Must-Read: Harold Pollack, Bill Gardner, and Timothy Jost: Valuing Medicaid

Must-Read: I had always thought that we had a mixed economy and the social safety net in large part to counter and correct the market’s judgment as to who deserved to have resources used for their benefit. And I had always thought that this was an obvious and well-understood part of benefit-cost analysis. Have I in fact been wrong? Is this not well-understood? Do the younger economists–the kids these days!–Really think that the rights function for assessing societal well-being roughly multiplies each person’s utility by their individual income?

Harold Pollack, Bill Gardner, and Timothy Jost: Valuing Medicaid: “Finkelstein and her colleagues placed a very low value…

…$25,000–on a year of additional life for Medicaid beneficiaries. The typical threshold used in health services research is much larger, in recent studies far above $100,000….This assumption powerfully frames… analysis…. If you start out by assuming that Medicaid beneficiaries’ lives are worth very little, you will find that it is not worth spending much money to prolong them. These authors… defined this threshold based on reasonable assumptions about what low-income recipients themselves would have been willing to pay, had they been spending their own money for their Medicaid benefits. Poor people aren’t willing to spend as much as rich people…. Had these authors valued the health of poor patients as highly as health services researchers typically value the health of the average patient, their results would have been quite different…. Although Finkelstein, Hendren, and Luttmer’s baseline assumptions are methodologically defensible, they have radical implications that are rarely so bluntly applied in other domains of health-policy research. Choices about how to financially value the health of poor people relative to the health of others are inevitably both politically and morally freighted. It strains credulity, for example, to imagine American policymakers using this low a value for life when analyzing mammography, prostate cancer treatment, or implantable cardiac defibrillators for seniors…

July 30, 2015

Connect with us!

Explore the Equitable Growth network of experts around the country and get answers to today's most pressing questions!

Get in Touch