We've Got You Covered

[Music] [Music] [Music] [Music] [Music] sh [Music] [Music] [Music] [Music] [Music] [Music] [Music] e [Music] [Music] [Music] good afternoon everybody and welcome to the KO Institute I'm Michael Cannon I'm the director of Health policy studies here at Koo and I'm very excited to be here today I've been looking forward to this day for a long time because now uh at the KO Institute I'm finally able to have a one-on-one conversation with who I think is the top health Economist in the country uh mit's Amy finin uh I've been a big fan of Amy's for some time and now she's given me an excuse to have that conversation with her she and her uh colleague luron anav of Stanford University have published this book we've got you covered we're going to be discussing that book I was excited to see this book come out because because uh Amy has been and her colleagues have been doing what I think is the most uh important work in health economics over the past 10 15 or whatever years maybe even 20 and and that has incl included such hits as you've probably uh heard of as the uh Oregon health insurance experiment a randomized controlled trial of the effect the effects that giving health insurance specifically Medicaid coverage to low-income adults had on their well-being and on health spending and other measures but also uh studies that uh uh ask really interesting questions that it seemed to me that very few people in the health economics essential questions that few in the health economics profession were asking like what sort of impact has the Medicare program had on elderly mortality or how has uh health insurance ex uh the expansion of health insurance over the latter half of the 20th century affected Health spending in these and many other studies uh Professor finlin has uh not only been asking the right questions but coming up with really in Innovative and imaginative uh research designs that have enabled her and her colleagues to answer questions that I think that uh others have not so all throughout uh uh this uh uh my my my Amy finlin Fanboy them I've been wondering uh because in her empirical work she is uh she's strictly a social scientist where do her policy preferences lie if if Amy finlin could reform the health sector how would she do it and I have to uh admit I was a little bit surprised when I read the book and found the answer and we're going to be talking about uh about that today because uh What uh uh professor frl and her uh co-author Professor anav propose is not what I would propose at all it is instead let me see if I'm getting all the adjectives right here Amy a uh automatic Universal compulsory taxpayer Finance basic health insurance for everybody okay so uh the way this is going to go is uh uh I'm I'm very eager to have this conversation with Amy first we're going to hear from her presenting uh the main themes of the book I'm G to have some questions for her uh about the book after that and then we're going to open it up to questions from uh the audience both in person and online if if you are joining us online uh then I believe uh the way to ask questions is well it's right there on the KO web page where you're joining us online okay so uh oh no it's right here on my not in my notes online audiences may join the conversation and submit questions directly on the event web page Facebook YouTube and on X formerly known as Twitter using the cast the hashtag Koh Health okay so with that I'm going to turn things over to Professor finlin Amy thank you for joining us thank you and thank you for that uh overly generous introduction I have to say at this point I'm now kind of eager to skip my presentation and go to your questions because no no no you got to s for your supper as I was going to as I will explain in the presentation I actually would have thought this proposal would appeal to you something we discuss a lot in the book that although the notion of universal coverage is traditionally associated with left Wing progressives it actually has a huge amount of intellectual support from uh uh proponents of small government and Libertarians so we'll get into all of that uh let me just uh give you guys a very brief overview of of the argument of the book and then we'll have a have a discussion about it uh this this is as Michael mentioned is joint work with my long-term co-author luron anv and as Michael also mentioned um you know for the last 20 years we've been working in US Health policy and health economics but always from a very narrow perhaps even esoteric academic perspective um and we were sort of as we describe in the prologue goed by my father-in-law being like come on but what's the solution and I being like well it's hard you know I don't know it's complicated um to actually try and think about how could we provide a framework for the solution and once we uh started doing that the answer to us at least was so both startlingly simple and so very different from anything we'd been working on or thinking about that we felt uh compelled to write a book about it so let me just give you a brief overview of the book uh it's in three parts the first is describing uh the problems of the US Health Insurance system many but not all of which I think are familiar to people and importantly why we don't think further incremental patches of reforms will work and then what we do is we take a step back and say well if we need to have a radical reform or really any reform it's important to ask what is the goal of US Health policy and that I think is sort of startlingly missing in in many policy discussions people argue about you know the pros and cons of health savings account or Single Payer Medicare for all or whatever the current you know uh policy dat is about without without ever articulating what is the purpose what are we trying to accomplish uh once we do that to us at least the solution was fairly straightforward and so uh and I'll go through that briefly in the last part of the book and then turn it over to Michael to eviscerate me all right so uh just just to start uh we we articulate three main problems with the US Health Insurance system the first which I'm sure everyone is aware of is the fact that even after the passage of the Affordable Care Act which was supposed to enact Universal coverage uh one in 10 Americans under 65 still lack health insurance that's the I think one of the things that gets the most policy discussion but one thing that we think is really important and that gets very little discussion is that a much larger share of Americans we estimate one in four Americans under 65 uh are going to spend some period of time uninsured over a two-year period uh and that's not a trivial amount of time of a couple weeks while they're changing jobs you for half of them it'll be more than six months for a quarter of them it'll be more than two years in other words Insurance whose very purpose is to try to provide some modum of stability or certainty in an uncertain world is perversely highly insecure and uncertain uh for the half of Americans who have privately who have uh employer provided health insurance they can lose their coverage if they retire if they change jobs uh if they lose their job perhaps because of health problems for the one in five Americans who have Medicaid the public health insurance for low income individuals they can lose their coverage uh either because you know their age or their disease status or their income changes or everything stays the same and they're still eligible but they've just failed to file the paperwork they have to file every year to show that they're still eligible so that to us is the second big problem and by the way although as many people know the Affordable Care Act cut in half the share of Americans without health insurance at a point in time moving it from about one in5 to 1 in 10 it basically didn't move the needle on this second number the one in four Americans under 6 who will lose their health insurance or spend some time without health insurance over a over a two-year period and that's precisely why we started thinking about why we fundamentally have to rebuild from scratch because the way our health insurance system has been created is a series of different policy patches that have come in at different points in time to cover a particular group with particular income or age or disease status or or situation and whenever you have these sort of layers and layers on patches you're going to have gaps in the seams where people fall through the coverage crack or uh people uh don't even realize which of those various patches are the way that they get uh to be eligible for health insurance a I think very sobering statistic is that of the one in 10 Americans who are uninsured at a point in time six and 10 of them are actually eligible for free or heavily heavily subsidized health insurance they just don't have it because maybe they didn't realize they were eligible or they failed to you know file all the paperwork to get eligible to get covered or they uh you know did that but then failed to recertify so that to us is is a huge problem and then the third problem that I just want to quickly highlight is the issue of medical debt remember health insurance is supposed to be a financial product protecting people economically uh against uh catastrophic medical expenses and yet not only is there an enormous amount of unpaid medical debt um researchers have estimated that it's that prior to the pandemic it was about $140 billion dollar in unpaid medical debt held by collection agencies which to put that in perspective is as much as all the other Consumer Debt held by collection agencies for non-medical purposes combined so it's really large the really striking fact to me and Lan which we only realized in doing the calculations for this book is that three fifths of that medical debt is incurred by people who actually have health insurance at the time that they're uh incurring the health care services and yet because of you know the move to high deductible health insurance plans and employer provided health insurance the untapped cost sharing in Medicare physician payments even people who are fortunate enough to have coverage and maintain that coverage can find themselves facing crushing medical debts so in all three of these ways the system we think you know pretty obviously is not functioning as as it should um we also discuss in the book how we got here and I won't spend too much time on it except to say that as I mentioned earlier um our policy history or was not you know ever a we're going to set out a coherent and carefully planned uh blueprint and then implement it instead it's been cobbled together as a series of patches as different individuals or uh groups gained salience their plight you know caught a policy window and specific uh policy was passed for them and that's sort of how we have this rubbe Goldberg machine of of