Access to healthcare has been a hot topic in the news, but when the public is surveyed do they understand what health care access means for their personal finances? With the help of a Center on Longevity seed grant, Faculty Affiliates Dan Kessler, Professor in Management, Graduate School of Business and David Brady, Professor of Political Science and Leadership Values, investigated how knowledge of the personal cost of healthcare reform affects consumers’ decisions to support specific reforms. To accomplish this goal, Kessler and Brady designed a survey that incorporated the respondents’ income level into a calculation that estimated the cost of reforms to that individual described as an increase to their income tax. As a result, participants with higher income levels were asked to pay more for the reforms than lower income respondents, which is likely how actual reforms would be implemented. Responses were obtained from 3,344 adults with an income distribution close to that of the US as a whole. Each participant was asked to evaluate the following health care reform options:

  • Major and minor subsidies for low-income people that would reduce the number of uninsured by 50 and 25 percent, respectively.
  • Major and minor Medicaid expansions that would reduce the number of uninsured by 50 and 25 percent, respectively.
  • A subsidy for the chronically ill.

In each case, the individual was presented with a corresponding income tax increase and asked if they would support the reform. The increases were realistic and calculated based on the best available estimates of the specific reforms. Kessler and Brady wrote that the survey was intended “to reflect the tension on American public opinion recognized by previous investigators: a desire to help make insurance more affordable but limited willingness to endorse the income transfers necessary to do so.” The results of the survey showed that while a large number of Americans indicate that they support health reform generally, much of that support wanes when confronted with the personal cost of that reform. As shown in the figure below, changes to Medicare or Medicaid that reduces the number of uninsured even 25% are supported by less than half of the respondents. The one proposal that enjoyed support from a majority of participants was one that provided subsidies for those patients who are chronically ill and incur sustained medical costs.

When the results were broken out by income level, there was a marked difference in support between upper and lower income respondents. Below-median income households (median defined as $50,000/year) showed a much stronger level of support for reforms than those with above-median income. This is not a surprising result, as on the whole those with lower incomes stand to benefit more directly from the reforms. The two figures below show the difference in responses.

Kessler and Brady noted that although considering the costs did in fact make people reconsider support for reform, it did show that a significant number of people are willing to pay. The study also showed that “designing a subsidy to assist people with a persistent need for costly care, rather than a one-time need, may increase its appeal”. For the full results of the study, see Kessler and Brady’s piece “Putting the Public’s Money Where Its Mouth Is”, published in the August 2009 Issue of the journal Health Affairs.