Healthcare in America
HEALTHCARE IN AMERICA
There’s a reason Healthcare in America is an unmitigated disaster. First, it’s a patchwork of Medicare, Medicaid, CHIP, COBRA, Obamacare subsidies, disease-specific programs, and aid for hospitals to provide charity care. It produces administrative and organizational fragmentation with complex, distributed, and unclear authority and responsibility, with many vested interests competing for their own self-interest.
Second, no politicians on either side of the political divide are willing to tackle the problem because they’ve been burned by unpopular health-insurance reforms in the past. Although healthcare policy has been a major political battleground for years, more than two thirds of Americans say that the nation’s healthcare system still has major problems. The problems are apparent just by looking at costs from 2003 to 2023: the average health-insurance premium paid by employers surged from $9,068 to $23,986. And no one expects this cost to go down or even stay constant.
Things just keep getting worse. Anecdotally it’s not our imagination that finding a doctor is getting harder and harder, that costs are going higher and higher, or that we’re experiencing longer and longer wait times for necessary procedures. It’s not our imagination that insurance companies require more and more of our time for granting approvals or settling bills and that senior care is a ballooning problem. Let’s consider the facts.
The US spends nearly three times as much on healthcare as other advanced nations, but our system only produces worse outcomes. In 2022 the US spent an estimated $12,742 per person on healthcare, the highest healthcare costs per capital of any of our peers, while the average for wealthy countries (excluding the US) was only $6,850. We spend a disproportionate amount of our taxpayer dollars on healthcare, and yet what do we get compared to our wealthy peers?
Shorter life expectancy.
Higher infant mortality.
More unmanaged asthma and diabetes.
Poorer safety during childbirth.
$1,000 per person of administrative waste, almost 5 times the average cost of other wealthy countries and more than the US spends on long-term care.
Shorter hospital stays, fewer angioplasty surgeries and more knee replacements than comparable countries, yet the prices for each are higher in the US.
Inflated costs pushing insurance out of reach.
The risk that families will lose coverage when they most need it.
Gaps in protection for those who think they are covered.
Aggressive debt-collection efforts.
A vast mountain of paperwork that adds expense and confusion.
A Medicare program that substantially reduced healthcare costs borne by seniors but fails to reduce mortality among seniors and is responsible for an enormous increase in hospital costs for everyone.
A Medicaid program for low-income adults which reduced out-of-pocket costs and increased the use of medical services, but a) yields no improvement in measurable outcomes and b) compensates hospitals and physicians with 60% of total Medicaid expenditures for medical care that is already being provided.
A healthcare system with inflated costs and poor outcomes that undermines our economy.
Improving our healthcare system so that it delivers better quality at lower cost is critically important to our nation’s long-term economic and fiscal well-being. In 2021 the US devoted 18% of its economy to healthcare. I repeat: we spent 18% of GDP on healthcare in 2021 and the current number is undoubtedly higher thanks to the border crisis. Such a considerable proportion of resources devoted to healthcare makes it increasingly difficult to invest in other sectors of our economy. It’s a top policy concern for voters, a key indicator of economic efficiency, and a significant driver of the national debt. Then why hasn’t something been done about it? For this I turn to Chris Pope at the Manhattan Institute to provide us background.
President Obama attempted comprehensive reform with the Affordable Care Act (aka ACA or Obamacare), but the legislation caused as many problems as it solved and generated tremendous backlash. Although Trump and the GOP won elections while denouncing Obamacare, they were unable to repeal and replace it with anything significantly better. (Remember the famous “thumbs down” of John McCain?) While the Biden administration has spent billions of dollars to patch up the ACA, it too has achieved little fundamental reform, as his Build Back Better plan shrank into the Inflation Reduction Act. Costly promises that Medicare would provide health care for Americans in their early 60’s and expand the program’s benefits to pay for dental care were abandoned.
Americans remain extremely dissatisfied with rising healthcare costs, but both parties are wary of committing too much to an issue that has caused so much trouble for them. Nevertheless, unsustainably growing healthcare entitlement costs are likely to force Congress to enact reforms, regardless of who is elected president in November. In 2021 the newly elected Democratic congress responded to Obamacare’s shortcomings by expanding subsidies for ACA coverage. Federal funds now directly support the purchase of 79% of Obamacare plans, while the majority of enrollees receive plans entirely paid for by federal taxpayers. This presents a real challenge, since insurers are financially motivated to inflate federal payments by exaggerating the eligibility and medical needs of enrollees for whom they can claim subsidies.
