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Most standard questions aimed at presidential candidates in recent years have sought affirmation or denial of standard propositions. For example: Do you favor repealing or extending Obamacare? Would you ensure near-universal insurance coverage? Do we need more federal regulation or greater state-level discretion?
That or they try to generate advance signals about near-term tactics. For example: Should we increase or trim taxpayer subsidies? How much should price variation be limited or curtailed? Are coverage and care goals better achieved through regulatory mandates or market-like incentives?
However, this is getting well-worn and generic, if not a little hackneyed, for these questions tend to obscure more basic dividing lines between candidates, and how candidates are likely to think about health policy and frame any plans for future changes. Of course, our vast accumulation of laws, regulations, institutions, entrenched interests, vulnerabilities, and evidence-free assumptions constrain any sort of “blank sheet of paper” rethinking in this sphere of politics. But we might better predict how candidates will proceed if we ask them the following five questions:
Although many additional layers of complex calculations must be transferred or delegated to other parties in making health care purchasing and treatment decisions, the most important one that sets the table is: Who controls the money up front and then attaches strings on how others might receive it? In the United States, about 45% of all health care spending flows directly through government channels as outlays. Two major entitlement (automatic spending) programs – Medicare and Medicaid – account for most of that total.
However, when one combines those figures with implicit public spending through tax expenditures (primarily for employer-sponsored health insurance but also more recently for subsidized exchange-based coverage through the Affordable Care Act), the public share of health spending moves closer to 60%. The public share of implicit and explicit share of health spending grew substantially for more than five decades before the ACA was enacted and implemented. An even larger share of almost all health care spending – particularly its allocation and pricing — is substantially influenced and shaped by government regulation. Moreover, less than 11% of all health care spending is paid for out-of-pocket by individuals.
Future political decisions by a successful presidential candidate will help determine whether these trends toward greater control of health spending by third parties – particularly government ones – continue, slow, or reverse direction. They include such issues as : the role of Medicare Advantage private plans in overall Medicare coverage of our aging population; the pace and structure of future expansion of Medicaid; limits on the amount of tax subsidies for high-cost private health plans or high-income individuals; and wider availability of tax subsidies for health savings accounts.
The important political decisions involve more than just the kinds and levels of health care that are indirectly subsidized or directly financed by federal and state governments. They also include decisions determining which, if any, intermediaries and political filters will stand between an individual and initial control of the health care dollars allocated for their benefit. Will health care spending be directed more, or less, by individual consumers/patients, their medical providers, their insurers, their employers, or government program administrators and regulators? It matters how much and in which ways candidates differ regarding whether they believe a) that third-party experts and interests – either public or private – know better what is best for the health of individuals or b) prefer to maximize the decision making role of individuals through greater choice, control, information resources, and self-help tools.
Most presidential candidates limit their health policy reform goals to needing either to insure more Americans, lower health care costs, provide more covered benefits, or increase choices — sometimes (without acknowledging tradeoffs) they aim for all of them at the same time. What a candidate wants to accomplish most of all, however, should help determine which policy steps are more likely to achieve them and what they might need to sacrifice along the way. Political shorthand tends to focus candidates much more on inputs and good intentions than on measurable results (i.e., at least we “tried”). Making few, if any, commitments to help produce better health outcomes enables candidates to remain less accountable for connecting political means (redirecting resources, redistributing incomes, and altering market prices) to medical ends (improving and maintaining health).
Presidential candidates should be pressed more to explain how their policy goals would improve the “value” of the health care choices available and accessible to Americans, rather than just their cost, quality, or quantity in isolated silos. Of course, doing so would also delegate more of those ultimate determinations to the varying preferences of hundreds of millions of Americans. Empowering them more fully would disempower political gatekeepers. It also would redirect many health policy debates away from arguing over the nominal amount of money we spend on health care and toward whether we are getting enough value for those investments. Although making and disseminating those measurements would require a more extensive and effective infrastructure for collecting and analyzing health care data, it also means deciding on whether a single set of politically mediated bureaucratic answers is better than a more competitive, open-ended trial and error search for diverse and customized ones.
It’s not a “breaking news” development that our nation’s long-term health care spending commitments remain on course to outpace future rates of national economic growth. The imbalance between large health care entitlement programs and the revenue dedicated to finance them is a chronic problem that will become more acute in terms of mounting budget deficits and public debt in the decades ahead. Presidential candidates looking beyond the next election cycle (perhaps a null set?) should signal whether they see this problem more as a shortage of revenue, an excess of health spending, or a need to get more for less (without resorting to magical thinking about efficiency gains).
The first approach may hope to rely on transfers of other people’s money to make the full costs of health care less visible to favored constituencies. Those transfers shift costs rather than lower them. They also incur other offsetting costs — the dead weight losses of higher taxes and a larger share of government-allocated spending that reduces the future pool of available resources, the crowding out of other spending priorities, and the increased politicization and centralized control of personal health care choices.
To the extent that candidates instead propose to slow the future rate of health spending, they should address whether they will focus more on the demand side to dampen consumption (by increasing cost sharing and reducing public subsidies) or redirect it from higher-priced products and services (by applying tighter price controls, utilizing less-transparent regulatory cross-subsidies, or imposing higher taxes more selectively).
