Another false alarm on the costs of Medicaid expansion

The universe of people obsessed with my Twitter debates with Michael Cannon presumably went ecstatic over our weekend exchange, which centered on Cannon’s short Friday column: “Your Friday afternoon news dump: Obama admin. Admits Medicaid expansion costs more than projected.” Michael and I disagree on everything. He is the Cato Institute firebrand who has apparently dedicated his life to destroying the Affordable Care Act. But he is a smart guy. I often learn from what he writes even as I disagree with it.  Cannon quotes from a recently-released Medicaid actuary report, which bears careful reading.

Michael’s first sentence made my heart sink: “It appears that Medicaid-expansion enrollees are going to cost the states a lot more than they thought.” Given the current knife fight over getting states to expand their Medicaid programs, this would be quite damaging. We know, for for example, that behavioral health costs are significant in a subset of new enrollees. There are also complicated interactions with other state and federal assistance programs. It’s certainly plausible that Medicaid expansion will turn out to be more costly than originally thought.

Because he is such a firebrand happy warrior, I have learned to follow up on his hotlinks to see what else might be going on. So I hunted down the report and ran the numbers. The actuaries did indeed predict higher costs—but almost all in the first year when states wouldn’t have to pay any of these costs. (The higher costs seem to reflect pent-up demand and perhaps more pregnant women than predicted in this particular Medicaid pool. I would like to learn more about what’s happening as states gain experience in the expansion population.)

I also ran the actual numbers from this year and last-year’s reports. The increase in predicted annual* costs per enrollee are shown below, broken down between the states and the federal government. The increased cost to the states averages that Michael warns us about are…. about $5/enrollee per year between 2014 and 2022. If you’re having trouble finding it, its the blue line visually indistinguishable from zero. To Michael’s credit, he’s told me he will modify the post. He certainly should.

2013-14 differences in actuarial prediction

The increased costs to the federal government are shown in red. The difference here is about $881 in the first year as the Medicaid expansion gets rolling, and then plunges in subsequent years, averaging out at about $95/enrollee per year.  That’s something like 2.2% of average non-disabled adult Medicaid costs. Despite the initial upward bump, things are quite manageable. It’s certainly not the sort of bad news one must conceal in a Friday news dump.

The main good news  about the overall Medicaid program is below the fold. Continue reading “Another false alarm on the costs of Medicaid expansion”

Why paranoids make the best suckers

My Twitter feed was filled this weekend with anger directed at parents who fail to vaccinate their children. The anger is justified, since these parents have fueled a resurgence of measles and other preventable diseases.

One of many striking aspects is the way that many educated parents buy into junk science, exemplified by false claims that vaccines cause autism. It’s sociologically interesting that so many otherwise well-informed people embrace crazy theories so readily-debunked after a few minutes of web-searching.

I tweeted about it, and got a surprisingly widespread response.

No one factor explains what’s happening. Many intentional non-vaccinators are simply free-riding on the herd immunity they hope is created by other people’s children. Such collective action problems provide the basic case for mandatory vaccination…. Continue reading “Why paranoids make the best suckers”

Breaking: 480,000 Americans still die from cigarettes every year

At the Atlantic Monthly, Kenneth Warner and I have a 7,000 word piece called the Nicotine Fix. Ken is one of the nation’s leading tobacco control experts and a former dean of the University of Michigan School of Public Health. It was great to be his wingman on this. We discuss the remarkable, yet incomplete progress America has made in reducing tobacco-related deaths. In the fifty years since the 1964 Surgeon General’s report, efforts to reduce smoking have prevented an estimated eight million deaths. Each of these eight million people received an additional twenty years of human life.

Screen Shot 2014-11-13 at 5.06.41 PM


As educated and affluent people turn away from smoking, it’s easy to forget some basic realities. 480,000 Americans still die of smoking-related causes every year. That’s an amazing figure. Our piece discusses the disgraceful history but more promising history of tobacco harm reduction efforts. Both of my in-laws died harrowing deaths from lung cancer, way before their time. I wish they had access to e-cigs or other products they might have substituted for combustable tobacco.

Incidentally, Ken and I are very grateful to Jennie Rothenberg Gritz and others at the Atlantic. They produced our piece beautifully. We have old tobacco ads and videos, and graphs like the one above, drawn from Surgeon General reports. We hope you enjoy reading it.

America’s most criminogenic drug

Which intoxicating substance is associated with the most lethal violence? Devotees of the Wire might presume that cocaine or maybe heroin would top the list.

Of course the correct answer, by far, is alcohol. It’s involved in more homicides than pretty much every other substance, combined. Surveys of people incarcerated for violent crimes indicate that about 40% had been drinking at the time they committed these offenses. Among those who had been drinking, average blood-alcohol levels were estimated to exceed three times the legal limit.

Aside from its role among perpetrators of violence, alcohol use is widespread among victims, too, for some of the same reasons. Recent data from the Illinois Violent Death Reporting System (IVDRS) bear out these trends. At my request, researchers at the Stanley Manne Children’s Research Institute analyzed 3,016 homicides occurring in five Illinois counties between 2005 and 2009. I find the below figures quite striking, particularly among young people. More here


“Almost awesome in its evilness.” Jon Gruber on states’ rejection of Medicaid expansion

Over at, I interviewed MIT economist Jon Gruber on the state of ACA.  We discussed a huge range of things, ranging from the case for the “Cadillac tax” to lessons of the botched rollout. It was a pretty upbeat conversation. But Jon was characteristically blunt regarding states that have declined ACA’s Medicaid expansion:

Jon: I think, Harold, the single thing we probably need to keep the most focus on is the tragedy of the lack of Medicaid expansions. I know you’ve written about this. You know about this, but I think we cannot talk enough about the absolute tragedy that’s taken place. Really, a life-costing tragedy has taken place in America as a result of that Supreme Court decision. You know, half the states in America are denying their poorest citizens health insurance paid for by the federal government.

