Close-up Of Stethoscope On Us Currency And American Flag.

Fixing Prices: Immigration and Physician Competition

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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U.S. Capitol Building.

Possibilities and Pitfalls of Health Reform Through Budget Reconciliation

By Nicole Huberfeld

The Biden administration entered office promising health reform. But the evenly-split Senate means ten Republican votes are necessary to move major legislation — cooperation that seems unlikely after years of Republican attempts to repeal and obstruct the Affordable Care Act (ACA).

Still, expanding health insurance coverage may be on the menu through budget reconciliation. A budget reconciliation bill progresses with a simple majority vote: special rules limit debate and make filibuster impossible.

The Biden administration has already navigated budget reconciliation to enact speedy health policy measures in response to the pandemic. Signed March 11, the American Rescue Plan Act of 2021 (ARPA) is a reconciliation bill which, among other things, offers federal money to support states’ and localities’ public health needs; facilitates economic recovery; increases tax subsidies provided through health insurance exchanges to expand affordability; and builds on the ACA and 2020 COVID relief bills by offering Medicaid non-expansion states an enhanced federal match of 5% for each enrollee to encourage expansion and counterbalance costs. The ARPA also addresses determinants of health and health equity, for example by extending the option of maternal Medicaid coverage for a year after the 60-day post-partum period and creating a new child tax credit. Most provisions last no more than two years.

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Grafton, Illinois, USA, June 1, 2019 -Car submerged under flood water in small river town, Grafton, Illinois, as Mississippi River floods roads, businesses and houses. vehicle under water, men in boat

Bail Out Humans

By Christina S. Ho

This past year has sensitized us politically to government’s affirmative obligations, especially the duty to backstop health catastrophes in order to dampen the risks that ordinary people must bear. 

Our government bails out large risks in so many other arenas. Yet we too often fail to backstop the most human risk of all — our vulnerability to suffering and death. 

Throngs of scholars have described our deep tradition of government-sponsored risk mitigation to nurture favored private activities and expectations, and relieve those favored actors from catastrophes beyond what they could be expected to plan for. I have characterized this distinctive political role figuratively as one of “government as reinsurer.”

The federal government provides standard reinsurance for private crop insurers, virtually full risk-assumption for private flood insurance, guarantees for employer pension benefits, robust backstops for bank liquidity risks, FHA mortgage insurance and a federal secondary market to absorb the risks of housing finance.

In these arenas and more, statistically correlated or high-magnitude catastrophic losses are shed onto the state in order to smooth out and shore up the underlying private risk market. We have yet to commit similarly in the health care domain. 

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People protesting with signs that say "healthcare is a human right" and "medicare for all."

A Long View on Health Insurance Reform: The Case for an Employer Public Option

By Allison K. Hoffman

Historically, job-based health insurance coverage was the gold standard. It was broadly available to workers and was comprehensive. It covered the lion’s share of most services someone might need. 

Yet, job-based private health coverage has been in decline. Employers are struggling to maintain plans in the face of escalating health care prices, and indicating the need for government involvement to solve this problem.  

Even before the pandemic, a decreasing share of workers, especially lower wage workers, had health benefits through their jobs. The majority of the currently uninsured are workers, either those whose jobs do not offer them coverage, such as gig workers and part-time workers, or those who are offered coverage but cannot afford their share of the cost. Ironically, some of these workers become ineligible for Affordable Care Act (ACA) marketplace subsidies because they are offered job-based coverage. 

Even for those who have job-based coverage, health benefits have become less generous over time, leaving households vulnerable to unmanageable health care expenses. The average deductible for a worker-only plan has increased 25% over the last five years and 79% over the last ten years. 

To help address these shortcomings and challenges of job-based coverage, the Biden administration should offer employers a Medicare-based public health insurance option for their employee coverage. It would simultaneously offer an out for employers who want it, and start to build the foundation for a simpler, more equitable financing system down the road.

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Game of whack-a-mole.

Stop Playing Health Care Antitrust Whack-A-Mole

By Jaime S. King

The time has come to meaningfully address the most significant driver of health care costs in the United States — the consolidation of provider market power. 

