Does Health Insurance Make People Healthier?

Posted on January 21, 2020

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Health Policy Researcher Asks and Finds Answers to Important Questions

Dr. Martin Andersen, assistant professor of economics at the Bryan School of Business and Economics, started asking questions about whether health insurance makes people healthier in his early career as an investment banker. He covered pharmaceutical companies, sparking an interest in the economics of the drug and health care industries.

His drive to do something about the problems he saw led him through his master’s degree in public health and his Ph.D. in health policy and economics, allowing him to delve deeply into the big questions facing health care and insurance through his research.

The seemingly obvious answer to his question is yes – health insurance does make people healthier. But the proof was difficult.

Wrestling with how to find the data to prove the answer, he awoke in the middle of one night and realized that studying Medicare expansions would provide information about causality related to a particular disease.

He studied the effect of the 1973 expansions of Medicare coverage among individuals with end-stage renal disease on their insurance coverage, health care utilization, and mortality.

From 1973 through the late 1970s there was a clear reduction in kidney disease deaths. “Suddenly, people who could never have afforded lifesaving dialysis were receiving this treatment,” says Andersen. “Insurance companies recognized that dialysis was more than an experimental treatment, and expanded coverage. And because Medicare was paying dialysis clinics, more clinics could invest and enter the market, giving many more people access to treatment – a classic example of the supply-side effect.”

What Is the Value of Health Care Today?

Fast-forward to 2017, when the United States spent $3.5 trillion on health care, or 18% of the national economy. “There’s no prospect of this number going down in the near future,” says Andersen. “So my fundamental question today is: Are we getting value (longer, better, healthier, happier lives) as the result of our insurance coverage?”

Andersen received a large grant from the National Institutes of Health to study both overall prescription drug utilization and health outcomes, as well as three specific clinical indications: diabetes, urinary tract infections, and pneumonia. “This project will begin to explore the effects of utilization management on beneficiaries’ health outcomes and identify the effect of patients not receiving their drug of choice on health outcomes,” says Andersen. “Understanding these effects will provide insight into whether or not Medicare should regulate utilization management. It will inform policymakers about the implications of utilization management in the Medicare Part D program.”




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