patches that punches you know below its weight I just want to give you two examples because these patches are not only the underline the problem but I think they also tell us the first hint of what it is American Health policy has been trying if failing to do for the last 50 to 70 years and I think that's very important if we're going to think about how to reform it so I'll just give you two two quick examples this is a cover from a Life Magazine from 1962 that caused a huge out outcry by revealing the existence of this secret Committee of seven people in Seattle there was a doctor a housewife a banker different people on the committee who were charged you know with deciding who should live and who should die what was the backstory to this a hospital in Seattle had invented a life-saving technology uh to for people with endstage failure uh you know it now as dialysis uh but they it was extremely expensive and they couldn't afford to just give it out for free to everyone so a committee was formed to decide who should get this technology for free this life- saving technology and this prompted huge outright outcry to think that you know in 1962 here in the very United States of America people were dying for lack of being able to afford a life-saving technology uh caught the attention of a senator from Washington one of who whose childhood friend was on that weight list uh prolonged lobbying campaign including a dramatic moment in which uh Advocates brought a patient on a stretcher into a congressional committee and dialyzed him in front of the committee to dramatize the situation and ultimately in 1972 Congress responded by expanding Medicare coverage to also provide coverage for anyone with endstage renal disease now you might think okay why just endstage renal disease and not also you know diabet I abetes or you know lung cancer but at least for these people you know now they're covered uh not so fast there are at least two problems with this uh proposal or this this policy one is that you're only covered once you have endstage renal disease and this is true of many many US health insurance policies we were shocked to realize there's separate programs for people with breast and cervical cancer with tuberculosis uh with HIV now with covid you know with lugar's disease the list goes on and on but of course you have to be sufficiently sick to get coverage so you won't have coverage for what could be uh health care that could prevent you from advancing to an end stage the even more bizarre point and this is a feature of all of these different disease specific coverage programs is that if you're fortunate enough to get a kidney transplant which is even better than dialysis for your long-term Health well that's great for your health but it's terrible for your health insurance because now you no longer have endstage renal disease because you have now a fun functioning kidney and you lose your coverage despite the fact that you have to you know spend tens of thousands of dollars on immunosuppressant drugs for the rest of your life and and there are many many examples like this just to give one other because again I think it it illustrates uh what we've been trying to do uh this is a picture of of Ronald Reagan uh hugging a disabled child named Katie Becket shortly after you know Reagan who had been inaugurated in January uh famously declaring that government is not not the solution had within less than a year prompted his administration in Congress to find a governmental solution to Katie becket's problem what was her problem she was a disabled child who could get Medicaid coverage if she stayed in a hospital or nursing home but if her parents brought her home to care for at home which is what they wanted to do then in calculating her income they would also count her parents income and she would no longer be income eligible so Reagan directed First's Administration and then Congress to pass these Katy Becka waivers allowing low-income disabled children to be cared for at home uh and still gain have their Medicaid coverage also sounds like a nice policy the problem it only covered children and at the time children with Katie's type of disability tended not to live very long fortunately there was a lot of medical techn technological progress Katie herself lived to age 34 but once she aged out of childhood when she got her 18th birthday she lost her insurance coverage that had been designed to cover children so I I think these examples and we go through many in the book sort of show you know the futility of this incremental patching approach that always leaves gaps at the seam but as we emphasize in the book and the reason we spend a fair amount of time on these is they also are I think the first part of the indication of what it is that these policies have been trying to accomplish all of these are examples of somebody in a you know diely ill who cannot afford the medical care that they and their family want them to have and what they reveal we argue in the book is an implicit social or empirical social contract that fundamentally uh we we are going to provide we as a society and as taxpayers are going to provide access to Essential Medical Care regardless of resources now that may seem like an odd uh statement to make about the US which is famously the only country high in in country without Universal coverage we also have a strong and proud tradition of Independence Frontier Spirit pulling ourselves up by our bootstraps Etc uh but as we argue in the book um this is this is very clearly evident not only in all those that history I just described to you but even going very back back to the very dawn of the Republic with the growth of hospitals uh which started in the early 19th century primarily as a form of charitable care for people who were ill and destitute through what was considered no fault of their own therefore shouldn't be put in the poor house and instead charitable hospitals sprung up to take care of them if they didn't have family around which was the primary form of Medical Care at the time because as this quote from the book on uh by Charles Rosenberg on the history of Hospital says fellow creatures could not be allowed to die in the street and that is a I we were really glad to see that he had written this because that's how we had been talking about it and we felt we we can't say that in the book that basically our social contract is to not let people die in the street but someone else said it so that that made it more convenient for us um in modern times you see this as well uh and we make the argument in the book that no one is actually uninsured for their medical care what would it mean to be actually uninsured it would mean that any medical care they got they'd have to pay for that's not what happens Michael mentioned the Oregon Health Insurance experiment which I helped run which looked at what happened when some low-income uninsured adults were randomly given Medicaid coverage and some were not and the result that I always thought I knew from that experiment was well when you randomly assign people Medicaid coverage they use more care they use about 25% more care but if you just flip that on its head the other way of saying that is those who remain uninsured are using about 80% of the medical care that they would use if they were insured and now here's the kicker if you look in the data they're paying for very little of that care themselves we estimate and others have estimated as well they're paying only about 20 cents on the dollar for that care if they were actually uninsured they'd be paying dollar for dollar for their care most tellingly that other 80% isn't just you know private charity at all it's publicly it's public programs that are publicly regulated publicly Finance to step in to try to provide Essential Medical Care regardless of resources when people become sufficiently ill the these are programs that fund hospitals that fund primary care clinics uh that fund all kinds prescription drugs all kinds of care uh so as again we we discussed this more in the book but the fundamental argument which hopefully if I haven't convinced you of now I will you will once you read the book is that as a society we have we have decided that we will step in with taxpayer Finance money to provide Essential Medical Care when people are sufficiently ill and unable to afford it you can like or not like that social contract um I both am sympathetic to it and then also wonder how how we Define you know that we do this in the case of medical issues and not other issues but what we take in the book is that you don't have to like it it's just empirically what we do and then we make the argument which is not actually that novel an argument it's been made throughout time and it's been embraced by people as I was saying across the political spectrum that if fundamentally we are going to step in with taxpayer dollars to provide Essential Medical Care regardless of resources we might as well finance and fund that commitment upfront through Universal basic coverage and this is actually an idea that goes back to the dawn of the Republic the United States was in fact the first country to to to uh pass national compulsory tax financed health insurance and they did it in 1798 uh for for in an act for the for the relief of sick and disabled seamen uh the idea was that seen coming into ports around the country away from home and the standard of Care at the time would fall ill and become a burden on the local community who would feel compelled to take care of them and as Alexander Hamilton uh argued um you know given that we were inevitably going to uh fund them because you know the interests of society depend on it they're very needy and and Worthy class you know to protect them from misery it makes sense to make the sailors uh pay for that upfront and then use the money to pay for their care and so they had six they had a tax a payroll tax of six cents per sailor per month at se handed over to the Customs agent every time a ship arrived in Port and that money was then dispersed to fund uh local hospitals to pay for the sailor's care when they inevitably became sick and couldn't pay for it themselves and this idea that if fundamentally we're going to provide taxpayer dollars uh to provide care when people are sufficiently ill and unable to uh afford that care themselves is something that in modern times has been embraced across the political Spectrum uh including for example Republican Governor Mitt Romney this was his uh major argument for mandatory health insurance in Massachusetts which predated the Affordable Care Act I was also uh struck that um Charles Murray at the Heritage instit Heritage Foundation who argues for a universal basic income of $113,000 a year as a way of getting the government out of people's lives let's dismantle the entire bureaucratic welfare state give everyone back their cash and let them do