Over the last 30 years, our health care markets have consolidated to the point that nearly 95% of metropolitan areas have highly concentrated hospital markets and nearly 80% have highly concentrated specialist physician markets. Market research has consistently found that increased consolidation leads to higher health care prices (sometimes as much as 40% more). Provider consolidation has also been associated with reductions in quality of care and wages for nurses

In consolidated provider markets, insurance companies often must choose between paying dominant providers supracompetitive rates or exiting the market. Unfortunately, insurers have little incentive to push back against provider rate demands because they have the ability to pass those rate increases directly to employers and individuals, in the form of higher premiums. In turn, employers take premium increases out of employee wages, contributing to the growing disparity between health care price growth and employee wages. As a result, rising health care premiums mean that every year, consumers pay more, but receive less. 

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Biden’s Early Focus: Durable and Attainable Private Insurance

By Zack Buck

Though health policy debates during the 2020 presidential primaries centered around expanding access to public health insurance programs (e.g., “Medicare-for-All”), the focus of the nascent Biden administration has been on making private health insurance more durable, not deconstructing it.

While these changes are likely to make private insurance plans more affordable and attainable, choosing to reinforce private insurance plans puts global systemic reform, the goal of many advocates, further out of reach.

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Medical bill and health insurance claim form with calculator.

Price Transparency: Progress, But Not Yet Celebration

By Wendy Netter Epstein

Price transparency has long eluded the health care industry, but change — fueled by rare bipartisan support — is afoot. 

The Trump Administration promulgated new rules relating to health care price transparency, and the Biden Administration seems poised to keep them. Though patients have grown accustomed to going to the doctor and agreeing to pay the bill — whatever it ends up being — they aren’t happy about it. The majority of the public (a remarkable 91%) supports price transparency. And lack of access to pricing has long been a significant glitch in a system that relies on markets to bring down prices. 

Though recent rulemaking looks like progress, it is still too soon to celebrate. Questions remain about consumer adoption, the role that providers will be willing to play, and the impact that transparency will have on pricing. The possibility that transparency will worsen existing inequities also requires careful observation.

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Emergency department entrance.

Be a Transformational President, Mr. Biden: Launch a Commission to Create an Ethical Health Care System

By William M. Sage

My message for President Joe Biden and his administration is a simple one. Invite physicians to create an ethical health care system. Demand that physicians take seriously that mission and work closely with other health professions and the public, sharing their power and authority.  

Physicians’ silence in the face of massive health injustice, inefficiency, and waste must be called out by leaders of the medical profession for what it is: complicity. Commitment to an ethically indefensible status quo has made much-needed reform proposals seem morally threatening, rather than representing opportunities for ethical introspection and improvement. All those who profit from the current system — a large group, given $4,000,000,000,000 of annual U.S. health care spending — use physician complacency to justify their own resistance to change.

The U.S. health care system will not change without permission from health professionals, especially America’s physicians. Permission must be built on principle, and it should take the form of re-envisioning and reaffirming medical ethics. The need to do so has been evident for over two decades, but COVID-19 has increased its urgency.

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Steps 1, 2, 3, 4 signpost.

The Ongoing Step Therapy Debate

By Laura Karas

Senator Lisa Murkowski’s (R-AK) reintroduction this February of a federal bill, the Safe Step Act, has revived the debate over the prudence of step therapy protocols.

Step therapy is an insurer utilization-management tool imposed in response to high drug prices. As its name implies, step therapy requires “steps” before a patient can receive his preferred medication (i.e., the one his provider has prescribed). Typically, a patient must “try and fail” a less costly medication or series of medications before becoming eligible for insurance coverage of the medication in question. In effect, step therapy allows an insurer’s “preferred therapy” to supersede patient and provider preference.

The need for step therapy is closely bound to the problem of high drug prices. But the crux of the step therapy debate boils down to the following: Who should decide which pharmaceutical drugs your health plan covers? You and your doctor, or your insurer?

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