObamaCare's Medicaid expansion is focused on individuals near or above the poverty line.
Back in July, when the NEJM study was first published to a round of self-congratulation from advocates of expanding Medicaid, Cato Institute Health Policy Director Michael Cannon put it bluntly: "Absent evidence that Medicaid saves the most lives per dollar spent, expanding Medicaid does not show how much politicians care about saving lives. It shows how little they care about saving lives, because they are willing to forgo additional reductions in mortality for the sake of…whatever else expanding Medicaid gives them." Krugman declares that "by any reasonable standard, this is a program that should be expanded, not slashed." Apparently it is unreasonable to consider the question of whether doing anything else might save more lives.