Yes, It Matters If You Have Health Insurance

Is having health insurance worthwhile? The answer to this question could help to determine whether the individual mandate will ensure the success of the Patient Protection and Affordable Care Act. (ACA)


From Oregon, where a groundbreaking study has just been published on the first-year effects of Medicaid insurance on the previously uninsured, the answer appears to be yes.


According to a working paper issued by the National Bureau of Economic Analysis, “In this first year, the treatment group had substantively and statistically significantly higher health care utilization (including primary and preventive care as well as hospitalizations), lower out-of-pocket medical expenditures and medical debt (including fewer bills sent to collection), and better self-reported physical and mental health than the control group.”

A New York Times article notes that the report’s design is “like that used to test new drugs. People were randomly selected to have Medicaid or not, and researchers then asked if the insurance made any difference. Health economists and other researchers said the study was historic and would be cited for years to come, shaping health care debates.”

The working paper notes that having insurance resulted in “ increases in hospital, outpatient, and drug utilization, increases in compliance with recommended preventive care, and declines in exposure to substantial out-of-pocket medical expenses and medical debts. There is also evidence of improvement in self-reported mental and physical health measures, perceived access to and quality of care, and overall wellbeing.”

In addition, according to the paper, “Insurance is associated an increase in reported compliance with recommended preventive care such as mammograms and cholesterol monitoring. Insurance also results in decreased exposure to medical liabilities and out-of-pocket medical expenses, including a 6.4 percentage point (25%) decline in the probability of having an unpaid medical bill sent to a collection agency and a 20 percentage point (35%) decline in having any out-of-pocket medical expenditures.”

Surprisingly to many, this is the first major study that has been able to track the actual effects of insurance on those previously uninsured. According to an National Public Radio report, “As high-level budget talks drag on in Washington, the Medicaid program for the poor remains a prime candidate for cuts. In recent months, Republicans have criticized Medicaid for badly serving its target population. But a new study — the first of its kind in nearly four decades — finds that Medicaid is making a bigger impact than even some of its supporters may have realized.”

The authors of the report acknowledge that it is unclear how or whether the Oregon results will translate well to the insurance expansions expected in 2014 due to the ACA. Nevertheless, this study provides compelling evidence that having health insurance is, indeed, good for you.

For a comprehensive analysis of the Patient Protection and Affordable Care Act, including the full text of the law and additional information on health reform implementation and other recent developments in employee benefits, just click here.