Is the Health Care Policy Focus Shifting from Access to Cost?

Is the Health Care Policy Focus Shifting from Access to Cost?

Timothy Taylor 04/07/2019 5

In my experience, complaints about the system of health care finance over the years almost always began with the lack of universal health insurance coverage, and how many tens of millions of Americans lacked health insurance. Then, somewhat later in the conversation, the high per capita costs of US health care spending might or might not come up.

The Patient Protection and Affordable Care Act of 2010 was a reflection of these priorities. The strength of the legislation was that it increased federal spending by over $110 billion per year to cover an expansion of health insurance for about 22 million people. But in terms of controlling health care costs, not much happened. US health care spending was 8/9% of GDP in 1980, 13.4% of GDP in 2000, 17.3% of GDP in 2010 when the legislation passed, 17.9% of GDP for the most recent data in 2017, and projected to hit 19.4% of GDP by 2027 by the Centers for Medicare and Medicaid Services. One can argue back and forth over whether this increase in health care spending as a share of GDP has been worth it, but you can't argue that health care costs have held steady or been reduced.

But there are some glimmerings that health care costs are becoming a more prominent and focal issue. For example, West Health and Gallup published "The U.S. Healthcare Cost Crisis" (March 2019, free registration required to download). Based on a nationally representative survey in January and February of this year, here are some findings:

  • "Indeed, when given the choice between a freeze in healthcare costs for the next five years and a 10% increase in household income, 61% of Americans report their preference is a freeze in costs. This sentiment runs inversely to income: Among those low-earners with annual household incomes under $24,000 per year, two-thirds would prefer the rising cost of healthcare be fully curtailed for five years over a pay raise. Even among high-earning households with annual incomes of $180,000 or more, there is majority support for frozen costs over increased wages, which would represent at least another $18,000 per year."
  • When asked ""Relative to the quality of care, do you think Americans generally are paying too much, too little, or the right amount for most of the care that they receive from the U.S. healthcare system?" 76% of Americans answer "too much."
  • "77% of Americans fear rising healthcare costs will damage the U.S. economy, and 45% fear a major health event will lead to bankruptcy."
  • "47% of Americans never know what a visit to the emergency room will cost, and 41% report forgoing care in an emergency department due to cost in the past 12 months."
  • "Americans borrowed an estimated $88 billion to pay for healthcare, and 65 million adults report having a health issue but not seeking treatment due to cost in the past 12 months."

Other reports are emphasizing cost reduction, too. I wrote earlier this year about how the Society of Actuaries and Henry J. Kaiser Family Foundation have created Initiative 18/11, where the numbers refer to the fact that the US spends about 18% of GDP on health care and other high-income countries spend about 11%, to consider ways of holding down health care costs. 

Polling by the Kaiser Family Foundation (KFF) finds similar concerns about health care costs, and about a greater level of concern about costs. Ashley Kirzinger, Cailey Muñana, Bryan Wu, and Mollyann Brodie  write in a "Data Note: Americans’ Challenges with Health Care Costs" (June 11, 2019)

Americans have consistently put health care costs at the top of their list when it comes to health care issues they want the government to address and for political candidates to talk about. Prior to the passage of the 2010 Affordable Care Act, politicians spoke frequently about health care during elections with equal attention paid to “health care costs” as “access to coverage.” For example, leading up to the 2008 presidential election, a KFF Health Tracking Poll found that “reducing the cost of health care and insurance” (41 percent) was the top health care issue chosen by voters from a list of possible health care issues, but it was closely followed by “expanding health coverage for the uninsured” (31 percent). Since the implementation of the ACA, health care costs now occupy a tier of their own on the public’s list of pressing health care issues. For example, leading up to the 2018 general election, KFF found at least twice as many voters said they wanted hear candidates talk about health care costs (27 percent) as any other health care issue such as increasing access or decreasing the number of uninsured people (11 percent) or universal coverage (8 percent).

The question of why health care costs are taking on greater importance is overdetermined--that is, it has too many plausible answers. People are worried about health care costs directly. I suspect that over time, people are figuring out that the continually rising premiums for their employer-provide health insurance is eating their pay raise.  For state governments, continually rising Medicaid costs are one of the biggest budget stressors. For the federal government, higher spending on health care programs is a large part of what is driving current and future budget deficit problems (for discussions, see here and here). Also, one of the main stresses on the middle class is a sense that the costs of certain items that play a big role in defining what it means to be middle class--health care, housing, and higher education--are climbing out of reach.

As with any serious problem, there will be some easy, deceptive, and flawed answers on display. For example, waving a magic wand called "single payer" or "Medicare for All" won't avoid a need to make a bunch of hard choices. Every dollar spent on health care represents income to someone, somewhere, and cutting healthcare spending is thus inevitably controversial. For discussions of some of these issues, starting points with a focus on US healthcare spending are "How to Reduce Health Care Costs?" (February 7, 2019) or "Why Does the US Spend More on Health Care Than Other Countries?" (May 14, 2012), or for a discussion with an international focus how countries everywhere are trying to hold down health care costs, see "Wasteful Health Care Spending" (February 23, 2017).

A version of this article first appeared on Conversable Economist. 

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  • Ray Mejía

    You have addressed a complex and dynamic issue facing the field of health care moving forward.

  • Matt Duncan

    Healthcare is not a luxury, nor is it a right. Healthcare is a commodity.

  • Jordan Garbutt

    Like a football game, the government is best as the referee and should never coach or play the game.

  • Brad Pywell

    Some good ideas shared here.

  • Paul Bamford

    We need to prioritize quality over quantity when it comes to life.

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Timothy Taylor

Global Economy Guru

Timothy Taylor is an American economist. He is managing editor of the Journal of Economic Perspectives, a quarterly academic journal produced at Macalester College and published by the American Economic Association. Taylor received his Bachelor of Arts degree from Haverford College and a master's degree in economics from Stanford University. At Stanford, he was winner of the award for excellent teaching in a large class (more than 30 students) given by the Associated Students of Stanford University. At Minnesota, he was named a Distinguished Lecturer by the Department of Economics and voted Teacher of the Year by the master's degree students at the Hubert H. Humphrey Institute of Public Affairs. Taylor has been a guest speaker for groups of teachers of high school economics, visiting diplomats from eastern Europe, talk-radio shows, and community groups. From 1989 to 1997, Professor Taylor wrote an economics opinion column for the San Jose Mercury-News. He has published multiple lectures on economics through The Teaching Company. With Rudolph Penner and Isabel Sawhill, he is co-author of Updating America's Social Contract (2000), whose first chapter provided an early radical centrist perspective, "An Agenda for the Radical Middle". Taylor is also the author of The Instant Economist: Everything You Need to Know About How the Economy Works, published by the Penguin Group in 2012. The fourth edition of Taylor's Principles of Economics textbook was published by Textbook Media in 2017.

   

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