February 22, 2024

Opinion | Starting to Arrange Health Care With the Already Insured

There is no shortage of proposals for health insurance reform, and they all miss the point. They always focus on the nearly 30 million Americans who lack insurance at any given time. But the coverage for many more Americans who are lucky enough to have insurance is deeply flawed.

Health insurance is designed to provide financial protection against the medical costs associated with ill health. But many insured people are still at risk of huge medical bills for their “covered” care. A team of researchers estimated that by mid-2020 collection agencies had $140 billion in unpaid medical bills, reflecting the care provided before the Covid-19 pandemic. To put that number in perspective, that’s more than what collection agencies hold for all other consumer debt from non-medical sources combined. As economists who study health insurance, what shocked us was our calculation that three-fifths of that debt had been incurred by families. with Health Insurance.

In addition, in any given month, about 11 percent of Americans younger than 65 without insurance. But more than double that number — one in four — to be uninsured for at least some time over a two-year period. Many more are at constant risk of losing their coverage. Conversely, health insurance — whose purpose is to provide a measure of stability in an uncertain world — is itself highly uncertain. And while the Affordable Care Act has greatly reduced the share of Americans who are uninsured at any given time, we got it did little to reduce the risk of insurance loss among the currently insured.

It is tempting to think that incremental reforms could address these problems. For example, extending coverage to those without formal insurance. Make sure all insurance plans meet some minimum standards. Change the laws so that people don’t risk losing their health insurance cover when they get sick, when get well (yes, that can happen) or when they change jobs, give birth or move.

But those incremental reforms won’t work. Over half a century of such well-intentioned policies has made it clear that the continuation of this approach demonstrates the triumph of hope over experience, to borrow a description of Oscar Wilde’s popular second marriage. .

An inevitable consequence of the lack of universal coverage is the risk of losing coverage. Whenever there are multiple paths to eligibility, there will be many people who will not find their path.

About six out of 10 Americans are uninsured who are eligible for free or deeply discounted insurance coverage. But they remain uninsured. Lack of information about which of the range of programs they are eligible for, along with the difficulties of to implement and demonstrate eligibility, this means that the intended cover programs are less than they could deliver.

The only solution is universal coverage that is automatic, free and basic.

Automatic because when we want people to sign up, not all of them do. The experience with the health insurance mandate under the Affordable Care Act clearly shows that.

Coverage must be free at the point of care — he or she does not pay a deductible — because it is contrary to the purpose of insurance to leave patients on the hook for major medical expenses. Natural recoupling is about going for small co-pays — a $5 co-pay for a prescription drug or a $20 doctor’s visit — so that patients make more informed choices about when they see a health care professional. The virtues of this approach have been preached by economists for generations.

But it turns out that asking patients to pay even a very small amount for some of their universally covered care has an important practical countermeasure: There will always be people who can’t afford it. even modest co-pays. Britain, for example, introduced co-payments for prescription drugs but also created programs to cover those co-payments for most patients — the elderly, the young, students, seniors and those who are pregnant , on low income or suffering from certain diseases. All said and done 90 percent of the recipes which are exempt from co-payments and distributed free of charge. The IS clean result it added hassles for patients and administrative costs for government, with little impact on the patients’ share of total health care costs or on total national health care spending.

Finally, coverage must be basic because we are bound by the social contract to provide essential medical care, not a high-end experience. Those who can afford it and want it can buy additional coverage in a well-functioning market.

Here, an analogy with airline travel may be useful. The main function of an airplane is to move its passengers from point A to point B. Almost everyone would prefer more leg room, unlimited checked bags, free food and high speed internet. Those who have the money and wish to do so can upgrade to business class. But if our social contract ensured that everyone could fly from A to B, a budget airline would suffice. Anyone who has traveled on one of the low-cost airlines that revolutionized the airline markets in Europe knows that it is not a great experience. But they get you to your destination.

Basic universal coverage will also keep the cost to the taxpayer down. It is true that the United States spends about twice as much on health care as a share of its economy than other high-income countries. But in most other rich countries, this care is primarily financed by taxes, whereas only about half of US health care spending is financed by taxes. For those of you following the math, half of twice as much is … well, the same amount of taxpayer-funded spending on health care as a share of the economy. In other words, US taxes are already paying for the cost of universal basic coverage. Americans just aren’t getting it. They could be.

We came up with this proposal using the approach that comes naturally to us from our economics training. We first defined the objective, which is the problem we are trying but failing to solve with our current US health policy. Then we considered the best way to achieve that goal.

However, once we did this, we were struck — and saddened — to realize, at a high level, that the key features of our proposal are ones that all high-income countries (and all but a few Canadian provinces ): guaranteed basics. coverage and the option for people to purchase an upgrade.

The lack of US universal health insurance may be exceptional. The fix, it turns out, is not.

Liran Einav is a professor of economics at Stanford. Amy Finkelstein is a professor of economics at MIT The authors of the forthcoming book “We’ve Got You Covered: Rebooting American Health Care,” from which this essay was adapted.

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