Avik Roy has read and posted about the papers I reviewed as part of my Medicaid-IV series. If you’ve forgotten, the purpose of that series of posts was to examine studies that use proven, sound methods to infer the causal effect of (as opposed to a correlation between) Medicaid enrollment on health outcomes. From that series, I concluded that there is no credible evidence that Medicaid is worse for health than being uninsured. Considering only studies that show correlations (not causation), Avik disagrees.
Avik’s post is long, but you can save yourself some trouble by skipping the gratuitous attack on economists in general, and Jon Gruber in particular, as well as the troubled description of instrumental variables (IV).* About halfway down is his actual review of the papers; look for the bold text.
The point I want to drive home in this post is why an IV approach is necessary in studying Medicaid outcomes. People enrolling in Medicaid differ from those who don’t. They differ for reasons we can observe and for those we can’t. An ideal study would be a randomized controlled trial (RTC) that randomizes people into Medicaid and uninsured status. Thats neither practical nor ethical. So we’re stuck, unless we can be more clever.
The next best thing we can do is look for natural experiments. That’s what IV exploits. In this case, the studies I examined use the state-level variation in Medicaid eligibility (and related programs). That variation obviously affects enrollment into Medicaid (you can’t enroll unless you’re eligible), though it is not determinative. Importantly, state-level variation in Medicaid eligibility rules does not itself affect individual-level health. Other than figuratively, do you suddenly take ill when a law is passed or a regulation is changed? Do you see how Medicaid eligibility rules are somewhat like the randomization that governs an RTC, affecting “treatment” (Medicaid enrollment) but not outcomes directly? (If this is unclear, go here.)Continue reading…