Smarter Healthcare, Part 2

Quite some time ago, I proposed a solution to healthcare that looked very different from other plans I had seen in the past^[1]. Since that time, a great deal has happened on the healthcare front: the House passed the AHCA and narrowly passed it after a false start, and the Senate tried to rush through the BRCA but currently does not have the necessary support. Both bills achieve two primary objectives: they roll back tax increases that were part of the Affordable Care Act, and they dramatically reduce Medicaid spending. Both are projected by the Congressional Budget Office to have a modest deficit reducing effect (which, for technical reasons, is necessary to avoid a Democratic filibuster) and both are projected to dramatically increase the number of uninsured persons in the United States by about 22 million ^[2]. Such forecasts should be understood to have large uncertainty, but the uncertainty could go in either direction; don't mistake uncertainty in a forecast for a guess with no basis. The CBO is almost certainly right that tens of millions of people would lose insurance under the AHCA and BRCA, and it could just as easily wind up being more than 22 million as less.

 The bill is quite unpopular^[3], although understandably many people don't feel they know enough about the bill to have an opinion. My own opinion is staunchly negative. I have always been tepid in my support of the Affordable Care Act (I refuse to call it by its more popular moniker because the idea of making health care reform a referendum on a previous president is madness to me), mostly because I have always felt it was wildly insufficient to solve the problem of U.S. health care and did not, despite its billing, come close to solving our need for long term health care reform. But returning to the broken system we had before cannot be the answer.

So instead, my proposal puts negotiating power in the hands of health care consumers by allowing them to pay medical expenses directly with federal loans. They can negotiate upfront pricing with providers. Currently, the majority of Americans have almost no bargaining power in health care: their insurance is decided by their employer, and their providers negotiate with their insurers. Most consumers are left basically forced to spend a certain amount of health insurance and forced to accept a certain among of coverage. This bears some similarity to health savings accounts favored by many conservatives, but it does not require that savings be stockpiled in advance in case of a medical emergency.

Today, I'd like to compare my system to a favored option on the left and used relatively successfully in many other countries: single-payer. Single-payer basically means that you get health insurance from the government, and it is paid for by tax dollars. Like the current system, consumers have little direct negotiating power, but the entire insurance process could be streamlined. Advocates point out, correctly, that every single-payer system in the world costs a lot less per capita than the U.S. system.

However, as the Washington Post notes, there is little reason to believe that a single-payer system in the U.S. would drive down costs without other massive overhauls ^[4]. After all, we have two large government health insurers (Medicare and Medicaid) and both come with exorbitant costs. In fact, as you can see in the image below, in spite of having more private spending on health care than any other nation, the U.S. already manages to also spend more on public or compulsory healthcare than almost all other nations. We have ended up with the worst of both worlds: a sprawling, expensive public health care system while still forcing most citizens to pay massive private costs for health care.

One advantage of my proposal is that I think it could legitimately bring down costs. In the current system, if you have insurance, your decisions to consume health care are almost wholly divorced from the actual cost of health care. Instead, if you have coverage, either you or taxpayers have already paid a lot for your healthcare and you might as well take advantage of services offered to you, or at the very least your decision to take advantages of those services has more to do with time and desire to see the doctor than it does the cost. Also, the costs are opaque and confusing, negotiated by insurers in such a way that when we receive our bills, the average American has little chance of deciphering what the charges even mean. We write a check and move on. Because doctors negotiate with insurers rather than patients, there is no incentive for transparent or upfront pricing.

However, once consumers are in charge of purse strings, it suddenly becomes easy to demand upfront pricing, as you can with an (uninsured) eye exam or dental exam, or a car repair shop. Certainly, some providers will try and talk their patients into costly, unnecessary procedures, but patients will have the ability to walk away and find someone else if they don't believe their provider is behaving ethically. It allows patients to see the value of nurse practitioners and physicians assistants, both of which can provide quality patient-centric care cheaper than medical doctors in many instances.

Also, I believe this idea will prove more politically palatable that the single-payer option. Observers are right to note that support for single-payer is growing, but it is still not the preferred choice of most Americans ^[5]. I believe options that give Americans more direct control while still having protections for worst-case scenario medical needs, on the other hand, could prove very popular. As always, comments and questions are welcome.