When Massachusetts expanded health insurance a decade ago, state officials unknowingly created an experiment. It’s turned out to be an experiment that offers real-world evidence of what would happen if the House Republicans’ health bill were to become law.
The findings from Massachusetts come from an academic paper being released Thursday, and the timing is good. Until now, the main analysis of the Republican health bill has come from the Congressional Budget Office, and some Republicans have criticized that analysis as speculative. The Massachusetts data is more concrete.
Unfortunately for those Republicans, the new data makes their health care bill look even worse than the CBO report did. The bill could cause more people to lose insurance than previously predicted and do more damage to insurance markets. The $8 billion sweetener that Republicans added to the bill Wednesday would do nothing to change this reality. President Donald Trump and Speaker Paul Ryan are continuing to push a policy that would harm millions of Americans.
Here are the basics of the new study, and why it matters:
The Massachusetts law subsidizes health insurance for lower-income households and does so via four different income categories. Everyone in a category – for example, a family of four earning between $44,700 and $55,875 a year – would pay the same price for insurance. A family earning less would pay less, and a family earning more would pay more.
This system creates what economists call a “discontinuity.” People who have only slightly different incomes pay very different prices for an insurance plan. A family earning $44,701 could pay a couple of hundred dollars more per year than a family making $44,699.
Discontinuities are a social scientist’s friend, because they set up natural experiments. The price difference faced by the similar families I just described allows researchers to analyze how much the cost of insurance affects people’s willingness to sign up.
And price ends up mattering a lot. When plans become even slightly more expensive, far fewer lower-income families sign up. “Most low-income people aren’t willing or able to pay much for health insurance,” says Mark Shepard, a Harvard economist and an author of the new study.
Why? Partly because people know that they have an alternative. They can instead rely on last-minute emergency-room care, in which hospitals typically treat them even if they lack insurance. Such care is problematic: It tends to be expensive, raising costs for other patients, and it’s often not as good as preventive care. But many poorer families choose ER care over taking money from their stretched budgets for health insurance.
The Republican health bill wouldn’t raise people’s costs by only a small amount, either. It would force many low-income families to pay hundreds or thousands of dollars more for insurance – and most of them would likely respond by not buying insurance. The people who still buy plans would disproportionately be sick people, which would then cause costs to rise even higher. “When premiums go up, it’s the healthier enrollees who drop out,” said Amy Finkelstein of the Massachusetts Institute of Technology, another author of the study.
The authors didn’t specifically compare their data to the estimates by the CBO. But the magnitude of the new results suggests the CBO estimates of insurance losses were conservative. Nathaniel Hendren of Harvard, the paper’s third author, said that the Republican proposal would effectively end enrollment in the insurance markets for families that make less than $75,000 a year.
It’s important to note that the study’s three authors aren’t political animals. Finkelstein has won the John Bates Clark Medal, an award for the top academic economist under the age of 40, and her research on Medicare is frequently cited by conservatives.
The Republican health bill is simply a bad bill.
The writer is a columnist for The New York Times.