with it what they want even he makes one and only one exception and that's that he's going to take $3,000 of that $113,000 back and use it for compulsory health insurance why because he recognizes that even if everyone has income and the potential means to Prov to buy health insurance if they don't and then they end up sick uh inevitably we're going to step in with taxpayer financed resources so that's the basic argument the only other thing which I won't go into detail on that we we spend some time on in the book is saying that while it's important to be clear on the uh function of health insur of government intervention health insurance it's also important to be clear and and humble about you know what it is that health insurance won't accomplish and we can talk about this more in the Q&A but we argue that somewhat ironically given its name that health insurance is not actually the secret to promoting health or reducing Health disparities and for people who are concerned about issues of the poor population Health in the United States or the huge disparities in health in health across income and racial groups the place to look is not to our health insurance policy but to to other potential policies which which we can talk about so if you by the argument that the purpose of universal uh the purpose of health insurance policy is to make sure that everyone has access to Essential Medical Care regardless of resources then as Michael already said the solution is extremely simple we haven't yet been able to fit it on a bumper sticker but we've got it onto a slide uh Universal coverage that's automatic free and basic and then uh because our our social contract is about a standard of adequacy not about equality um we would then want people who can afford it and want more coverage to be able to supplement that in a well functioning uh Market which economists love to design and we spend time on that in the book but in the interest of time today I just want to focus on those uh three key elements that Michael highlighted the automatic free and basic I think the automatic point is the easiest uh if we if we if we want everyone to have uh coverage we need to make it automatic we've already as I said enacted Universal coverage we just haven't achieved it and so we need to do what we did with Medicare in 1965 for physician and H for Physicians and hospitals where it just was essentially automatic at 65 and everyone had it let me pause for a moment on free because as a health Economist coming out and saying that anything in the in the basic Universal coverage should be free to the patient no premiums of course because that would interfere with the automatic part but also no co-pays no deductibles no cost sharing that's about as close as professional to professional heresy as you can come as a health Economist right Health economists myself included have argued for decades about the virtues of copay and deductibles in in health insurance coverage this actually goes back to a debate between uh Nixon and Kennedy the different Kennedy Nixon debate this was between Ted Kennedy and Richard Nixon uh when in the early 1970s both uh the the Democrats led by Kennedy and the Republicans led by the Nixon administration had competing proposals for Universal coverage on the floor of the US Congress and one of the key sticking points was whether or not to introduce copays or deductibles in that coverage with the Nixon Administration arguing that we need people to have behave judiciously and the amount of medical care they get they need to have some Financial skin in the game and Kennedy and the Democrats and the labor unions arguing this is ridiculous people only get medical care if they need it and if they need it they get it regardless of the price it's not like oh colonoscopies are on sale today I think I'll go get one uh and therefore all you do with copays and deductibles is increase the risk that patients bear you don't actually introduce reductions in health care spending this prompted the uh launch of the Rand health insurance experiment and Decades of work after that that has made some of which my co-author and I have done many of which much of which has been done by other people all of which has made abundantly clear that Nixon was right Kennedy was wrong if you if you have to pay something for your medical care you use less of it and this has prompted generations of economists to argue for cost sharing and health insurance so that people as I said have some Financial skin in the game I've made this argument myself I've lectured generations of students on this as says lauron and in this book we say unequivocally we take it back we we can't at least when this advice comes as it often does in the context of universal health insurance systems and the reason we do is not because we were wrong about the fact we stand by our research and that of many other economists Nixon was right when people have to pay something for their medical care they use less medical care but rather because we've seen what has happened in countries around the world that have followed the advice of economists and in order to re in health care spending have added co-pays in or deductibles into their Universal basic coverage plans and it's amazing what happens in country after country they introduce the cost sharing with one hand and they introduce the exceptions and the exemptions with the other hand why because there are always going to be people who can't afford even a five euro or five pound co-pay and if we have a cont a social contract that we these people should be getting care we're going to have to introduce the exception so for example in the UK which introduced cost sharing for prescription drugs they also introduced exemptions for people who are poor for people who are old for people who are young for people with cancer for people who are students for veterans the list goes on and on at the end of the day 90% of prescription drugs in the UK are dispensed to people who are Exempted from the cost sharing so all you've done is create a lot of administ ative hassles for the state also for the patients and their doctors and you're not actually reducing Healthcare use not because copays aren't effective but because they're not effective when they're not operable and we've seen this in country after country France for example which famously has quite high cost sharing in its Universal system 30 to 40% Co insurance for some types of procedures and tests they also have taxpayer financed coverage of that cost sharing for low-income individuals and then they have tax subsidies and other regulations to try and encourage employers to offer uh coverage for that cost sharing to employees the end result being that 95% of people in France do not face this cost sharing so we come out for free because that's where we're going to inevitably end up and let's not create the patchwork mess that we currently have to get there the last thing I want to say about this plan is you know it's always fun to stand up and say Universal and free but we also have to be clear about the the basic part and we have a chapter in which there housing metaphor throughout the book and we say basic coverage is going to be a shack not a chateau it's going to our social contract is about providing Essential Medical Care not a high-end experience uh there are many countries around the world that do this Singapore and Australia being two where you know for example the universal basic system can get you coverage uh of hospital care and you'll recuperate in a ward with 10 beds and what in Singapore and notoriously hot and humid climate they refer to euphemistically as natural ventilation if you buy the supplemental coverage you get the same you know surgeon and the same hospital care but then you can recover in a private room with air conditioning with a private bath and better food basic coverage would also be basic in terms of you know ability to choose any doctor you want and wait times for non-urgent care they would be closer to what we currently have in Medicaid or in the coverage for the veteran administration which are longer than what we have in in Private health insurance uh and that's why we estimate that about 70% of the population would purchase supplemental coverage but again if the if the purpose of health insurance is to provide access to Essential Medical Care weight times that are longer than desirable but are still deemed reasonable for non-urgent care are acceptable and we make the analogy in the book to the economy air travel that has taken over Europe if any of you have had the fortune or Misfortune to travel on one of those Airlines you know it's not a high-end experience we'd all like more leg room free Wi-Fi unlimited unchecked bags but if the social contract was to deliver people from by plane from point A to point B they deliver on that and for those who want more they can upgrade to business class the final thing I want to say uh while before turning it over uh is something on budget I should I should have said at the beginning that luron and I decided that our remit was to try and understand what an ideal system would look like freed from political constraints but we certainly were going to hold ourselves to economic constraints and of course one of the you know biggest concerns in US Healthcare is the high rates of Health Care spending here's a quote from Vic fuches um who's known as the grandfather of Health economics he sadly passed away a couple months ago at age 99 as he was revising his textbook may we all be so lucky um and he notes that the US Healthcare System system is in crisis pointing to the soaring costs but he actually noted that in 1974 uh when us Healthcare was only 6% of GDP so we've been in crisis for a long time we're now at 18% of GDP the sky's been falling for a long time and we argue in the book that well this is a very important problem it's not when we know how to solve and it's not when we have to solve to achieve what we want to achieve on the coverage front for one very simple reason we all know that the US spends twice as much as any other high-income country on Healthcare as a share of the economy but I think what's less appreciated is that in all these other high-income countries essentially all of the healthcare spending is taxpayer financed so they're spending about 9% of GDP on taxpayer financed Healthcare well in the US half of healthcare spending is taxpayer financed so half of 18% is also 9% so that's Medicare Medicaid tax subsidy to employer provided health insurance in other words we're already spending as much as other countries are spending on taxpayer financed health care so we're already spending what it cost to get Universal basic coverage we're just not getting it and that's because we're choosing to spend that money differently on for example a Medicare system that is way more generous on many dimensions than basic