My approach to U.S. health care reform
The easiest way to evaluate the U.S. health care system and the best ways to improve it is with the proven “best-practices” model that businesses use when evaluating their own competitive landscape. It’s pretty simple: review what other countries are doing, see who’s doing a better job than we are, and then integrate the best pieces of their model into our system.
For health care, the two metrics that matter are the per capita cost of health care and the quality of health outcomes. The U.S. has per capita healthcare costs of nearly $10,000 per year and “mortality rate amenable to health care,” or MAH, of 112/100,000. On both metrics, this is worse than every other country in the OECD. The bulk of industrialized countries cluster between $4,000 – $7,000 per capita annual health care costs and MAH of 60 – 100/100,000.
With a population of 300 million and an annual healthcare cost of $2.7 trillion, that means that just getting down to a midpoint range where our trading partners have already achieved — say, $6,000 per capita annual costs and a MAH of 80 — would lower our annual health care expenses by $1 trillion and save over 100,000 lives per year. Imagine 100,000 Americans living rather than dying each year and the impact that would have on their loved ones and our communities. We cannot even begin to put a price tag on that, but it is a big deal, and a win-win.
So how do we get there?
First, and most importantly, we must insist on true, universal health care. Not just the kind where anyone can go to the emergency room, but the kind that our allies and trading partners have, where everyone, regardless of employment or wealth, has access to full preventative health care services — check-ups, screenings, and all the other early-detection measures that reduce the need for higher-cost, later-stage interventions.
The Affordable Care Act (a.k.a. “Obamacare”) took a big step toward universal health care in the U.S., providing more than 20 million additional Americans with access to affordable insurance for themselves and their families. But the work is not done. We need to finish the job by (1) ensuring that all Americans have health insurance and (2) fixing the flaws in the ACA exchanges to ensure they remain available and solvent.
To address the first goal, we need to add a taxpayer-funded, means-tested base level of health care coverage — means-tested to make sure that this base coverage is only available to those who don’t have health coverage through their employers, unions, V.A. office, Medicare, Medicaid, or personal wealth.
We should also ensure that anyone who doesn’t qualify for this taxpayer-funded plan has the option to buy into that plan — along with whatever other options they may have from their employer or the ACA. This is functionally similar to the Sen. Chris Murphy’s proposal to allow people to buy into Medicare, which I support.
Next, we need to repair the ACA exchanges to make them accessible nationwide. As an employer with staff in different states, it was frustrating for us — and our insurers — to have one set of plans in one state, one in another, one set of plans for private employers, another for government employees, and another for unions. We can make those exchanges much more efficient if we instead set them up to provide a set of national options for people with similar health needs across the country. The ideal health insurance package for a family of 4 with a young kid getting vaccinations and a teenager getting ready for orthodontia are not that different if the family is a union family in West Virginia or a pair of lawyers in Glen Ellyn. Let markets more efficiently allocate services by making sure that both families have the option to buy into the same plan.
Taken together, this approach would provide universal health care, taxpayer-funded for those who cannot afford it and market-provided for those who can. It would provide a path to Medicare for all, but only provided that Americans — at their discretion — chose to buy into that option. It would also provide an identical “menu” of choices for all Americans who elect to buy into for-profit plans, such that if those market-situated providers offer a more competitive value proposition, Americans can — again, at their sole discretion — buy into those options. Thus, it does not stipulate an end-state based on the idealized views of a few hundred legislators in Washington, but rather based on the informed choices of a few hundred million Americans.
Interestingly enough, this approach is very close to the Swiss model, which delivers a lower MAH than any other industrialized country (approximately 55/100,000) and costs $7,000 per capita per year.
In other words, we have real, fully implemented case studies to show that going to the model I propose would lead to lower costs and better care. A win/win. Are there models that deliver still lower costs? Yes — but none of them with better outcomes. So while some may personally decide to choose still cheaper, but lower care costs, that should be subject to personal discretion, not by government fiat.
To understand why it’s so important to allow markets — rather than governments — to choose, one need look no farther than Minnesota. While the U.S. as a whole has a higher MAH than any other industrialized nation, Minnesota as a state has a lower MAH than any other industrialized nation — even Switzerland.
This matters because for an average Minnesotan, a sudden leap to the Swiss model would represent a lower cost and marginally worse health outcomes. That might be a trade off that individuals are willing to make, but we should not assume that all will prefer that option. It also means that we have lessons learned in our own country that we can apply to our health care system without going overseas. (My guess, which I cannot prove, is that a significant reason for the improvement in Minnesota is the Mayo Clinic, which somewhat uniquely compensates their doctors based on health outcomes rather than procedures ordered. Getting economic signals right matters.)
Finally, we cannot talk about health care without also talking about pharmaceutical pricing. It is true that pharmaceuticals in the U.S. cost a lot more than other industrialized countries. It is also true that innovation in drug development is overwhelmingly concentrated in U.S. markets. While we should do everything in our power to lower the cost of pharmaceuticals, we also need to recognize that drug development is a very high cost / high risk activity, with more drugs that never make it to market than do. It is appropriate and necessary to allow those that succeed to earn high profit margins, or else we will not attract the innovation necessary. However, there is much we can do to lower the cost pharmaceuticals without compromising innovation.
Specifically, we must allow Medicare to negotiate drug prices, as the V.A. and for-profit health providers already do. No company would ever go into a negotiation without the right to serve the best interests of their stakeholders, and Medicare’s stakeholders are not the pharmaceutical companies. We need to empower them to meet their mission.
Secondarily, we need to take a much more aggressive posture against the extension of patents and re-purposing of drugs for new diseases that serves only to extend the profit margin of those drugs long after pharmaceutical companies have recouped their initial investment.
How I will advocate for better, more affordable health care:
1. Defend the ACA and support modifications only if they can be shown by non-partisan experts to lead to an improvement
2. Support proposals to accelerate the transition to universal health care, possibly including but not limited to:
- A public option
- The creation of a taxpayer-funded, means-tested base health care plan to fill in the gaps where individuals not currently eligible for employer or existing government programs are not served (this could be through an expansion of existing Medicare networks)
- Allowing any American to buy into Medicare and/or the Medicare Advantage Plans
3. Support the elimination of differential health care coverage for federal employees
4. Defend and protect Medicare
5. Allow Medicare to negotiate drug prices
6. Act as a strong advocate for consumer protection, working to direct the FDA and others to be highly skeptical of any patent renewals for drugs that have already recouped their initial (high and risky) investment associated with drug development and testing
7. Work with health care providers and hospitals to ensure that the for-profit ends of the health care industry have an economic incentive biased in favor of health outcomes rather than medical procedures