fb-pixel Skip to main content

We need a national conversation about our health care priorities

An inevitable consequence of the reality of limited resources — even in wealthy countries — is that we cannot fund an unlimited amount of care for everyone.

If you ask different people to identify the main problem with our health care system, you’re likely to get answers ranging from lack of insurance coverage to prices that are too high, to lack of access to providers, to surprise billing, to waste, to lack of attention, to issues of prevention and wellness. Solving any of these problems, let alone all of them, requires targeting our health care resources in a way that balances competing priorities and focuses health care spending on the care that will actually produce the greatest health benefits. How we pay for health care — as patients, insurers, government programs — is the key.

An inevitable consequence of the reality of limited resources — even in wealthy countries — is that we cannot fund an unlimited amount of care for everyone. Rather than focusing on the payment tools that we have available to drive best use of those resources, much of the sloganeering we hear sidesteps the tough trade-offs that this requires. One version of this is advocating for a “simple” plan (such as single-payer or transparency in a free market) without acknowledging the winners and losers it would generate. Another version is focusing on reforms addressing unpopular aspects (such as fraud, the broken malpractice system, surprise billing) that, while laudable, would not achieve fundamental objectives. This may be politically expedient, but it delays the national conversation we need to have about our policy priorities. Ironically, ignoring the trade-offs is a recipe for the status quo.


We believe that two key goals of health reform are ensuring access to adequate care for everyone and moving the system toward higher-value, fiscally sustainable health care spending. The first goal requires policy makers to take a stand on what constitutes “adequate” care. Discussing whether “health care is a right” avoids the harder question of “how much health care is a right?” One way to assess this is to think about the health benefit that different treatments provide, and at what price. Should taxpayer dollars fund a treatment that has only a chance of giving patients a few extra days of life at a cost of a million dollars? Setting no limits on coverage is implicitly answering yes — and guaranteeing an exorbitantly expensive program that crowds out resources for food, housing, and education. How many teachers are we willing to give up for our public programs to cover such care?

A high-value insurance plan might not cover such a treatment — or might have substantial copayments associated with it. By the same token, a high-value insurance plan should cover high-value services, such as diabetes management medications or effective cancer treatment, with little cost-sharing for patients. It’s important to distinguish “high value” from “low cost” — some very expensive care is extraordinarily valuable in improving health, and some low-cost care is quite wasteful. On the payment side of the ledger, moving away from fee-for-service models based solely on the quantity of care delivered toward payments based on the value of the health care and patient outcomes would be a powerful force for getting the most from our health care spending.


Would repealing the Affordable Care Act get us there?

We think not. Insurance coverage is incredibly valuable, and insurance works best when everyone is covered. The value of health insurance is only rising, as more and more intensive high-value treatments — such as gene and cell therapies — become available. Eliminating incentives for coverage, including the mandate and subsidies for low-income populations to enroll, is a move in the wrong direction. So is reinstating the subsidy for the most expensive employer plans by eliminating the “Cadillac Tax.”


Would Medicare for All solve these problems? We don’t think so.

First, the way Medicare pays for care is unlikely to drive innovation or value. It’s nigh on impossible to write down a central price list that gets the prices “right,” particularly when there aren’t market prices to benchmark this list against. Second, if we acknowledge the uncomfortable reality that covering all care for all people while paying providers at rates that will keep them in practice is impossible in a world with limited resources, the program will have to have coverage limits, waiting times, or other ways of rationing resources. Different people will have different preferences and different resources, and it is not clear that a one-size-fits-all solution can meet these different preferences and remain fiscally viable. With a limited, fiscally sustainable public program, higher-income people may choose to purchase additional coverage or care. This is one way to balance the goals of ensuring adequate access for everyone while driving higher value spending and promoting innovation.

We would be better served by removing some of the existing barriers to a more sophisticated insurance design. For example, traditional Medicare is prohibited from using cost-effectiveness analysis. It must also cover every hospital and pay rates that effectively subsidize hospitals that are not performing. After almost a decade of tinkering with alternative payment models, these models are still grounded in the fee-for-service system, and most Medicare for All proposals would just perpetuate this. On the private side, insurers are rarely able to adapt coverage provisions to the health benefit the care would generate for the individual patient. Our blunt system of coinsurance and copayments rarely allows subsidization of low-cost treatments that keep patients out of the hospital. These constraints and limitations propagate high-cost care — with a consequence of also driving up insurance premiums and uninsurance rates.


The crucial questions we ought to be grappling with include how we determine what the public plan should cover, how much it should pay providers, and how we assess the health benefit of each treatment option for each patient. A value-based payment and insurance system wouldn’t necessarily cover everything for everyone, but would get the most good out of our resources spent on health or otherwise. If we were able to get to such a world, we wouldn’t have to be worried about how much we spend on health care — 20, 30, 40 percent of gross domestic product — because we would be devoting resources only to the care that was worth it. We’ll have succeeded in moving to a better system when we focus on producing value, rather than jobs in health care or the share of gross domestic product that goes to it.


Katherine Baicker is the dean and Emmett Dedmon professor at the University of Chicago Harris School of Public Policy. Amitabh Chandra is Ethel Zimmerman professor of public policy at Harvard Kennedy School and Allison McCance Professor of Business Administration at Harvard Business School.