From 2010 to 2022, annual Medicaid spending surged from $397 billion to $806 billion. The cost of Medicare ballooned from $520 billion to $944 billion. Over the next decade, Medicare costs are expected to double again, and the cost of Medicaid will certainly keep up with or exceed a doubling thanks to all the migrants let into this country over the last four years. But here is the opportunity: all those expanded subsidies are due to expire at the end of 2025. In a few short months, the debate will reopen over the ACA providing a real opportunity to correct the healthcare problems we all see and haven’t been able to do anything about.
Possible Solutions I would Propose:
First, I believe, based on the evidence, that government schemes have proved costly and ineffective and that the roots of our healthcare problems are LACK OF COMPETITION and TRANSPARENCY. Despite spending almost twice as much on healthcare, utilization rates in the US do not differ significantly from other wealthy countries. Thus, prices are the main driver of cost differences, and health policy experts point to excessive waste in our healthcare system as the culprit behind our excessive costs – i.e., unnecessary, ineffective, overpriced, and wasteful services. Healthcare experts estimate that 25% of total healthcare spending could be eliminated as a result.
Furthermore, based on analysis of regional disparities in Medicare expenditures, many medical interventions undertaken today are in fact not necessary or are recommended without adequate personalization. Fisher et al. suggest that the US as a whole could save annually up to 30-% of Medicare expenditures with no compromise in medical outcomes or patient satisfaction. I believe, and the data show, that there are substantial opportunities for the US to maintain or improve our health outcomes at much lower cost, and here are some suggestions.
Expand individual control over health insurance by letting employers provide pre-tax funds for workers to purchase their own coverage, enabling them to maintain the same insurance coverage from job to job or to self-employment, without risk of denials due to pre-existing conditions. This will allow enrollees to receive lower premiums if they sign up early in life and subsequently maintain continuous coverage.
Leave supplemental coverage up to individuals who want to pay for pricey new therapies.
Invest in interventions outside of healthcare to address the social drivers of health: the food industry, the fitness industry, social media and mainstream media, poverty, homelessness, gun violence, mental health, substance abuse, and the school system.
Incentivize primary care physicians (PCP’s) to provide coverage after hours, either directly or by a covering physician. Americans are most likely to report difficulties getting after-hours care, resulting in their having to use emergency rooms. This amazingly simple change would reduce the cost of care by using physicians who know the patient and can quickly and accurately address the problem, reduce the access problems, and reduce the administrative complexity of care.
Require changes to insurance pricing rules.
Review the structure of federal healthcare programs for improvement such as:
Combine Medicare’s Part A hospital care program with Part B ambulatory services.
Reform coverage of low-income individuals who need long-term and high-cost care and are eligible for both Medicare and Medicaid (known as “dual eligibles”).
Convert Medicare into a premium support program that would allow beneficiaries to purchase insurance through insurance exchanges.
Convert Medicaid into state block grants.
Provide long-term care income tax deduction or income tax credit to replace government funding.
Change the way federal programs pay for healthcare, including pay-for performance initiatives, alternative payment arrangements for patient care such as bundled payments and accountable care organizations, and expanded use of capitated payments to Medicaid’s long-term care beneficiaries.
Make the cost of healthcare more visible to beneficiaries to encourage them to be more involved in healthcare decisions. E.g., design co-payments and deductibles to make patients more aware of costs by using different amounts of co-pays and deductibles to encourage patients to select higher value care options.
Prohibit “first dollar” coverage so patients have some out-of-pocket exposure, some “skin in the game,” as it were.
Reduce federal healthcare subsidies, continuing to make the programs available, but limiting federal costs. For Medicare, possibilities include raising the eligibility age, increasing premiums, or increasing taxes on benefits which would reduce the level of financial assistance to higher income beneficiaries. Impose caps on spending for Medicaid and subsidies for health insurance.
In conclusion, my professional work experience was 30+ years in housing, and that is the area I should logically tackle first as your Congressperson. However, healthcare desperately needs attention, and I want to contribute to solving that problem in any way I can. Most importantly, any solution(s) proposed, or any solution(s) voted for, should be measured against one standard: competition and transparency.
