Under the new healthcare reform bill, 32 million uninsured people, many in the lowest-income brackets, stand to gain access to coverage. Simultaneously, taxes may increase for higher-income citizens. The near-term ramifications of this reform are still being loudly deliberated on both sides of the aisle, but the long-term outcome of increased insurance coverage is a key consideration as well.

Medical insurance is a kind of investment, says Professor Frank Lichtenberg, who studies healthcare economics. While the 20- or 30-year returns on that investment — better health outcomes and lower costs — are challenging to assess, he says, many study results are consistent with the investment premise. For example, studies have shown that people who have healthcare coverage before age 65 have lower Medicare costs.

“There is a sense that wider health insurance coverage will ultimately benefit Americans as a whole by decreasing expenditure in the long run,” he says, “but it is challenging to quantify that.”

Lichtenberg’s research has shown that states with expanding health insurance coverage experienced slower growth in health expenditures in comparison to states with contracting health coverage.

“It sounds paradoxical,” says Lichtenberg. “Insurance increases the propensity of people to seek and receive medical care. The direct effect is that people will use more medical care, and that should raise costs in the short term. However, in the long run people start to receive preventative care in a timely way that will obviate more serious medical conditions down the road. Lower costs of medicine might also increase compliance and reduce hospital or emergency room visits.”

Photo credit: Flickr/O’Connor College of Law