We’ve Got You Covered: Rebooting American Health Care is a study in contrast. On one hand it is a chatty, easily accessible look at the failings of the US health insurance system by two of the nation’s best young health economists. But behind the one-liners and informal presentation, it proposes a highly provocative, radical alternative to our current mess.
Liran Einav of Stanford and Amy Finkelstein of MIT would combine a global health budget with universal, free, basic care for everybody. No application needed. However, people could purchase additional insurance that covers what the basic plan does not, something like what Medicare Supplemental ( M edigap) does today.
And to the horror of nearly all health economists, they’d provide first-dollar coverage, with no co-pays or deductibles, for that basic care. This runs counter to decades of research, including by the authors themselves, that shows when consumers pay out of pocket for health care they will buy less of it. And those choices significantly reduce costs without creating worse health outcomes. The evidence of this, they say, “is overwhelming.”
Free Means “Free”
Yet, the authors say basic insurance should be free. And by free, they mean totally free.
Here is their logic: While significant cost sharing lowers overall health costs, it also sticks low-income patients with big medical bills they cannot afford, which defeats the purpose of universal access. On the other hand, very modest cost sharing might be manageable for most but wouldn’t reduce overall costs very much. And some of the very poorest still might not afford care, which again is counter to the idea of universal access.
Why universal coverage? The authors argue that the revealed preference of the US already is to provide such care, but in a chaotic, wasteful and—for patients—most dangerous way possible.
For example, hospitals are required by federal law to treat anyone who walks in the door. Then we leave it to the hospitals to bill the uninsured, who can’t pay. Another example: There is no insurance for many people at high risk for diabetes. Thus, they put off care and get sicker. But once they go into full-blown kidney failure, Medicare pays for everything, including expensive transplants.
Their conclusion: Let’s just admit we want to provide at least some medical care to everyone and do it in a common-sense, rational way.
But Einav and Finkelstein have come to believe the only way to fix the US insurance system is to blow it up. No more patches and ad-hoc fixes that inevitably fail. Just throw it out and start from scratch.
As radical as their solution is, this slim volume is not intended to solve all the problems of the US health care system. Fixing insurance is hard enough.
Einav and Finkelstein correctly anticipated that some critics would complain that their idea would create a two-tiered health system. Those who could afford supplemental coverage would get better care than those who have only basic insurance.
Their response: We already have a two-tiered system—one that is especially irrational. Let’s at least make it coherent. Everyone would get the care they need. But only some would get the care they want. In our current system, many fail to get even the care they need.
That won’t satisfy Sen. Bernie Sanders (I-VT) and other advocates of unlimited care for all. But it has the virtue of being affordable.
What Is Basic?
Einav and Finkelstein leave many critical details unresolved. For example, what does “basic” mean? Well, it probably doesn’t mean private hospital rooms and hotel-quality food. It probably does mean longer waits for elective surgery and primary care referrals for specialty care. But basic can mean whatever we want, as long as we are willing to pay for it.
They also are agnostic about whether this universal system would be operated by competing private insurance plans (think Medicare Advantage) or whether it would be built on a Sanders-like traditional Medicare for all chassis.
They note that countries such as England provide single-payer universal coverage while Switzerland and Israel rely on private insurers. Each has flaws and benefits.
Costs And Benefits
While I was reading We’ve Got You Covered, the dean of health economics, Victor Fuchs, passed away. I couldn’t help thinking about Fuchs, who also wrote accessible books about the US health system that asked the crucial question: Why do we pay so much for such poor results? And who, along with Ezekial Emmanual, two decades ago proposed a voucher-based plan for universal care.
I suspect Professor Fuchs would have liked We’ve Got You Covered even though he’d disagree with some of its conclusions.
You may too. In fact, you probably will. But if you care about your health insurance (and who doesn’t), you’d do well to give this provocative book a read.