Health Economist Examines Impact Of Public Health Coverage
WILLIAMSTOWN, Mass. - As the national debate rages over health care reform, Lara Shore-Sheppard, associate professor of economics at Williams College, says one thing is clear: "doing nothing is definitely worse than doing something."Shore-Sheppard notes that while the debate can seem complex, the need for reform comes down to two big issues. "First, a large chunk of the American population has unstable health coverage, or no coverage whatsoever. Second, health care costs are high and rising."
President Obama, she says, is tackling coverage first. Shore-Sheppard knows a little something about health coverage; she has spent much of her career studying the effect of expanding children's access to Medicaid.
"Originally, Medicaid was offered to only the very poorest children," she said. "It has since been expanded, along with the newer State Children's Health Insurance Program, CHIP, to cover children with family incomes below 300 percent of poverty" -- three times the federal poverty level. "My research has studied the effects of this expansion on private health insurance coverage, on children's physician visits, and on other factors."
Most recently, Shore-Sheppard and a collaborator were awarded a two-year grant from the Robert Wood Johnson Foundation to study the impact of public dental coverage on access to care for low-income children. While Medicaid covers dental services for children, reimbursement is low, and many dental providers don't accept Medicaid. Consequently many low-income children go without dental care. Her study will be the first to examine how states responded to the increased flexibility and greater federal funding offered by CHIP and whether the changes states made resulted in improved access to dental care for children.
One of her research papers, Stemming the Tide? The Effect of Expanding Medicaid Eligibility On Health Insurance Coverage, published last year in the BE Journal of Economic Analysis and Policy, examined whether public health insurance "crowds out" private insurance -- a claim often made by insurance companies. In other words, do people drop private coverage when public coverage is expanded?
"Based on the evidence, it seems that the number of people who drop private insurance for government-funded insurance is quite small. We can't rule out that there is a small crowd-out effect, but we can rule out a large one."
The larger problem, Shore-Sheppard found, is that as public coverage expands beyond the poorest children, eligible children are not being enrolled in the program; they simply remain uninsured. Shore-Sheppard notes that this might be because as one moves up the income scale, parents don't know that their children are eligible for public coverage. Another possibility is that while they know their children are eligible, they do not enroll until they really need it.
Either way, Shore-Sheppard feels that the low enrollment speaks to the need for a government mandate, like the one that exists in Massachusetts. "To truly expand coverage, a mandate is very effective. However, for a mandate to work, both logistically and ethically, coverage must be made affordable."
Shore-Sheppard notes that while there's evidence that children who have more stable coverage are more likely to see the physician, expanding coverage won't solve all the problems.
"It's also essential to tackle health costs," she says.
Health costs, she says, have been rising for many reasons. First, there have been vast technological improvements in health care. While these improvements may enhance diagnostic care or treatment, they are extremely expensive. Other factors include "defensive medicine" -- the tendency to order a battery of tests for a patient to rule out any potential problems -- as well as the practice of paying providers by the procedure, a highly inefficient provider payment system, a rise in many chronic diseases, an aging population, a lack of cost-awareness by patients of the costs involved, and the cost of pharmaceutical research and development.
"It's like somebody opening a credit card bill at the end of the month. They may not have spent large sums on any one item," she says, "but the combined total can be many thousands of dollars."
"People want a magic bullet," she adds. "But there's no one magic bullet that will solve the cost problem."
Shore-Sheppard notes that she is frustrated by the presence of "red herrings" in the health care debate, like the often-discussed "death panels."
"I respect differences of opinions," she says. "But to simply disrupt the process is irresponsible, and it's bad for constituents. If we fail, health care costs will continue to rise. The uninsured will still be there. We have two very big problems, and they're not going away."
While much attention has been focused on the "public option," or government-provided health care, Shore-Sheppard notes that a public option might not be necessary if we could create incentives for insurance companies to do the right thing.
"We can set up regulations that make it clear to insurers that claims must be honored, so there's no ambiguity. Also, if everyone had coverage, the whole notion of pre-existing coverage would be moot. There's an opportunity to create incentives that aligns insurance companies' interests with what we think is right socially."
However we move forward, Shore-Sheppard says she hopes that her work, and that of other researchers, continues to have a place in the debate.
"Sound health policy must be informed by data," Shore-Sheppard says. "It's not always a seamless transition from research to policy, but good policy will be based on the evidence that exists."