coverage would be and yet less generous on others because it has these high cost sharing agreements and doesn't cover you know most of the country so let me stop there we talk about the design of supplemental coverage in the book um we end by briefly in the epilogue discussing the politics of how we could get to Universal coverage we don't have any magic uh bullet or even any particular insights on this the one thing I would really emphasize is I think this is the important place to end the discussion not to begin the discussion it doesn't make sense to me to talk about what we think is feasible today or might be feasible in the future which I find always very hard to predict without first having Clarity on what the ideal is so then we can either try and find policy Windows to introduce it or if we inevitably have to compromise uh we at least know what we're compromising because we know what the ideal is so I will stop there and uh turn it over to Michael on the rest of you thank you Amy um and uh I want to uh offer a note to our uh interweb audience uh because of technical incompetence apparently I've been publishing your questions on the website before they were ready and they've disappeared from my tablet here but our crack team of it and social media folks are working on it so that we'll get your questions in front of me and uh until that happens I've got some questions uh for Amy um uh F first just a couple clarifying questions before some more challenging questions uh uh would it be fair to say that under your proposal everybody in the United States would be eligible for something like Medicaid for all very much so with the uh essentially is Medicaid for all except for the fact that unlike in the current Medicaid Program where you can't supplement Medicaid if you want something that's a little um more coverage than Medicaid you have to give up your Medicaid coverage and repurchase what it would have covered but otherwise yes we would allow you to supplement or top up but yes you can think of this as Medicaid for all with a supplement like they can do in Medicare exactly yes okay so Medicaid just to clarify Medicaid is a joint Federal state health insurance program for sensibly for low-income individuals the Medicare program is for uh a universal Federal program for uh uh the elderly uh people with endstage renal disease and uh the disabled um and uh about Medicare uh under your proposal would Medicare become less comprehensive for enroles so it would be as I said we estimate that about 70% of people would buy supplemental coverage because the basic would be less than what they currently have in some Dimensions uh and that so for those without insurance currently or for those on Medicaid currently they would be unambiguously better off and not by necessarily supplemental uh both because they have coverage and they don't have the risk of losing coverage and they can supplement if they want for the 50% who have Private health insurance they'd be uh basic coverage would definitely be worse in the sense of being much more basic less coverage but it would be better in the sense that they wouldn't risk catastrophic out-of-pocket spending for anything covered by it that it's considered essential and they wouldn't risk losing it and for for the fifth of the population on Medicare to your question it the coverage would yes be much less basic but it wouldn't have this you know unlimited you have to pay one in every five dollar of any physician bill out of pocket so no risk of having tens of thousands of dollars of medical bills if you have a sufficiently expensive Illness but overall government would spend less on Medicare enroles yes okay uh and uh in order to shift those resources to the uninsured and people with uh to provide the basic coverage for with private insurance okay uh and and so per enrol Le spending in Medicare would go down uh what about um what about physician prices and these are just to sort of uh uh paint a picture these question I just wanted to uh uh convey just how uh big a change this would be for uh enroles and and Healthcare Providers uh Healthcare Providers uh in Who currently participate in the Medicare program what would this proposal do to the prices that they receed for the services they provide to enroles in the basic so we don't actually think that this necessarily would be very disruptive on the provider side it could be if we chose to make it disruptive but it doesn't have to be and one reason is we we deliberately and you can view this as a feature or a bug we view it as a feature we deliberately take no stand on a lot of these delivery questions of you know would the basic coverage be publicly provided or privately provided or a mix of both would it be Single Payer or multipay or how much would uh you know Physicians be paid because there are a lot of different ways that you can structure it and if you look to countries around the world you see many different different viable models everything from you know single public payer public employees as you have in the UK and as we have in the Veterans Administration in the United States to systems like the Netherlands or Switzerland where you have competing private insurers providing the universal basic coverage they're pros and cons to each of those systems and again either of them can deliver on the social contract plus you have to remember that 70% of the population so basically everyone currently on private insurance or Medicare we estimate is going to buy supplemental coverage and one of the things supplemental coverage does in many systems we talked about Israel Singapore Australia in the book is pay more to doctors to get you know their choice of physician or to be able to jump the queue um or to get you know better accommodation so it's not totally clear to me that there would have to be any major disruption in how the vast majority of uh Physicians practice and are paid okay so now for uh uh my hopefully more challenging question well I wanted to first uh praise the book uh in a number of ways first of all uh what I loved about it was uh it's bold it doesn't Begin by asking what's politically feasible I think more people should do that it begins by asking what is right uh and it really does swing for the fenses as those questions tried to convey this is a radical proposal it would be very disruptive uh for a lot of people but I still think more Health reformers should follow this Approach at least begin with you think the ideal World should uh an ideal world would look like uh it would clarify Health debates probably make them less boring uh and and even if an a proposal is politically infeasible I think I still think it has value because it does something that your more mey mouth politically feasible approaches cannot they give us an opportunity to ask okay what are the political constraints that would prevent this from happening and I think in that uh in that examination there's education to be had about how the political system makes decisions and what different types of proposals are worth pursuing dur through the political system and which ones are not I I also love that the book is unusually honest for a book that uh Advocates a robust role for government in healthcare it is unusually honest about how government operates in healthcare it uh it and and about health insurance as well uh you and uh uh luron make the point that it uh will that health insurance will not eliminate Health disparities you're honest about past efforts to use government to fill in the cracks in the US Health sector that you that there are gaps in Medicare coverage there are gaps in the no surprises act that mtala which is a condition that Congress places on Medicare spending that says that emergency rooms have to screen and stabilize all patients regardless of ability to pay that that law did not accomplish its goal uh honest about the marginal benefits of uh of additional health insurance I love the metaphor of Amy's hat thank you Amy's mom for that one and uh that we already have a public option uh in the Medicare program and that Medicare is already a voucher program uh I I try to convince people of this all the time and it's it's hard and this is going to make it a lot easier so thank you for that and we were talking about this before I love the blind dead notes I hope the KO Institute will adopt those uh now uh things that I uh can I just so thank you for all of that I just have one slight quibble sure but it may be an important one you said for a book that argues for a robust role for government you're you know surprisingly candid and honest about loss of government failures I'm not sure we are arguing for a robust role for government well compared to my role for government it's very robust well but as I as I said you know again this can be done um through you know private private insurers competing over providing the basic plus the supplement what's what was amazing to me is you know I saw as we walked in there's something named after hyek out there even this entire Auditorium okay even hyek you know who who rails against the British National Health Service corrupt I mean or inefficient you know government medling public employees it's awful you know even he says but we should of course have Universal Health Insurance just not delivered that way so you've got Charles Murray you've got Frederick Hayek you know you've got a lot of famous proponents of liberal govern government sorry of limited government all of whom are agreeing with the point or articulating before us we're agreeing with them the point that fundamentally as a society since we step in with taxpayer financed resources when people are ill we might as well Design This coherently so how would you make that LE when you say you want less of a role for government what do you have in mind none of all those uh libertarian or quasi Libertarians that you mentioned none of the studied Healthcare in any detail right that's my my role and mine and so and so I like being able to disagree with uh Hayek on occasion and I do have he does come up in my questions okay so uh uh things that I like less about the book is that there wasn't and this is a very hakan point there was no examination of prices uh you just take the prices that exist in the US Health sector as given uh it also doesn't examine or ask whether uh the what you call the empirical social contract I'll have more to say about that in a moment might be causing the problem that you're trying to solve of sick people being unable to afford the care that they need uh it doesn't examine uh what would prices be if the if social contract adherence had just left Healthcare alone or uh how your proposal would determine or possibly distort prices similarly no discussion of quality and the uh empirical social contracts impact on on that and whether it might be contributing to those Pro problems uh the analogies you you only touch on