“I document a large and mounting body of empirical research that shows that key market-based policies in health care have failed. Even if well intended, these policies have often not helped people make meaningful choices of medical care or insurance plans. And neither have they controlled spending, as experts promised.
In fact, they are doing exactly the opposite. They are setting people up to make poor choices and are scaffolding a massive, ineffective market bureaucracy.
One-third of people said they would rather file their taxes than read the terms of a health plan. And reams of studies summarized in my article affirm that people do not choose well among health insurance plan options, and these errors are hard to remedy with anything short of a strong default plan—in which case, one must ask whether “choice” even matters.
Likewise, even when people have to pay a large share of their own medical care and have easy access to price information, they still do not compare prices or choose the lowest-price options, even for services with little variation in quality. One partial explanation is that health care patients look to doctors—not price lists—to steer their care. Patients lack the desire, time, knowledge, and skills to navigate medical decisions as “consumers.”
The focus of the last several decades of health regulation has been to try to fix broken markets and flawed consumers through constant regulatory, technocratic tinkering—either to spur competition or to nudge consumers toward better choices. This tinkering has fallen short, and it has produced a massive market-based bureaucracy.
Thick layers of government regulations and regulators attempt to scaffold failing market-based policies. Plus, this scaffolding has deeply embedded private health care enterprises—with high profits and salaries—into the bureaucracy. As one example, the 2018 salary for the CEO of Blue Cross and Blue Shield of Michigan was recently reported to be $19 million, which is not an unusual sum among health care executives.
Because markets do not meaningfully enhance choice, do not avoid bureaucracy, and have certainly not solved cost problems, it is time to stop tinkering and to seek a better foundation for the next era of health policy and regulation.”
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“It is time to give up the false hope that health care markets and individual purchase decisions will produce a health care system that Americans want and, in the process, drive down spending. Policymakers have spent a half-century avoiding the hard questions about what values, objectives, and tradeoffs should guide health policy, by hoping that markets would magically answer these questions.
The reality is that the only way to build effective health policy—and, in turn, health regulation—is by engaging deeply in these hard questions and the challenging political battles they necessarily provoke.”
“Before being able to break ground on a new hospital there, Piedmont Medical Center had to navigate the state’s Certificate-of-Need (CON) process, which in this case required going all the way to the state Supreme Court to fend off a legal challenge from a competitor. All that to build a 100-bed facility that the South Carolina Department of Health and Environmental Control had determined, all the way back in 2004, was indeed needed in the region.
Unfortunately, “need” is not enough in many cases. Like how zoning laws and mandatory environmental reviews might be well-intentioned policies but are frequently wielded by “not in my backyard” (NIMBY) activists as a way to tangle new development in costly piles of red tape, the CON laws on the books in many states can be used by existing hospitals to delay or prevent new facilities from opening.
That’s exactly what happened in Fort Mill. A hospital chain based in Charlotte challenged Piedmont Medical Center’s plans for a new facility, then sued to block the state’s decision to give Piedmont permission to build the hospital. The litigation cost thousands of dollars and delayed construction by several years. Researchers at the Americans for Prosperity Foundation, a free market think tank, argue that even the threat of such lengthy, expensive reviews ends up deterring investments that would otherwise take place.”
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“Artificially limiting the supply of health care services can be a major issue when a pandemic or other emergency strikes, of course, but CON laws harm public health even without the help of a novel coronavirus. States with CON laws have higher mortality rates for patients with pneumonia, heart failure, and heart attacks, according to research published in 2016 by the Mercatus Center, a free market think tank that argues for repealing CON laws. Other studies show that CON laws contribute to health care shortages in rural areas because they force medical providers to focus on wealthier, more populated areas in order to make up for the added costs imposed by the CON process.”
High-Deductible Health Plans Reduce Health Care Cost And Utilization, Including Use Of Needed Preventive Services Rajender Agarwal et al. 10 2017. HealthAffairs. https://www.healthaffairs.org/doi/10.1377/hlthaff.2017.0610 Does High Cost-Sharing Slow the Long-term Growth Rate of Health Spending? Evidence from the States Molly Frean and Mark
“The Affordable Care Act offered states a huge infusion of federal money to expand Medicaid eligibility to low-income adults, and about 30 states took that deal right away in 2014. Since then, new medical debt in those states has fallen 44 percent, a dramatically bigger drop than was seen in the states that refused to expand the program over the same period. Those states showed only a 10 percent decline.”
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“nonmedical debt had fallen by similar amounts in expansion and non-expansion states over the time period they studied, 2009 to 2020, strengthening the case that Medicaid expansion was the difference with medical debt.”
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“In states that expanded Medicaid, both the lowest- and highest-income groups saw their medical debt drop after expansion, but the amount of medical debt added annually decreased much more for the former (by $180, from $458 to $278) than the latter (by $35, from $95 to $60).
In non-expansion states, on the other hand, the lowest-income group averaged a $206 average increase in new medical debt, from $630 to $836. But the highest-income bracket still saw a small decline in new debt for medical care.”
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“Those states are concentrated in the South. Eight of the 12 non-expansion states are in the region. Nearly one in four Southerners have some medical debt in collections listed on their credit report, compared to 10.8 percent of people in the Northeast and 12.7 percent in the West.”