NEJM’s Fundamentals of U.S. Health Policy, Part 6: The Future of U.S. Health Policy

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This is the second last paper in the NEJM series, and I think they’ve done a great job covering the major topics so far to give the “lay of the land” of this incredibly exciting field.

This one, written by Matthew Fiedler, Ph.D., gives an overview of the different camps that are vying for their respective visions of how to reform the healthcare system. And I’ll start by giving a quick summary of all his main points, then I’ll discuss some issues I have with this paper after that.

He first defines the main big-picture policy issues that are being debated by the two competing groups (essentially Republicans and Democrats, although he doesn’t refer to the groups by those names): What role should government play in ensuring broad health insurance coverage? And, How should we cope with the lack of competition in many health care provider markets?

Then Dr. Fiedler explains that the two groups disagree about which problem should be solved first. There’s the group that advocates first for universal coverage, which is because their beliefs are that health insurance substantially improves health and financial security, and that the well-being of lower-income people is particularly important, and that governments should have broad latitude to intervene in the health care system. And the other group, he explains, disagrees, and they instead believe that federal coverage programs, particularly those serving lower-income people, are too expansive.

He then talks more about the first group, explaining that there is actually a division between those who want to expand on the ACA-type approach of keeping the patchwork of coverage and those who want to replace the coverage patchwork with a single integrated coverage program. The second option would be simpler and impose smaller administrative and hassle costs, but it would require higher taxes and greater disruption to existing coverage arrangements.

Circling back to the group that feels that programs that serve lower-income people are too expansive, Dr. Fiedler says that their plan is to repeal things and take away subsidies for helping individuals obtain coverage. That’s why the CBO concluded that their approach would increase the uninsured by more than 20 million (but would also substantially reduce federal spending).

As for the second issue that he defined at the beginning of his paper–that of dysfunctional health care competition–he seems to attribute it to concentrated health care markets (for example, 90% of hospital markets meet the threshold for being highly concentrated), and then he explains the implications of that and approaches to addressing it.

The implications of concentrated markets are, as he explains, that it allows providers to demand high prices from private insurers, which increases the cost of insurance. It may also encourage providers to operate inefficiently and can even reduce providers’ pressure to improve quality because patients’ ability to switch providers is limited.

One approach to addressing this issue is a combination of several efforts, such as strengthening anti-trust enforcement, eliminating other policies that weaken competition (such as certificate-of-need requirements, which limit market entry, and “any willing provider” requirements, which keep insurers from offering providers increased volume in exchange for lower prices), and enhancing price transparency. About price transparency, he says it is pursued in hopes of encouraging patients to seek out lower-priced providers and encouraging providers to price more competitively, “although prior experience with price transparency is uneven.”

Limitations of this competition-enhancing collection of policies are that enhancing antitrust enforcement is too late in already-concentrated markets, and even if the other efforts help, robust competition may not be realistic (or even desirable) in some smaller markets anyway given the fixed costs associated with operating another hospital or physician practice.

Dr. Fiedler then discusses the other approach to addressing non-competitive healthcare markets and their high prices, which is to turn to administrative pricing. This could include price caps, and it could also include a “public option,” which would be a new publicly run insurance plan that would compete alongside private plans, thereby keeping private insurers honest in their premiums. He gives the downsides of these policies, especially that they may decrease providers’ incentives to improve quality because they prevent providers from parlaying investments in quality into higher prices or lucrative new volume, but then he acknowledges that the magnitude of this effect is uncertain.

That pretty much summarizes his main points. On the upside, I think he did a good job approaching the topic in an organized fashion. On the downside, I think this paper was incredibly (yet subtly) biased, which is totally inappropriate for a series of articles that is ostensibly providing a neutral introduction to health policy. This does NOT mean I’m accusing Dr. Fiedler of trying to trick people–I think this paper is simply an accurate reflection of his political influences and his understanding of these health policy topics. The fact that the NEJM editors did not make him change many of these things before publishing this paper is probably a reflection of their political persuasions as well.

This post is already long enough, but I’ll try to succinctly point out some of my main issues.

First, framing the two problems as a coverage issue and a “competition” issue. The second one is not just about healthcare competition. It’s about reigning in healthcare spending, which, if it continues on its current trend, will be the primary cause of bankrupting our country. His narrow focus on competition minimizes the problem, which then undermines the legitimacy of the group that wants to focus on that problem first rather than focus on the coverage issue first. He would have done well to at least parrot conservatives’ statements about not wanting to put even more people into an already unsustainable healthcare system and push us even faster toward bankruptcy but instead to get the costs down first, which would have the side-benefit of pricing many of the uninsured into the system as well.

Next, he describes liberals’ beliefs about the benefits of insurance and their interest in getting coverage for the poor, and then his description of conservatives’ beliefs and priorities is . . . nonexistent, other than to say that they “disagree” and then list all the things they want to take away without providing any rationale for why this might also be a reasonable approach (depending on your core values and priorities). It’s a subtle marginalization of the other side and, unfortunately, reflects all too well our current intolerant political atmosphere.

Another concern, which I’ll make my final concern, is how he makes a show of providing the downsides of his favoured policies but then immediately minimizes them as if to say the downsides are minor, and, conversely, how he describes much more persuasively the downsides of his unfavoured policies without any minimization. A good example of this is his entire discussion about the two different approaches to addressing non-competitive healthcare markets. I’ll spare you long quotations; go read directly from the paper if you have access, starting at the last paragraph of the second page of the article.

I realize Dr. Fiedler did not have room in that article for a thorough analysis of the huge and multifaceted issues he was introducing, so I hope one day to meet him and discuss some of these topics with him. Until then, for anyone interested in a few more details on these topics, here are some links to material I’ve written on these topics before . . .

For how market consolidation fits into our overall spending issues, see here. For a more complete discussion on price transparency, see here and here. For the potential harms and potential benefits of administrative pricing, see here. For some discussion on public options, see here. And for a thorough evaluation of Medicare for All versus other options, see here and here and here and here.

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