Category: Patient Care

By Jill Horwitz and Austin Nichols

The Biden administration is off to a roaring start. It is expanding and maintaining coverage during the pandemic by shoring up subsidies, paying premiums for laid-off workers, and otherwise working to reverse the growth in the uninsured (and underinsured) population caused by the last administration. Now it’s time to tackle another, cost.

Not only are health expenditures a large and growing share of GDP, crowding out other spending, costs have been increasingly shifted to patients in the form of premiums and ever-growing deductibles, which together have grown much faster than wages over the past decade. Moreover, out-of-pocket spending often hits all at once; about a third of high-spending patients incur half of their annual out-of-pocket spending in a single day. Increasingly, even people with insurance cannot afford to use it, so high cost is undercutting access even for the insured

We can tackle the primary drivers of cost, prices, by dismantling market power. The most salient case is cartel prices charged by physicians, and the natural solution is expanding the supply of physicians. Congress has taken some steps in this direction by expanding Medicare graduate medical education (GME) by 1,000 positions last December. The administration can unilaterally increase supply by via immigration. As others have suggested, increasing immigration of physicians who would accept somewhat lower compensation than current market rates would put “downward pressure on” physician pay.

These steps are important because expenditures for physician and clinical services are key drivers of spending and spending growth. In 2019 they accounted for $772.1 billion or 20% of total health care expenditures, representing a growth rate of 4.6% over 2018. Overuse drives some of these cost increases, but prices are the main story.

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