health Care Quality in passing or the quality of health insurance even in passing and the analogies uh that use are not encouraging you talk about the ability to to top up uh uh if you everybody gets the basic automatic coverage that's kind of like Medicaid for all but unlike Medicaid they can top up by purchasing private insurance you say much like the government provides basic education but people can per uh purchase additional instruction or go to a private school or government uh provides uh defense defense Council to uh uh to all defendants but if you want to Pro uh uh pay pay for your own uh Council you can do that same with police protection uh you can purchase additional Security Services I read though and I thought my God each of those each of those uh areas where government gets in involved in um uh in providing what you might call a positive right to education a civil right to uh to um uh defense Council or protecting fundamental rights when it comes to police protection the quality of the government is providing in all those cases is alarmingly poor so uh I I would have liked to see more of an examination of how the uh empirical social or or how the empirical social contract has already U uh impacted the quality of health care or how it might in the future um let's see can I say something go ahead as I'm jumping to the the first actual question okay go ahead so just so so first of all I completely agree with your point that um there are many examples where uh the government u in providing uh or guaranteeing Services is doing a woefully inadequate job and we gave those examples knowing that I think the question is always relative to what where starting with a system in which as I tried to detail at the beginning you have people who don't have insurance you have people who are cycling uh through Medicaid programs and constantly losing coverage relative to that we're lifting up the bottom obviously it would be great if you know that bottom could be even better but I want to be we tried we wanted to be realistic we didn't want to promise a Panacea when we weren't going to be confident we could deliver one we still think public education uh is better than uh not having uh any education for the many people who would probably not have it if we didn't have publicly provided education so that gets to your other point which I just wanted to fly which you kind of hinted at which is and this is something I've thought about and worked on which is maybe the problem is the government right the if only the government weren't stepping in to provide you know back stop coverage uh if you're sufficiently ill people would buy health insurance right I don't think we have a ton of good evidence on that one way or another it's a reasonable conjecture it's also a reasonable conjecture that they wouldn't but I think what's very clear both in our history uh in our in in a bunch of uh work in psychology and social psychology is that if somebody doesn't we are going to step in so just saying oh if we only get rid of government everyone will buy health insurance and then we don't have to like have this you know you know sort of back stop solution I think is is unrealistic and as I said I think that's where Charles Murray was coming from when he said I want to get the government out of people's lives except for compulsory health insurance although I agree with you that he does not he is not a health Economist okay so my next question SL challenge sort of touches on that uh one argument for government subsidies for healthcare or Universal government subsidies is that there could be or should be a social contract where the government and the citizenry enter a compact everybody pays into some government program that guarantees healthcare for everyone and the government makes that Arrangement mandatory so there the usual objections into the sort of social contract theory or just justification for government intervention one is that you know if I don't have a right to refuse it's not a contract no one asked me to participate you won't find my signature on any on any social contract and if I didn't consent it's not a contract uh Hayek I think made the point or I've been meaning to look up I've heard I want to confirm I want to look this up but it's almost too good to to check that he said that one of the best ways to bleed a word of its meaning to invert its meaning is to put the word social in front of it think think contract think security think science uh even if there should be uh uh and even if there should be a social contract where everybody comes to the aid of the vulnerable it doesn't follow that government is necessarily the best mechanism for for uh to fulfill that commitment but uh you and your co-author go further you argue that not only uh should there be a social contract but there is a social contract whose existence and shape we can observe and validate empirically and here I want to quote from the book you say there's an enduring but Unwritten social Norm that the US has been trying to fulfill universal access to essential basic health care regardless of a person's resources the empirical social contract under which like it or not the US operates and that our country has always tried to provide Essential Medical Care for those who are ill and un unable to provide for their own care I noticed uh at least two times in the book you said that uh you use that word always public policy has always been pushing in that direction and you site there's lots of data consistent with that hypothesis you had some of them in your uh uh PowerPoint presentation the Medicare program itself plus its expansion to the disabled cover the disabled and people with endstage uh kidney failure uh Medicaid and its various expansions to Children uh the Katie Becket uh uh waiver that Ronald Reagan uh affected uh to the infirm to pregnant women the medically needy and most recently able-bodied childless adults the Ryan White AIDS program Co programs and so forth so the the throughout your book The the empirical social contract is really sort of a motivating force it's almost like an invisible hand that is guiding public policy to fill in the cracks in the health sector uh and because you say the public policy is always moving toward that goal but my question and challenge is do the data actually support your hypothesis of an empirical social contract because because when uh there are lots of instances where public policy does not try to provide Essential Medical Care to those who are unable to provide for their own and instead does the opposite and in many cases government subsidies and regulation create the leaks and squeaks that the data you're sighting is trying to uh trying to plug and trying to grease uh so for example government licensing of clinicians creates gaps in the health sector it increases prices it creates shortage of medical shortages of Medical Services blocks quality Innovations uh the uh government regulation of health insurance creates gaps by pring health insurance Out Of Reach of millions uh we've had already a discussion about the tax exclusion for employer sponsored health insurance which to my mind is the most harmful thing the government does in healthcare it increases creates gaps by increasing prices making uh uh leading people to purchase excessive coverage and insecure coverage that disappears when they lose jobs when they retire uh the FDA creates gaps by increasing drug prices suppressing the creation of beneficial drugs uh President Obama and President Biden have literally proposed and President Obama did do this throwing sick people out of their health insurance um and and so even within the data that you support in that you cite in support of the empirical social contract hypothesis we can see public policy creating gaps in the health sector Medicare and Medicaid through various mechanisms increase prices for Private health insurance and private uh Medical Care uh Congress you know effectively repealed obamacare's individual mandate which undermined that theoretical social contract States uh frequently cut people and services from their Medicaid programs states are currently dropping millions of people from the Medicaid Program so and even many of the examples of gaps in the US Health sector that you cite in the book are gaps that public policy created and not just government you know dropping people uh but people losing their health insurance because the government compelled them to enroll an employer sponsor plan so ra uh where so these are examples I think where government is not and public policy are not trying to prevent people from dying in the streets but are actually causing people to die in the streets because they cannot afford uh Medical Care use another metaphor which is I think you used it in your presentation too that is like whack-a-mole there it's like that like public policy like whack them we see these problems coming up and the government is trying to solve them by whacking down all of these moles that just keep on popping up but uh it seems that also at the same time the government is doing that it's also running a mle bre reading program so there are more and more moldes popping up all over the place so my question is after that long long Prelude is it fair to say then that when your book argues that we can empirically observe that there is a social contract in the United States that the United States has always tried to pursue that it's only looking at data that confirm that hypothesis and not looking at the other side of the letteror so I think this is a really important point in the sense of as I tried to convey in my talk if you don't buy that we have been trying to do this then I think all of the argument for what we're what the solution is you know is on much shakier or no ground so it's it's very good for you to highlight this I guess I want to say two things first we try and I believe in other parts of the book that maybe you didn't quote from we make it very clear that we say this is the empirical social contract we have been trying but but failing uh to to uh honor so I don't think it is fair to to say you know look at all these ways the government policy has screwed up therefore there can't have been some underlying motivation if it was screwing up that that particular you know goal just because policy doesn't achieve its ends doesn't mean it wasn't trying uh or that it wasn't doing other things with a different part of its you know uh bureaucracy that was you know undermining it because the one hand wasn't thinking about what the other hand was doing um that being said I do think you are very right it is it is it is a challenging thing to argue that we need reform to fulfill a social contract that we haven't fulfilled well then how do you know we have it is a fair point right and you know we spend a lot of time in the book I guess not only on the policy history that I went