On the latest Facing the Future, I was joined by Joe Antos, a resident scholar at the American Enterprise Institute, Josh Gordon, director of Health Policy at the Committee for a Responsible Federal Budget, and Concord’s Executive Director, Bob Bixby. We discussed health care policy reform with long-term economic growth and the pandemic in mind.
[Note: Portions of this week's Facing the Future can be seen in the video clip posted below.]
In 2019, The Concord Coalition commissioned a series of papers on five topics with the idea of putting forth a fiscally-responsible economic growth agenda at a time when projected long-term economic growth was waning and the nation’s fiscal picture was worsening every year.
Little has changed with that long-term trajectory, but much has changed in the near term, as the country battles COVID-19 and the economy struggles to rebound from the effects of the pandemic. With millions suffering now and the long-term picture no better, Concord is revisiting its agenda to determine how it should be adapted to our new reality.
Beginning this week, the month of October will feature discussions on each of the five key topics, starting with health care. You can read the 2019 health care policy paper by clicking here, which was written by the late Alice Rivlin from the Brookings Institution and Joe Antos from the American Enterprise Institute.
Bixby provided background on the paper and the purpose of looking forward. He said the nation is rightly focused on addressing the ongoing pandemic now, but there is no more important, long-term oriented subject for the federal budget than health care. And, after COVID-19 subsides, we will still have an unsustainable budget situation.
“From a fiscal point of view, which trickles into an economic impact, it is the most important thing for the federal budget in terms of getting our long-term fiscal path under control,” Bixby said. “It affects businesses, individuals, state and local governments; across the spectrum, rising health care costs can put a squeeze on everybody.”
“So, it does fit into one of the things we looked at as a fiscally-responsible economic growth agenda,” he added.
Antos explained what the 2019 paper attempted to accomplish. He and Rivlin approached health care reform from the perspective of economists, working to build from the system that currently exists to expand access, improve affordability and increase efficiency.
“The health sector is rife with inefficiency,” Antos said. “We don’t have active consumerism to any great extent in the health sector for reasons that could be resolved, but not easily; it’s not just a question of incentives, it’s a question of information, a question of contracts between my doctor and perhaps the hospital who pays him.”
“We think everybody should have health insurance; ideally it should be affordable,” he added. “Before we get to affordability through improved efficiency, we strongly believe that as a country we need to provide appropriate subsidies to people who cannot afford health insurance; that’s an investment in the country, not just spending.”
In achieving those goals, Antos said it would be best to start with concrete reforms and work with what exists before disrupting the system.
“Improve the subsidies for lower income people in the exchanges, make exchange coverage more readily available for people that might have higher income levels, expand Medicaid coverage uniformly across the country,” he said. “And then look at the way we pay for health care.”
Gordon said that when the paper was first written, there was a tension between crafting a new, comprehensive idea versus finding ways to tinker and improve the existing system.
“A lot of times, the new bold thing is what people push for, but this paper, instead, took a very methodical approach through all of the different parts of the health care system and ways that they can be improved to where, in the end, the sum of those parts ends up being a really big improvement in what we can expect from our health care system,” Gordon said. “I think the pandemic, and everything that has happened since in the political environment, makes it an even better paper.”
Gordon added that the pandemic underscored the importance of achieving change, making the system more efficient and attacking each area of market failure to give us the quickest way to having a better health care system.
“If you spend a lot of time arguing about something that may not happen or that is completely disruptive, you have an opportunity cost of not having a better system in place as soon as possible,” he said. “I think we kind of all wish that right now we had a better system already in place, and I think it’s imperative to get that better system as quickly as we can.”
Antos said that with health care, most people are responsive to cost but only the cost that comes directly out of their pocket, and we do not have a good understanding of what we are buying and what it is costing in total.
“It’s a gigantic problem, which can be addressed in a number of ways. Certainly the standard economist’s recommendation, which will never be taken by any politician, is to reform the tax benefits for employer-sponsored coverage,” he said. “Those tax benefits promote inefficient health care, promote overly generous coverage and it’s also unfair because people with higher incomes get a better benefit from that tax break than lower income people.”
Antos added that there are a lot of reasons to address these tax issues but politicians are a little “allergic to the issue.”
Gordon said, “We can’t count on just the competition among insurance plans … we really need to start addressing the relationship between hospitals and doctors and insurers because that interaction is really what drives the U.S. to have so much higher health care spending and health care prices than they have over the world.”
Optimal policies, Gordon added, would be policies that impose some kind of regulation or “box” around providers and insurers so they can negotiate on a more even playing field.
“This would be something like, as the paper points out, reference pricing … that’s a way to structure the market to where the choice is a little more meaningful and we’re not losing a lot of money because some hospitals can basically demand any price relative to insurance companies because they have so much more power in that relationship,” he said. “We would have to do something similar with prescription drugs.”
Hear more on Facing the Future. I host the program each week on WKXL, NHTalkRadio.com (N.H.), and it is also available via podcast. Join me and my guests as we discuss issues relating to national fiscal policy with budget experts, industry leaders and elected officials. Past broadcasts are available here. You can subscribe to the podcast on Spotify, Pandora, iTunes, Google Play Music or with an RSS feed. Follow Facing the Future on Facebook and watch videos from past episodes on The Concord Coalition YouTube channel.