Far from ending the debate over the future of health care in the United States, the Affordable Care Act appears to have given it a boost.
Ongoing Republican efforts to dismantle the ACA have caused the public to realize that they like inclusive, affordable health insurance. Yet the failures of this bipartisan solution (pioneered by former Massachusetts Republican governor Mitt Romney) have convinced many on the left that we need to rekindle the flame for single-payer health care. Others fear this is a step too far and want to build on the successes of the ACA while maintaining a public-private mix of health care.
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Whichever approach we take to address the fundamental challenges for the US health care system, there are two common denominators that must be included in any plan.
The first is universal, nondiscriminatory health care access. Today, a white child has roughly the same chance of seeing his or her first birthday as one born in Europe; a black child has a lower chance than one born in Libya. The life expectancy in two neighborhoods three miles from each other in Baltimore is 84 (higher than the US average) versus 67 (lower than North Korea). This type of disparity should be unacceptable in a nation as wealthy as ours.
The only way to ensure it ends is universal, affordable, health insurance access for all Americans — not just for those who happen to have jobs that provide coverage or who qualify for targeted government programs.
Moreover, the growth of genetic screening means that we are approaching the day where we know from birth who is likely to be ill and who is not. This offers miraculous opportunities for new cures. But it also offers new opportunities for insurers to discriminate against the ill if we don’t enforce strict nondiscrimination regulations. A starting point for any plan to fix the health care system is an assurance that every American, regardless of health, can get health insurance at a fair price.
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We cannot return to the pre-ACA days where individuals were one bad gene or one bad traffic accident away from bankruptcy.
Today, a white child has roughly the same chance of seeing their first birthday as one born in Europe; a black child has a lower chance than one born in Libya. The life expectancy in two neighborhoods three miles from each other in Baltimore is 84 (higher than the US average) versus 67 (lower than North Korea).
The second common denominator is government regulation of health care prices. Our attempt to be the only nation in the world without government price regulation has clearly failed. Let’s be clear: Health care markets don’t work. They have all the features of market failure that we learn in economics, from consumers shopping with little information to providers with excessive market power. We have tried a number of market-based solutions such as Accountable Care Organizations, groups of medical professionals that coordinate to provide medical services. These have worked to some extent — health care cost growth has slowed over the past decade. But it is not enough.
And the problem is about to get a lot worse.
The genomics revolution in medical treatment promises to provide cures for diseases long considered untreatable, from cystic fibrosis to muscular dystrophy to hemophilia. But there are no sensible market forces setting the prices of these new life-saving treatments; indeed, much of the health community breathed a sigh of relief when a miraculous new cure for the fatal birth defect SMA was priced at “only” $2.1 million dollars per patient.
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Proper price regulation is an enormous challenge, economically and politically. Economically, we need to balance the need for price control against providing ongoing incentives for innovation in medical care. Partly we can resolve this by recognizing the public nature of medical research and development and by relying more on the government and less on the private sector to drive health care innovation. But partly we need to determine prices based in a fundamental way on both the true cost of producing the goods or services and the value they deliver to society. Other nations are willing to take a stand on the value of new medical innovation and to use this as a negotiation tool; it’s time the United States did so as well.
Politically, price controls mean potentially creating losers — something our system does quite easily. The good news is that we don’t have to lower our health care costs — we can easily afford to devote 18 percent of our economy, or even somewhat more, to health care. But we have to slow cost growth — we cannot afford to spend a projected 40 percent or more of America’s gross domestic product on health services by the end of this century. This means that in taking on this politically daunting task, we don’t need to create losers — we just need the medical sector to stop winning so rapidly.
Health care reforms can take any number of iterations in the coming decades. But unless it ensures universal, nondiscriminatory access and recognizes the need for price regulation, it will continue to fail Americans.
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Jonathan Gruber is a professor of economics at MIT and director of the Health Care Program at the National Bureau of Economic Research.