January 3, 2014

MEGAN MCARDLE: Another Problem ObamaCare Won’t Solve: Health Costs.

Does giving people health insurance help control costs?

Conventional wisdom holds that it should, by diverting them from expensive emergency room use to less-expensive visits to doctors and nurse practitioners. This argument was very popular with advocates for health reform in 2009, and it remains a sort of folk wisdom among educated people; I’ve heard some version of this argument in virtually every discussion I’ve had about health care in the last decade.

To health-care economists, though, the question is more complicated. Health insurance does theoretically let you go to a primary care physician rather than relying on ER docs who are legally required to treat you. On the other hand, it also reduces the cost of going to the ER. And as the basic laws of economics tell us, when you reduce the price of something, people usually want to consume more of it.

Which of these effects is stronger? There’s only one way to find out: test it. And thanks to the state of Oregon, we finally have a good test.

And the answer is, sadly, of a piece with all the other ObamaCare promises.