over very briefly um and not only on the current state of policy where as I said much to my surprise so much of the the the uninsured get a lot of Medical Care on that ends up being being taxpayer financed uh but we also talk a lot about um the psych the sort of universal psychology behind this and how it has uh affected other aspects of our public policy we drawn the work of uh Michelle daber who's a legal uh scholar and a sociologist who talks about uh F the history of Federal disaster relief in the United States which to me was shockingly parallel to our healthare policy it also dates back to the dawn of the Republic it also has what she refers to is This Disaster narrative where we can't help but send you know FEMA in and then with with you know the governor in a hard hat when anyone has when when when a you know hurricane has devastated you know New Orleans but you know somehow uh then we fail to actually uh do anything to try and prevent that from happening again or or dealing with the underlying chronic conditions so at some deep level you have to be right in the sense of we're arguing that we haven't fulfilled the contract so we can't point to its dispositive evidence that it exists because it currently we haven't fulfilled it we think that if you look if you think about human nature and human psychology and we talk about this in the book and if you think about this all of these public policies there does seem to be that contract but if you actually believe that there's a parallel universe in which a modern US Society could you know tie its hands and just say sorry we gave you that basic income you didn't buy health insurance nothing for you I I don't think at some deep level I can you know that's a counterfactual world that we haven't seen but I I'm surprised because that's of of the many criticisms we've gotten of the book uh I guess I had to come here to hear that one well good I'm glad you're here so uh and but speaking of of of psychology and uh the the mechanism by we try to effectuate this hypothesized uh social contract um you do have as I mentioned a lot of data that you cite in the book uh data points that show that policy makers do try to fill in gaps in the health sector do try to provide Health Care to people who are um uh who are a desperate need of healthcare but unable to afford it Katie Becket Ryan White so forth uh and the political system does respond when you know you're uh when all of the uh uh when all the when everything falls into place when you have uh uh you know a sympathetic uh individual or group uh with with some political cache maybe your childhood friend is a US senator and you want to and that helps to get a government program expanded it helps to uh uh get government subsidies for that particular need the political system does not seem so good at uh at identif or identifying and solving problems that affect large numbers of people where there aren't uh where the stars don't align so we've had this discussion before and I think it's pretty fair to say that most health economists agree that the tax exclusion from employers by sponsored health insurance has been very harmful uh and one of the reason is that it's been harm I've mentioned a couple of them it increases prices uh it it uh it uh encourages and as prices for medical care and health insurance so it makes it harder for people to afford Medical Care and then sometimes they just lose insurance entirely because they lose their job or their employer uh drops coverage or they retire um and even though there's near unanimity among economists that this has been harmful and that we should and that Congress should change the tax exclusion for employer sponsored Insurance because it's causing all of these moles to pop up Congress does not do that instead the political system just tries to knock out those moles it seems to be better at responding to uh discrete issues uh where additional resources could do some good but ignoring uh much larger problems W that uh uh that the government itself has created what is what does it say about the wisdom of using government or the political system in order to try to uh fill in the cracks of the health sector uh it shows this obvious by is for ignoring for focusing on small problems where uh where the the the right number of factors just happen to align in order to Spur uh government to action and ignoring much bigger problems that actually give rise to all of those smaller things is there a is there are there uh psychological biases or institutional biases at work there that just make this a poor tool for addressing these problems or or effectuating a social contract I mean there's there's two versions of that one is you know it's well known you know basic political science that you know there there's an incentive to pass uh you know programs that have an identified narrow group of beneficiaries who can you know say look now I have this coverage and diffuse the cost to everyone else so that's a well-known problem in political science I'm not sure that that and and the US I think compared to most countries has historically been more incremental and less radical in its policy that's not to say we never have radical policies I would say the int you know the introduction of Social Security the introduction of Medicare and Medicaid would be two counter examples but there's two different versions of your question one which is how could we ever get this politically when we tend to do the incremental uh I guess my answer would be um well that's why one of the reasons we're writing the book to try and change the conversation but the other version of your question is well just government you know if I if I read between the lines government like never gets anything right why would we expect them to get this right and I guess you know there my response would be I'm not sure what the alternative is if you agree that in fundamentally we have this social contract now maybe you don't maybe you think that we could you know get rid of government intervention in health insurance and not feel as taxpayers compelled to act when there are people who are you know sick and poor and unable to afford Medical Care part of the reasons for the examples in the book including The Merchant Marine in the 18th century including the people dying of endstage renal disease was to try to show that I think we think that actually we can't do that that we won't stand idly by um if you agree with that what is the solution if not to have government mandated Universal coverage so I wasn't going to do this but as it turns out I I have a book out too that answers that question I wasn't going to plug my own book at your event but I have a book out that answers that question and the uh the the response is that of course Perfection is not an option because we're humans and human institutions are never perfect uh but we can strive toward Perfection uh by trying to fill in the gaps in the health sector so that fewer and fewer people fall through over time and the way way that that happens is with quality improving and cost-saving innovations that where we've Market forces uh have been given room to breathe in the US Heth sector we've seen Market forces generate and that that that process that system will drive down prices so that more people can afford Medical Care fewer people fall through the cracks that way while improving quality so that uh even if some people still cannot afford Medical Care on their own it is far easier for everyone to uh for for that number of people uh who cannot afford the medical care they need on their own is much much smaller and the rest of us have an easier time providing it for them because we're wealthier we're not spending as much on health that's great I think I agree with you let me just let me just be clear so you you do you do agree that if there are some people even in this much perfected much more efficient lower cost higher quality system there are some people who still can't afford health insurance or M misguidedly choose not to buy it um that the there will be some taxpayer financed care for them not necessarily taxpayer financed if we could get to a world where the government was not doing all of the things it's currently doing to increase prices is to reduce quality make health insurance insecure all those moles popping up all the mole breeding program if we could get rid of the mole breeding program and then uh we saw that there were still you know uh there are fewer people falling through the cracks but still some people uh I would be happy to have a debate over whether taxpayer financing of meeting their medical needs would on balance improve things or make things worse uh I think that that government program would be much smaller than what we have than any government program program we you see right now uh it would be an open question as to whether it would be at the State uh at the federal level the state level or even the local level or whether introducing those government programs would uh have unintended consequences that would not leave people better off on net it would crowd out private charitable effort it would lead to uh uh uh lobbying uh to affect the parameters of that program its effect on the private Market that would actually cause the gaps in the health sector to widen so uh I think the I would be happy to have that debate but I I think there's an Impulse behind it that says okay so if we did that then we could fill in all the gaps I think that is still the pursuit of a a Nirvana that's just not going to exist when what we should be aiming toward is a system that automatically fills in those gaps so that fewer and fewer people fall I mean let me completely agree with but now we're talking about what I think and not what you think but related and I'm happy to talk about it in the sense of taking a step back there are two huge problems with the current US healthc care sector the one that we're talking about in our book which is the lack of uh real Insurance health insurance coverage that's supposed to be functioning as actual you know economic protection and that's why we don't emphasize just people who lack health insurance at a moment but the risk of losing your coverage the risk of having to pay large amounts out of pocket even if you maintain your coverage but the second elephant in the room is the fact that we spend so much on health care and much of it is poor quality and most policies you know if you look at sort of the the Clinton era push for healthcare reform or the Obama era push they link those two together um we deliberately separated them uh a because we as we explained and I just explain we think they are separable but there is no question I could completely agree with you if we can get healthc care if we can deliver the same quality at lower costs or better yet better quality at lower costs not only is that just better in and of itself but it