Opinion: U.S. health care is needlessly pricing people out. Here’s how to fix that
In a world full of partisanship, we support bipartisan reforms good-willed members of Congress can agree would be good for our country
American families pay for health care costs multiple times over in the form of Medicare taxes, lower wages, rising health care premiums and out-of-pocket expenses. Even as our gross domestic product has grown incredibly over the past 50 to 60 years, our health care costs have risen even faster. Wages have remained flat. It is as if we were the mole getting hammered in the Whack-A-Mole game.
Health care in America is structured to keep costs as high as possible. Just as health care costs are bankrupting the Medicare trust fund, you may have a friend, family member or neighbor who has been bankrupted by unexpected health care bills. This is common. A recent study reported that medical bills were a key contributor to more than 66% of personal bankruptcies in the U.S.
One of the great paradoxes of 21st-century America is that we live in a land of unparalleled abundance, yet millions lack coverage for or access to basic primary care. We boast the world’s most renowned hospitals and surgical centers, house the highest and most prestigious medical training programs, and develop and manufacture cutting edge drugs and devices second to none. We also have the fewest doctors per capita, the highest incidence of chronic conditions and suicide, and produce subpar outcomes at the highest costs of any developed nation.
Our poor performance derives in part from a maze of incentive-distorting laws and widespread collusion that suffocate competition. We have an artificial labor shortage and virtually no price information or true consumer choice. In effect, we experience the problems of a monopolistic market that operates through the power of government and business cartel practices. We are “price takers” in health care just as we are “price takers” at the gas pump. A lack of price transparency and provider choice create waste and enable health care providers to name their price and send us to collections if we cannot pay.
Clearly the system is broken. Yet most proposals to change health care are partisan and lack the necessary support to get enough votes in Congress, avoid a filibuster and be signed into law. Examples include creating a public health care option, legislating single payer health care and pressuring states to rapidly expand Medicaid.
Regardless of which side you support on each of these issues, it is hard to imagine consensus on meaningful health care reform emerging anytime soon with the current approach. We see Republicans and Democrats talking over each other by writing reform bills that have no chance of passage — often to demonstrate party loyalty and rally their constituents before the next election. All the while nothing gets done to lower those bills you keep getting in the mail.
We need to act now. In a world full of partisanship, we support bipartisan reforms good-willed members of Congress and federal officials from both parties can agree would be good for our county. The following 10 bipartisan solutions make sense:
- Create price transparency for patients. When selecting a care provider, patients should have the ability to compare quoted prices for standard procedures or visits with how much they would pay at comparable, nearby providers. This would be consistent with consumer rights we have come to expect in any other setting. If it is important enough to require bottled drinks and packaged foods to be labeled for individual sale, it is important enough to tell patients when they are making a choice that may wipe out their savings versus an alternative that would not. We should strengthen price transparency rules that the Trump administration created that mandate rate transparency that hospitals have negotiated with insurers but still do not make it easy for consumers to shop based on their projected financial burden. More work also must be done to protect patients against unforeseen surprise medical bills due to out of network physician billing.
- Pay for value. We should stop incentivizing “sick care,” which does not pay providers if someone is well. Instead, hospitals and doctors should be paid, whenever possible, based on the health outcomes they provide and how cost-effectively they do this. We should also enable Medicare to pay for drugs that deliver value and effective outcomes.
- Enact telehealth legislation. We need to make permanent two telehealth changes the COVID-19 pandemic catalyzed that facilitated access health care at home: (1) Nixing the rules that limit telehealth mostly to rural geographies and (2) doubling the scope of services that Medicare will reimburse for when provided by telehealth.
- Expand scope of practice to boost provider competition. Allow qualified medical professionals, including nurse practitioners, pharmacists and therapist assistants, to expand the scope of services where they have the proper training.
- Create site neutrality. We need to level the playing field and remove unnecessary restrictions that drive patients to hospitals for inpatient care. Higher payments for outpatient, facility based services that can be performed in a lower cost setting should be eliminated.
- Rebalance the fee schedule. We overvalue many procedures that add minimal benefit, and we undervalue primary care that would prevent conditions later down the road. We need more transparency and evidence-based reasoning for determining billable rates.
- Support home-based care. Support and incentivize more home-based care and enable more seniors to stay at home and live around support groups of loved ones.
- Accelerate generic drug usage and cap annual drug price increases. Support the development of safe generic drugs and limit drug companies’ power to prevent generic competition after patents expire. Limit drug makers’ ability to raise annual prices more than the rate of inflation.
- Expand health reimbursement arrangements. Let employers give employees money and flexibility to shop for the insurance they want on an insurance exchange.
- Support health, not just health care. Health care systems and clinics only account for 10% of our health. Our food security, education, employment, housing and the environment all contribute much more to our overall health than our hospitals and clinics do.
We are confident congressional representatives and federal officials of good will can deliver meaningful cost reducing and value creating health care reforms in the months to come. True change will require focus. It will not come from the theatrical politics we see on national television, but from those leaders behind the scenes rolling up their sleeves and getting done what we elected them to do. We hope to see Congress and cabinet officials coalesce to support most — if not all — of these reform proposals in short order.
Henry Eyring teaches at Utah State University and the London School of Economics. Douglas Hervey is a partner at Cicero and leads their health care and private equity practice.