March 5, 2020

What economists would change—and keep—about the US health care system

Daily Briefing

    When a group of nearly 200 health economists were asked how they would run the U.S. health care system, their answers did not always follow politically popular positions, Austin Frakt reports for the New York Times' "The Upshot."

    Slide decks: Health Insurance 101

    Frakt's article takes a close look at a survey conducted in 2018 by three health economists from Cornell University, Texas A&M University, and Indiana University. The researchers asked nearly 200 health economists how they would shape the U.S. health care system. Here's what they would change—and keep the same.

    The Affordable Care Act

    A large majority of the economists surveyed said they would keep the Affordable Care Act (ACA) in place, with 89% opposing repeal. A similar majority, 81%, also believed the ACA's individual mandate was essential to the law's success, arguing that without the mandate, healthy enrollees would leave the ACA's exchanges, which would result in a sicker risk pool and cause insurance to become continually more expensive. However, Frakt notes that the individual mandate's "necessity is less clear today" because the exchanges have "by and large remained stable" since Congress zeroed out the mandate's tax penalty—which effectively eliminated the mandate itself.

    Most of the economists also said they would keep the ACA's protections for people with pre-existing conditions, with 80% saying health insurance premiums shouldn't be higher for people with "genetic defects," according to the poll.

    Almost 70% of the economists said they would be comfortable charging people higher premiums if they engaged in unhealthy behaviors, such as smoking.

    However, Frakt notes that members of other disciplines view these so called "sin taxes" differently, arguing that addictions are not necessarily informed choices but diseases.

    For instance, Michael Stein, chair of the health law, policy, and management department at Boston University, said, "Adult addiction to nicotine usually stems from decisions made as a teen, which are shaped as much or more by circumstances than rational thought. Charging a higher premium for a smoker is punishing someone with a disease, so why this disease?"

    Changes to Medicare and Medicaid

    Generally speaking, the economists surveyed opposed most changes to Medicare and Medicaid that they were asked about for the poll.

    For instance, 71% of the surveyed economists opposed basing Medicare eligibility on income instead of age.

    Similarly, 61% opposed converting Medicare to a voucher-based system, which would establish a specific amount the government would pay for health coverage so recipients could shop for different health plans.

    However, several economists supported raising the eligibility age for Medicare, with just about half of the respondents rejecting the proposal, 28% favoring it, and 22% providing no opinion on it.

    The poll authors speculated that while health economists "recognize the value of free markets, [they] also believe that market failures are harmful. In some cases, such as health insurance for the elderly, many economists think that society does best when government provides services directly." Meanwhile, just over half of the economists supported raising taxes to increase finances for Medicare.

    The economists were also asked if they favored Medicaid work requirements, which Frakt writes have been proposed or implemented in 16 states as of the summer of 2019. According to Frakt, 77% of the respondents opposed the plans.

    Similarly, about 70% of the economists opposed Medicaid block grants, which would provide a set amount of money for Medicaid as opposed to open-ended funding.

    Other ways to reduce spending

    Many economists also opposed the current tax exemption for employer-sponsored health plans, with just 14% favoring the current tax structure. According to Frakt, some economists argue the tax break can lead to health plans that are overly generous and ultimately create wasteful health care spending.

    In addition, nearly half of the economists disagreed with the statement that drug company profits are needed to incentivize research and development. Twenty-eight percent agreed with the statement and 24% provided no opinion on it.

    Ultimately, Frakt concludes, "If health economists were in charge of the health system, not a lot would change, with some notable exceptions. Medicaid would not have work requirements … , and taxes would go up for Medicare and for employer-based health insurance" (Frakt, "The Upshot," New York Times, 2/17).

    Have a Question?

    x

    Ask our experts a question on any topic in health care by visiting our member portal, AskAdvisory.

    X
    Cookies help us improve your website experience. By using our website, you agree to our use of cookies.