certainly makes any coverage problem easier I'm not I didn't have the same confidence in the clarity and of the solution on insurance coverage than you seem to have on on the health how to fix Healthcare delivery but if there's a solution to that you know sign up because that certainly makes the I agree with you completely that certainly makes the coverage problem easier okay I'm I'm triaging my questions now because I have so many but we're running out of time and I want to get to audience questions uh and you teed up one of them which is the book doesn't address Cost Containment either I mean correct uh uh it it or how to uh either how to reduce prices or to eliminate unnecessary medical spending says there isn't good evidence on what works uh my question for you is isn't there because if you look at the Rand health insurance experiment the Oregon Health Insurance experiment and the dartman atls don't they all show there uh there is good evidence on what works uh Rand shows that cost sharing at least for the non-poor uh reduces unnecessary medical spending without impacting health for the average in uh for for the average patient Oregon shows that actually not expanding Medicaid at least to uh not to child disable bodied adults doesn't have much impact on the physical health no discernable impact on physical health outcomes of the enrolled and Dartmouth shows that limiting spend in high spending parts of the country would have no impact on uh on their health or their satisfaction with the care they're receiving um so isn't there evidence there uh from those three I think reliable Bodies of Evidence so all of the I mean what you gave was a not unfair summary of of those three bodies of evidence but I think it's incomplete I think the there's an enormous amount of evidence some only some of which we talk about in the book because my co-author kept saying let's focus on what we are doing and what not on what we're not doing um which is that take cost sharing for example that you know there's what we increasingly see is that if you introduce cost sharing or you introduce Managed Care on the supply side yes that cuts back on you know care that's considered wasteful but it's kind of a blunt instrument it also Cuts back on care that is um that is uh that is considered valuable and essential in other words we don't really have the tools to know how to like you know design either demand side or supply side policies to to you know uh make sure we don't throw the baby out with the bath water and I guess on specifically on what you said I think in both Rand and the organ experiment and the Oregon experiment I obviously know better since I ran it I think the measures of Health are are quite limited so we don't we we didn't find any dispositive evidence but we don't I don't think it's there's a lot of other evidence that shows that when you introduce cost sharing ing you people cut back on what is generally considered and maybe they're wrong high value care as well as low value care and on the Dartmouth work which I've also done some work on yes I actually became convinced through additional work that I and others have done that it looks like um you know there's a lot of uh spending that could be cut back I don't again I don't think we know how we don't know what we would have to do to make high spending Minneapolis which is spending twice as much on the same Medicare and rolly as Miami and not producing any better outcomes we don't know how which have to right it's like that old saying in advertising we know half of all advertising expenditures or waste we just don't know which half right I don't think if you made me king of the world or I would venture you as well you would know what to do in Minneapolis to make them look like Miami but I want to Sor the other way around Miami I want to push back though on what you how you describe the Rand health insurance experiment and its results because I think this is a common misinterpretation and misrepresentation of the results of that study what it found was that yes uh enroles cut back on all types of Health Care uh high value and low value care and they it appears it appears in the data that they were not very Discerning and yet even though the uh the researchers found that they cut back on high value care that they could find no evidence that that harmed their health and it and uh the lead researcher for the Rand Insurance experiment Joe new house and his colleague said this was wasn't just because uh or we don't think this is just because uh uh there's there was no high value care there was high value care there but we believe that when they cut back on all medical care they were cutting back not just on stuff that does nothing and not just on high value care but also on harmful care that left them worse off and that's where the Net Zero result came from we don't know how much high value care they cut back on but to the extent they did it was completely offset by cutting back on low value care so so that to me suggests that if you have cost sharing like they had in the Rand health insurance experiment that doesn't throw out the baby with the bath water which is the metaphor you use in the book the baby's fine the baby ends up fine what you're throwing out is yes a lot of low value care and yes some high value care but you're all throwing out so much uh uhow uh Danger is harmful care that the baby is fine so if you can comment on that let me say two things so one um as we as I was trying to argue in the book is that if you know you believe that we've convinced you of this social contract Andor you look at the examples of other countries uh we just think that in the basic coverage cost sharing is Impractical it always gets Exempted in the supplemental system for anything that's not considered essential we're all for the market and the custom customer deciding what kind of cost sharing they want separately on the specific point of the Rand health insurance experiment the reading you're giving is the reading I think that the uh investigators gave to it and that you know I think I also had and taught for years I think that's been that's been undermined recently by the growing realization and it's a general problem for health economics that um we have fairly low sensitivity measures of Health I mean the the best one we have is mortality and fortunately prime age people have very low mortality and that also let's be clear the Rand health insurance experiment included 2,000 families if you've seen like the recent uh experiment that golden it all did in the IRS with you know uh four million uh you know people and encouraging them to some of them to get health insurance then they detect mortality reductions from health insurance I'm not here to argue that therefore you know health insurance is the elixir of life in fact as you said we argue in the book that relative to the you know vast problems in of of the population Health that exists health insurance has a relatively limited role to play but I think the argument that there are no uh adverse Health consequences of lack of insurance or high cost sharing has not quite stood the test of time when we've expanded to uh much much larger samples that could actually pick up you know what are small but real effects though to be fair that uh the IRS study was um health insurance versus no health insurance where it's Rand and cost sharing okay um and I have more to say about that but uh one last question of mine uh the book criticizes the idea of the deserving versus the undeserving poor is a theme that has come up in welfare policy uh over the decades now when your proposal draws uh an inevitably subjective line between what is basic care that the the universal automatic program will cover and the government so the government will subsidize and what is non-basic care which the government won't subsidize aren't you just substituting your definitions of deserving and undeserving for other peoples so if the if the cut off for basic coverage is uh that we're the government is not going to pay for your medical care if it's going to cost more than $20,000 to keep you alive for a year uh isn't that the same as saying that if it costs $30,000 to keep your mother or your child alive for a year that they are undeserving so I think what we say is you know we have to make a decision as a society of how much taxpayer resources we want to spend on basic coverage we could do it without raising prices uh I excuse me without raising taxes and then it would be fairly basic or we could raise taxes and make it more comprehensive that is a social or political question I think another way of saying your comment is you know when people talk about the language of Rights you know that Healthcare is a right everyone deserves it I don't think rights come without any uh notion of budget or limits and we have to decide as a society what those are we have obligations but they aren't Limitless and that's what the policy and political process is supposed to help us determine in fact one of the things we push for in the book is that the basic coverage have a budget which kind of sounds obvious like what doesn't have a budget well the US healthare system doesn't have a budget when we talk about the Medicare budget we don't mean a budget constraint as in how much can be spent this year it's either how much was spent last year or how much we're guessing is going to be spent next year and yes I think you know policy involves hard choices I'm not sure we have to cloak it in the moral words of dessert but there is going to be a limit to what's in basic coverage unless we want taxpayer Finance basic coverage to creep up to 50% of GDP which perhaps we will decide as a society but I had a question about that too I'm going to defer it sir if you can state your name in affiliation and please State your question in the form of a question um Carl poer I'm a longtime Health policy analyst and now I work on issues having to do with low income workers Center on Capital and social Equity so I'm going to start with a comment I think both of your proposals are very compatible in fact I think I agree with Michael we should get rid of the employer uh exclusion as do I but that would lead to her proposal wouldn't it in that if you the whole we depend on the employer system to cover 150 million people that unravels and you got tens of millions of un uninsured people and you you know you can't make the states do it now the Supreme Court says after Obamacare so the federal government would have to step in so either going to have dysfunctional Healthcare markets in the states or or or uh exchange pick it up so so what that might actually your proposal Michael might be the trigger to make her propos proposal politically feasible and the second thing the second thing that I just a different I'm imagining you know chip conon and all these guys that run all the healthcare lobbies behind you the