Finding Common Ground: Health Care

By Charles Wheelan on July 19, 2017

If only we had a handful of Centrist Independents in the U.S. Senate right now to be the catalyst for a more constructive debate over real health care reform. Health care does not have to be a hyper-partisan issue; sadly the Republicans and Democrats have turned it into one.

Sure, there are areas of honest ideological disagreement when it comes to health care, such as public funding for abortion or the level of insurance subsidies for low-income people, but the fundamental objective of health care is not inherently political: keep Americans healthy at the lowest possible cost.

By any reasonable metrics, the U.S. health care system has enormous room for improvement. Policy wonks typically evaluate health systems on three dimensions: cost, quality, and access. America is doing relatively poorly on all three.

Cost is the most straightforward because the U.S. is so wildly out of line with other rich countries. We spend over 17 percent of our GDP on health care; the average in the developed world is nine percent. Health care is the most significant expense in the federal budget (as in many private firms). It is the expense most likely to swamp us fiscally. That’s just math, regardless of your party affiliation.

What are we getting for all that spending? That’s the quality question. The answer is surprisingly disappointing. American health outcomes are often middling to poor. True, when celebrities and kings get sick around the world, they tend to the fly to the U.S.Healthcare_costs.jpg for cutting edge care.

But for things not on the cutting edge, we are not that good. American life expectancy is below the OECD average (78.8 years at birth compared to 80.5). Part of that is because the U.S. is a violent place. Homicide and suicide bring down life expectancy; it’s not fair to blame that on the health care system. But it’s also true that America has an unconscionably high infant mortality rate—38th in the world, according to the United Nations.

The U.S. also does poorly relative to other rich countries in “amenable mortality”—deaths from preventable causes: treatable cancer; diabetes; childhood infections; and so on.

Access is the last piece. Who is guaranteed access to care? (Of course, there is the related question of who pays to insure those who cannot afford coverage.) The Affordable Care Act broadened insurance coverage with the insurance mandate, which requires that all Americans hold health insurance or pay a penalty. The Republicans made opposition to “the mandate” a cornerstone of their repeal effort—which would be funny if it were not so serious.

The insurance mandate was originally a conservative idea. It was conceived by the right-leaning Heritage Foundation as an alternative to insuring all Americans through a government system. The mandate is fundamentally about personal responsibility: All Americans should have insurance so that the rest of us are not stuck with their bills if they have an accident or become seriously ill. Many states have mandatory car insurance for exactly the same reason.

Thus, there are conservative reasons to support the mandate. For liberals, it is the mechanism that gets the country closer to universal coverage (as long as subsidies are included). For economists, it is the only way to insure people with preexisting conditions at a reasonable cost if we are going to maintain a system built primarily on private insurance.

This is a really important economic point. If we have just a private insurance market, people who are already sick (or likely to become sick) will not be able to afford insurance. They, of course, are the ones who need it most.

If we require insurance companies to sell insurance to all customers at the same price, regardless of any preexisting condition but with no mandate, the insurance companies will go broke. In that scenario, the only sensible time to buy insurance is after one becomes sick. After all, the insurance company can’t say no or raise the premium, no matter how sick you are.

So here we are. The Affordable Care Act significantly broadened access to health insurance. The ACA did not, however, make radical changes in the way care is delivered. We still have a system that operates primarily on a fee for service basis, meaning that we pay for procedures rather than outcomes. That is going to have to change. Critics of the Affordable Care Act are correct that the system we now have is too expensive—for many families and also for the federal government. Health care spending is the item that threatens to swamp the federal budget in the long run. That will have to change.

ACA.jpgThe Democrats made a mistake in trying to transform 18 percent of the American economy without a single Republican vote. Bipartisan legislation tends to be substantively better. (Both Social Security and Medicare were passed with bipartisan support.) Legislation with input from both parties (and independents) also tends to be more durable. Is it any surprise that the Republicans were eager to scrap Obamacare once they came to power?

Yet it boggles the mind that the Republicans arrived in power with no substantively defensible replacement for the Affordable Care Act. What they were offering up—dead for now—made no meaningful reforms in terms of changing how medicine is practiced. The Republicans had eight years to come up with a plan that would promote better outcomes at lower cost; they whiffed this one.

There is some good news lurking in all this: The U.S. is spending an enormous amount of resources and getting mediocre health outcomes. Health care may be the one place where we can achieve what is normally impossible: spending less and getting more.

Health economists argue that we might reduce costs (or at least slow the rate of growth) by changing our system of care in a way that also makes people healthier—focusing more on wellness and prevention, for example, and moving more quickly towards a system in which health providers are paid to provide better health outcomes rather than for the number of tests and procedures they administer.

That is the discussion that has to happen. Someone has to knock the two parties off their talking points. That is exactly the role we hope a “Centrist Caucus” could play in the Senate—as few as three or four senators committed to reforming health care rather than racking up a victory for their party.

Note to Democrats: the Affordable Care Act needs to be fixed. Our health care system is still not affordable in the long run.

Note to Republicans: You are going to have to come up with something more substantive than just scrapping Obamacare.

Note to America’s Independents: You are right to demand better. Health care is one of the most complex policy issues: strange incentives (patients don’t pay); opaque pricing; the gap in knowledge between doctor and patient; the sheer amount of money involved; and the life-saving nature of the services being provided.

Still, at the end of the day, the task is straightforward: make people healthier at a price we can afford as a society. There are things to be learned from other countries, even if we do not want to emulate their systems. There are things to be learned from health systems in the U.S. that are doing innovative things.

John Kasich, governor of Ohio, wrote in an op-ed this week: “The best next step is for members of both parties to ignore the fear of criticism that can come from reaching across the aisle and put pencil to pad on these and other ideas that repair health care in real, sustainable ways.”

It would be a lot easier to reach across the aisle on this issue if there were some Centrist Independents there to narrow that partisan divide.