So to my mind, I’m offended on two levels here. I’m offended because I believe we can help poor people get health insurance, but I’m almost more offended there’s a principle of political economy that basically, if you’d told me, when the Supreme Court decision came down, I said, “It’s not a big deal. What state would turn down free money from the federal government to cover their poorest citizens?” The fact that half the states are is such a massive rejection of any sensible model of political economy, it’s sort of offensive to me as an academic. And I think it’s nothing short of political malpractice that we are seeing in these states and we’ve got to emphasize that.

Harold: One of the things that’s really striking to me is there’s a politics of impunity towards poor people, particularly non-white poor people that is almost a feature rather than a bug in the internal politics in some of these states, not to cover people under Medicaid, even if it’s financially very advantageous to do so. I think there’s a really important principle to defeat this politically, not just because Medicaid is important for people, but because it’s such a toxic political perspective that has to be … It has to be shown that that approach to politics doesn’t work because otherwise, we will really be stuck with some very unjust policies that will be pursued with complete impunity in some of these places.

Jon: That’s a great way to put it. There are larger principles at stake here. When these states are turning – not just turning down covering the poor people – but turning down the federal stimulus that would come with that.


They are not just not interested in covering poor people, they are willing to sacrifice billions of dollars of injections into their economy in order to punish poor people. It really is just almost awesome in its evilness.

More here.

Poverty, inequality, and Public Health

IMG_3018Below are my comments on a panel held over the weekend in India to celebrate the opening of the University of Chicago’s new Delhi Center. Regular readers will recognize much of what’s here. I hope it is of interest.

Thank you very much for the opportunity to speak on this panel for such a special occasion.

I will use my time to discuss some linkages between poverty, inequality, and health. I do so with trepidation, since I can see some of my betters—James Heckman, Jean Dreze, and Martha Nusbaum to name a few—are here today in this audience.

It’s humbling for any American to speak on these topics when so many great Indian political economists have made fundamental contributions. Many of these men and women were motivated by their first-hand observation of famine, deep poverty, gender and caste inequality. These matters are fundamental in the efforts of the world’s largest democracy to address the post-colonial development challenges of one billion people.

These matters have wider application, as well. Scholars, policymakers, and citizens want to know whether, when, and why various forms of inequality harm the most vulnerable citizens. The truth is, inequality sometimes is harmful, sometimes not. The mechanisms are complicated, and often indirect. We can’t always tease them out, which doesn’t mean that they aren’t there.

My own work concerns domestic US poverty and public health policy. Even so, Amartya Sen’s Poverty and Famines: An Essay on Entitlement and Deprivation was probably the most important book of my graduate career. His combination of rigorous economics with a passionate commitment to equality and human flourishing was revelatory to me.

I assign my introductory microeconomic students a stylized problem modeled on Sen’s analysis of the Bengal famine. It’s a parable, of course. Like most parables, it’s been cleaned up a bit, crystalized to its essentials before inclusion in the sacred canon of economics problem sets. The basic mechanics remain useful to elucidate one possible pathway through which inequality can undermine public health…. Continue reading “Poverty, inequality, and Public Health”

If you like your reduced ER use, you can keep it

IMG_1553The latest results are in from the great Oregon Health Insurance Experiment (OHIE).

In a randomized experiment, individuals offered Medicaid coverage showed higher rates of emergency department (ED) use than did their otherwise comparable peers not given the same opportunity.

The effect size was pretty small—about one extra ED visit per recipient, every 3.5 years or so. In dollar terms, this amounts to an estimated annual expenditure increase of something like $120 per recipient. We can’t say from this paper whether the extra ED visits were valuable or cost-effective. We can say that these results will embarrass some liberal advocates who argued that expanded coverage would reduce overall rates of ED use.

They should. This talking point was never properly evidence-based or even particularly plausible given prior research. It’s not obvious that reducing the rate of ED use is even a sensible policy goal. Advocates across the political spectrum should stop using the ED for cheap talking points about the mythical savings associated with universal coverage or about the misbehavior of Medicaid recipients who supposedly waste huge amounts of money through overuse.

We might, instead, take some satisfaction that we have created a system, open 24 hours per day, 365 days per year, which people turn to when they need help. Our challenge is to make this system work.

More here.

Rick Altice on the challenges of correctional care (and related matters)

When I was a doctoral student, I wrote a desk-jockey dissertation. I analyzed a gigantic dataset to examine informal economic transfers within low-income families. Then I took a Yale postdoc. One of the first people I met there was Dr. Frederick Altice, who was a key investigator and clinician providing care to HIV-infected prisoners and drug users at the community health care van, a needle-exchange-based health services targeting street drug users. This was the mid-1990s and New Haven was an epicenter for HIV among drug users. It was a pretty awful time for the city. At least New Haven had intrepid people like Rick who worked to limit the public health harms and the human suffering.

One of my first times out, a woman stepped on the van to get some care. She was a sex worker and a person who injected drugs. Within the close quarters of that van, many of the other people waiting gave her a little extra room. She was very grimy, probably homeless.  Rick called her over. He pulled out an apple, and split it with his penknife. He handed her one piece, and said, “Why don’t you share this with me?”  As they ate together, he conducted a beautiful clinical interview that explored her incredible range of serious health problems.

I interviewed Rick today at Wonkblog. We talked about a range of pertinent issues in correctional care. If anything, Rick understates the challenge. Connecticut is quite unusual in providing generous Medicaid to many low-income adults who would be uninsured in other states. 

More here.