head of the hospital Lobby yeah I mean um those guy the second social contract that we have is they can make just about as much money as they want in health care and that's that's and that's what Congress listens to that's they pay for that so I just wanted to those are two two points so I'm sorry I went on to it okay thank you uh anyone else in the studio audience crit hi U my name is crit I work here at Ko and I guess myel said my name uh so the analogies you gave for what would be compatible or like comparable to the healthc care system you proposed were police and schooling and I thought guess who provides police and schooling it's not the federal government government it's the state governments so how would your proposal deal with the federal structure of these United States that's a great question um I I think have no view on the important contentious issue of federal versus State when it comes to Health Care uh as we talk about at the very end you could imagine a state doing this uh often states have been the Laboratories of democracy that have prompted action at the federal level if you have a view that we shouldn't have a federal government at all and it should all be the state government you know in a world in which we didn't that's what it was this could be done all at the state level I don't have a strong view you know to the extent I think it's a social contract that applies in all states I'd like to see it implemented in all states but whether that's done without any role for the federal government uh or entirely with a role for the federal government is I think a separable question and we have no particular view on that if if there's a state that's ready to try to implement this we're here to try to help question from the audience watching at home for most people other goods and services housing food utilities Etc are more important than healthare but many people have less access to these than we might like should we then have mandatory minimum insurance for other things too if not what makes healthare special that is a terrific question it's something we struggled with a lot in the book right uh there you know as I alluded to you know if you say we have a social contract to you know provide access to Medical Care regardless of resources what about food what about housing Etc um I think there's several answers the first is uh whether or not you think those are also good ideas uh we believe you clearly you you're going to have to have some form of this Universal coverage and again I gave the example of uh proponents of a universal basic income who say that's you know neither necessary nor sufficient for solving the health care problem because even if people have enough income if they choose not to buy health insurance we're going to feel compelled uh to uh to step in with taxpayer resources so at some level you know this is something I struggled with a lot like why are we writing a book about uh Health Care policy and not only not also or only you know housing food Etc policy and as I said I think the one doesn't preclude the other but it also uh doesn't solve the problems of the other the other thing I'll say which you can take for about as much as it's worth um is if you look to the philosophy ERS as we did in writing this book they articulate the idea that uh education and health what's special about health they would say education and health are special compared to housing food Etc because those are essential for uh equality of opportunity to you know sort of uh have the possibility of achieving your your full potential as a human being so that's the philosophical argument that's been made that I'm just uh repeating I think to me the the key argument is if you want to also solve problems of uh housing insecurity and and uh inadequate nutrition that's terrific but even if people have enough income for all that that's not going to also solve the health care problem so it's special because we have revealed that we step in in a way that we don't always uh when people are hungry or or ill housed all things else equal do a making health insurance compulsory or Rel ly more compulsory so more people are insured and B making more treatments and drugs covered by law so the insurance is more comprehensive SL generous necessarily increase General Health spending holding everything equal increasing health insurance increases Health Care spending and increasing what's covered by health insurance I would suspect would also increase health care spending yes okay uh and this is one of my questions let's uh say that your proposal did lead to an increase in healthc care spending so to consume more of US GDP you health spending is currently at 18% what if your proposal caused it to go to 20 30% of GDP is there a point at which you would say if if I could show you that it would hit that the health spending would hit that level of GDP that you would say nope my proposal is not worth it anymore so let me say two things first as you yourself pointed out it's not at all obvious that our proposal is going to increase health insurance uh Healthcare spending because it's not necess you know you talked about we're going to have a dramatic reduction in the generosity of Medicare um for the uninsured as we pointed out they're already getting 80% of their care actually insured so it's more about making it sensible and efficient than necessarily increasing it second in terms of at what level is it is there too much spending on Healthcare I think you know as that quote I put up from Vic fukes in 1974 indicated people have been saying the level of the share of the economy being spent on Health Care is unsustainable you know for half a century when it was at 6% when it was at 12% you know now it's at 18% uh to me the the the key question and I think you'll agree is to the extent if you can get the employer provided the employer tax subsidy out of this and this is people purchasing health insurance or in my case supplemental health insurance with their own money not taxpayer Finance then I don't care we don't worry about what the share of the economy being spent on you know flat screen TVs are right so I think the key is not what is the share of the economy being spent on Healthcare but what is the share of the economy being spent on taxpayer financed Healthcare I I share your Healthy disregard or the overall spending level on Healthcare I think what MERS is what we're getting for that money uh but there's uh there is a concern that in order to get uh your proposal over the Finish Line Congress might have to buy off certain corners of the health sector now you're getting into politics into politics right right so so which teas up the next question from the from the home audience okay which is that your book like many other reform Advocates argues we should tear everything down and start over when in our history have we done something like that absent a natural disaster or or war or or or something similar doesn't that fact explain why Clinton care never passed but Obamacare did and I would add to that uh that when ObamaCare reduced the future growth of government spending the only way that Congress was able to do that was by promising the health sector $2 in new spending for every $1 it was in spending it was reducing so you know first of all uh I'm you know if you take seriously The View that we never have radical policy unless you know there's a war or some other type of Crisis okay then you know we can wait for that day to come I I refuse I refuse to uh buy into the notion that we can forecast exactly what will be politically feasible when when we were uh pitching this book to Publishers in January 2021 we had several tell us that we had to write the book quickly if they were going to publish it because you know uh uh Biden was going to enact uh Medicare for all within the first 100 days so like what people think is on the table politically and not I think changes a lot over time our goal was not to you know try and figure out how to accomplish something now but to put out what we think is the ideal so that you know as we say in the book to quote Milton fredman so that when the impossible becomes the inevitable there are you know what we think are sensible plans around to guide when there is a radical policy window um I've received several questions along these lines this one is from Matthew M uh who defines basic how is it defined what if there's a $3 million life-saving therapy that suddenly becomes available at what point does that become basic that is a great question we have a whole chapter on that in the book but the short answer is we would do what every other country does a high income country which is first as I said you have to have a budget because we can't even talk about what's included in basic if we don't have a budget that's not what the current Medicare system does by law Medicare is not allowed to cover costs in deciding what to cover uh that would not be our approach our approach would be like every other country which is you have a budget if we don't think that budget is high enough we can vote to raise it but then you have to make hard decisions within that budget and the answer to what happens if there's a $3 million life-saving technology you can see what happens in basically every other country there's a two-step process the first is a technocratic one at which you know um economists and Physicians weigh in on the cost effectiveness of different Technologies and the second stage is some kind of more stakeholder or political process in which those technocratic estimates are inputs but also you know visceral feelings of what is essential as well as politics comes into play even in the UK which is aderes the most closely to the pure coste Effectiveness analysis they've set a higher willingness to pay for endstage cancer drugs than for other things so those are decisions that have to be made they can't be made if we don't have a process and a budget which we currently don't have so Medicare is nuts and spends too much money okay I'm glad I'm glad we've reached agreement I think I'm going to have to bring the whole uh discussion here to a close because we're out of time I want to thank professor finlin and her co-author Lov uh for this book for participating in this this forum coming all the way to the KO Institute to do it uh I want to thank everyone here uh for coming to the K Institute as well as well as our home audience for joining us uh if you're here with us in our studio audience uh we are you can join us upstairs for lunch in the conference center uh and with that thank you Professor thank you very much that was [Applause] great [Music] [Music] uh-huh uhhuh he [Music] [Music] hey hey heyy [Music] [Music] [Music] [Music] [Music] for

Channel: The Cato Institute

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Id: O64gqFp9qGc

Length: 96min 38sec (5798 seconds)

Published: Tue Nov 21 2023