MIT economist studies real health care

(Bloomberg) — There’s no shortage of theories about health-care policy. Amy Finkelstein wants facts.

Her newest research, based on data from Oregon, builds on her agenda: measuring the effects of health programs with scientific rigor. She and colleagues found that Medicaid coverage increased emergency department visits by 40 percent, according to the latest findings in their continuing study, released yesterday in the journal Science.

“We’ve shown that there are real benefits but also real costs to Medicaid,” said the Massachusetts Institute of Technology economics professor. “My fervent hope, and I don’t think it’s entirely naïve, is that this will lead to a more informed public-policy discussion.”

Finkelstein’s pursuit of policy-relevant evidence has placed her at the pinnacle of her field. When the American Economic Association awards committee selected her for its 2012 John Bates Clark Medal, it called her “the leading scholar in health economics.” Winners of the medal, awarded annually to an economist under the age of 40, include 12 Nobel Prize laureates and two White House chief economists.

“People get excited about the research that she’s doing, the way that she tackles problems,” said James Poterba, president of the National Bureau of Economic Research and Finkelstein’s colleague at Cambridge-based MIT. “She is one of the leading health economists in North America, in the world.”

Ph.D. parents
Finkelstein’s love of hard evidence started young: She is the daughter of Ph.D. biologists. She was more interested in using the world as her laboratory, so she studied government at Harvard University, graduating with a bachelor’s degree in 1995. In an interview, she said she wanted to synthesize history, her favorite subject, with how society operates — yet the lack of proof frustrated her.

“My dad would read my term papers and say, ‘Sure, that’s a nice argument, but I could just argue the other side,’” said Finkelstein, 40. After taking former Labor Department chief economist Lawrence Katz’s “Social Problems of the American Economy” her senior year, she found her niche.

“I realized I was more interested in what the impact of a policy is, rather than how it came to be enacted,” she said. “I had drunk the Kool-Aid at that point and wanted to do economics.”

Finkelstein completed a master’s degree at Oxford University on a Marshall Scholarship, which sends recipients for graduate study in the U.K. From 1997 to 1998, she worked as a staff economist at the White House Council of Economic Advisers under then-chairman Janet Yellen, nominated to be the first female head of the Federal Reserve in its 100-year history.

‘First love’
“If you were willing to work hard and had something to contribute, you could work on anything,” Finkelstein said of serving on Yellen’s staff. After trying out a range of topics, she developed an interest in what she calls her “first love”: insurance markets.

“This seemed to be an area where private markets might not work well, where there might be scope for welfare-improving public policy,” she said. “There was interesting data and interesting empirical work to be done.”

She said she chose MIT to pursue a Ph.D. because Poterba was reputed to be “the world’s best adviser,” and earned her doctorate in 2001. She is the third-generation woman in her family with the degree, along with her mother and grandmother, who earned a Ph.D. in comparative literature in Poland.

She became an assistant professor at MIT in 2005 and full professor in 2008. That same year, she was named co-director of the NBER’s Public Economics Program and co-editor of the Journal of Public Economics, positions she still holds.

Oregon expansion
Much of her recent research has focused on Medicaid, public health insurance for the poor. She and co-authors, including Harvard’s Katherine Baicker, have been analyzing Oregon’s expansion of the program since 2008.

The state had 10,000 additional Medicaid slots available, and used a lottery to select from a waiting list of 90,000. That provided a once-in-a-lifetime opportunity to isolate the impact of newfound coverage, Baicker said. It isn’t ethical to create an experiment that denies health insurance to a control group, and trying to measure the effect of coverage without such a comparison clouds the findings.

Results from the first year, published in 2012, show that Medicaid increased health-care use among recipients. It also basically eliminated catastrophic health costs, according to research published in 2013. Medicaid didn’t make a measurable difference on blood pressure or cholesterol, though positive screenings for depression fell. Both studies received widespread media coverage.

‘Rorschach test’
“The headlines are almost like a Rorschach test of people’s ideological bents,” Finkelstein said. “No one is arguing about whether what we found is what we found, they’re arguing about what it means.”