Economists’ Guide to Rehabilitating America’s Healthcare | Stanford News

Break it down, start over.

This is the recommendation of Stanford economists Liran Einav and MIT’s Amy Finkelstein on how to fix the $4 trillion-dollar apparatus that is US health care and it is detailed in their new book, We’ve Got It: Rebooting America’s Healthcare (Portfolio, 2023). After studying the patchwork of US health care policies for nearly 20 years, Einav and Finkelstein say it’s time to stop putting Band-Aids on a system they diagnose as incoherent, uncoordinated, inefficient and unplanned. Their two-part solution: free, automatic, and basic health care for every American along with the ability to purchase supplemental insurance. If that sounds like universal coverage, it is. But as Einav and Finkelstein explain, this isn’t about politics: The US has unofficially enacted universal coverage and has already simply failed to implement it.

The book marks the second work by Einav and Finkelstein and comes less than a year after the first, Risky business: why insurance markets fail and what to do about itwas released (written with Ray Fisman of Boston University and named after two distinguished Financial Times lists of best books to read). Einav, professor of economics at the School of Humanities and Sciences and Tad and Dianne Taube Healthcare Fellow at the Stanford Institute for Economic Policy Research (SIEPR), recently spoke to SIEPR about We’ve got you covered and what Finkelstein and he hope inspires.

You wrote We’ve got you covered in the same Freakonomics style as your first book complete with personal stories and cultural references ranging from Stephen Colbert and Walter Cronkite to The west wing. Who is your target audience?

The general public above all. People know what kind of insurance they have, but they don’t understand that there are so many different parts to the US healthcare system. They also know Medicare jargon for everyone, for example, but don’t always know what it actually means.

Our hope is that we can educate people at a very blue, high level and without boring them to death about all the different pieces and how they fit and how they don’t fit.

You make a very important point at the beginning of the book about how fragile access to health care is for most Americans.

The problem facing US health care policy isn’t just the 12 percent of Americans under the age of 65 who are uninsured. It’s much bigger and deeper than that. There are also many policyholders who are in constant risk of losing their insurance. In writing the book, we wanted to find out how many people are potentially uninsured. Our research shows that one in four Americans under the age of 65 will go uninsured at some point during a two-year period. That’s more than double the number of people who go uninsured in any given month.

The book argues very persuasively why guaranteed access to health care is critical. In fact, you say the US already has it.

The United States has, since the 18th century, operated under an unwritten social contract to provide access to medical care for those who are sick and cannot provide for themselves. American leaders across the political spectrum, liberal and conservative, have embraced this. The problem is, we’ve never had a consistent approach to universal health insurance, and so the history of health insurance has resembled, as the book puts it, a game of Whac-a-Mole.

In the book you explain that it is time to formalize what has been around for a long time. What are you proposing?

Our proposal has two parts: The first would guarantee every American a basic level of automatic and free medical care, which means that no one pays premiums or anything out of pocket.

To economists, of course, removing cost sharing is heresy: demand is always lower when people have to pay for a good or service. But we realized that, when it comes to health care, charging people as little as $5 for a doctor visit means some would be left without and others would go into debt. We know, based on the already existing social contract, that policy makers would then create exemptions and then the whole system would become expensive and messy again.

The second part, and we strongly believe this, is that people should have the ability to purchase supplemental coverage in addition to, but not in lieu of, basic coverage.

This is the whole project. The rest, as we say in the book, is just commentary.

Can you elaborate on what primary health care means?

By base we mean Very basic: primary and preventive care, essential medical care for the critically ill, specialist care, outpatient care, emergency room visits, and inpatient care. There is a large gray area of ​​medical care that would be left out. But since our goal with this book is to lay out general conceptual guidelines, we don’t go into the specific services that we think should be provided with basic coverage. In practice, even if we compiled such a list, it would become obsolete as new medical treatments and technologies emerge.

Think of basic care as similar to low-cost airlines in Europe. The planes take you from point A to point B. The experience isn’t great, but you get where you need to go without crashing. So, yes, waiting times would get longer for patients, there would be less choice of doctors, and hospitals would be less comfortable.

How would basic care be paid for?

From the pockets of taxpayers. It may come as a surprise that taxpayer-funded health care spending in the United States is already large enough to pay for universal basic coverage. Fees don’t have to go up, but they could go up depending on the basic coverage you offer.

One point you make in the book is that your project, far from politically aligning, has something that shocks everyone. Some might say that the supplementary insurance option is unfair as not everyone will be able to afford it.

Amy and I would disagree. In simple economic terms, think of primary health care as a special good that is distinct from other goods such as cars, houses, or food. Once basic health care is covered for everyone, additional coverage is, by default, for non-essential health care items. These non-essential items become like any other standard good. So why shouldn’t people be allowed to buy medical care that is no longer about basic health and survival just like they can buy a nicer car, a nicer house, or better food?

Ultimately, what do you hope this book inspires?

We wrote this book because, after studying US health care policies for nearly two decades, Amy and I realized we had something to say about the big picture. And because we’re outside the political world, we think we have a fresh perspective and can maybe move the conversation in the right direction.