Policy choices for supply-side incentives and constraints aimed at curbing health spending growth might include, on one hand (the more invisible one): easing market entry by new competitors; or perhaps adopting value-based reimbursement and competitive bidding practices in public programs, increasing cost transparency, and leveling the regulatory playing field for all purchasers and providers. On the other (more visible) foot are candidates more reliant on the workings of government bureaucracy. They might favor trying to keep incumbent providers on a tighter leash with administered prices, while managing and endorsing “innovative” changes from the top down.
Of course, the dividing lines between various demand-side and supply-side incentives and interventions are not so distinct, because they interact and can either magnify or negate each other. Their effects tend to be incremental and ephemeral, because neither health care needs deferred nor health care costs shifted produce substantial, permanent reductions in future health spending growth. Relying solely on these two types of policy levers also tends to overlook other serious distortions in current resource allocations for health care: A bias toward ameliorating present problems at the expense of increasing future ones, and overinvesting in the medicalized claims of the elderly while uninvesting in building the long-term health and human capital of younger generations.
The direction for necessary re-balancing of private and public spending to improve and maintain health is much clearer than the relative magnitude of those reallocations. Any presidential candidate who attempts to frame this question must overcome serious political risks in order to deliver much larger rewards. One helpful first step is to re-examine how most individuals would spend their own money, instead of other people’s money, in making longer term choices and then empower them more to do so.
Although the Affordable Care Act achieved some early success in 2014 in expanding health insurance coverage for the previously uninsured, the overwhelming share of those gains came from two categories: low-income Americans enrolled in Medicaid under more liberalized income eligibility rules, and lower-income enrollees in highly subsidized exchange-based insurance plans. In 2015, further increases in coverage of the previously uninsured began to plateau. Limiting factors include the combination of rising premiums for many exchange-based plans, modest interest by individuals and families who were only eligible for much smaller premium subsidies, and very little, if any, interest by the unsubsidized uninsured. The end of several types of risk protection subsidies for exchange-based insurers in 2017, plus further repricing ahead based on several years of poor claims experience, suggest that the higher-hanging uninsured fruit remains even further out of reach. Even millions of otherwise-eligible Medicaid beneficiaries remain uninsured.
However, some opponents of Obamacare maintain that they cannot succeed politically in repealing most, if not all, of the Affordable Care Act of 2010 unless the latter’s insurance purchasing mandate and premium subsidy provisions are replaced with other reforms that guarantee that just as many, if not more, Americans will remain insured. They also hope to replace less-attractive ACA coverage offers – either through Medicaid or health exchanges – with more appealing private sector insurance options. The primary reform proposed on this front involves default auto-enrollment of the uninsured into limited-coverage plans whose premium matches the amount of available public subsidies. Other potential reforms rely on rather heroic assumptions that various policy changes (interstate competition in insurance sales, state-level insurance reform, rearrangement of income-based insurance subsidies into fixed-dollar tax credits for individual market insurance, elimination of essential health benefits mandates, or expanded access to more generous health savings account subsidies) will both reduce the minimum threshold costs of coverage and the remaining number of uninsured individuals.
Relying on the ACA’s individual mandate penalty not only remains the most unpopular part of the health law; it’s also relatively ineffective at increasing coverage of the uninsured. In 2014, about 7.5 million Americans paid a penalty for going without insurance. An additional 12 million received exemptions, most because the insurance options available to them were not considered “affordable” under ACA rules.
Default enrollment proposals hope to harness the inertia of those currently uninsured and reverse it in favor of limited coverage, by assuming that few individuals will opt out of insurance that does not cost them any extra money in unsubsidized, out-of-pocket premiums. This superficial ploy may gain some currency with official scorers of nominal coverage take-up and budgetary cost effects, but it also risks undercutting the more principled case against an individual mandate.
A simpler approach, albeit without the same artificial guarantee of whatever-it-takes shallow coverage gains, might involve better targeting of premium-support subsidies for basic coverage. The latter’s lower costs could be achieved either by greater cost sharing, narrower provider networks, more limited benefits, or the less-explored territory of selling to individuals health care products and services at a price that they actually are willing to pay! Remarkably enough, the latter practice has been known to succeed in many other sectors of a market economy.
Both elegantly simple reforms and more intricately planned sweeping transformations of health policy tend to carry the same genetic defects: inattention to getting from here to there without producing too many losers, triggering a political backlash, developing unworkable complications during implementation, or delivering unintended damaging consequences. Presidential candidates need to pay far more attention than campaign speeches will ever acknowledge out loud to what the body politic will tolerate in disruption of settled arrangements but accept in smaller and slower doses. They also should remain more modest in what they expect of the working machinery of government administration.
A better approach is to signal the direction, purposes, and ultimate benefits of policy changes, but allow for longer transition times, initial testing, more incremental adjustments, and early feedback along the way. Our political system does not respond well to leaders who only know how to floor the accelerator or slam on the brakes. Effective transmission of significant policy reforms in health care, as in other issue areas, will require shifting through several gears as they start slow, then pick up more speed.
Then again, most vehicles for health policy reform tend to have lots of backseat drivers and plenty of airbags on board already. Better buckle up, and brace for the curves ahead.
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