Reducing healthcare costs remains a priority

Non-pandemic healthcare hasn’t been much on the agenda during President Joe Biden’s first 100 days. But reducing healthcare costs remains a priority for the public — ranking ahead of addressing racism, crime, immigration or climate change.
Democrats’ wariness of the issue is understandable. The public is passionate about healthcare, but also risk-averse. Three of the last four presidents (two of them Democrats) wrecked their poll numbers with efforts to enact sweeping changes to the US health insurance system. And even though Democrats are more trusted than Republicans on healthcare issues, the party’s leaders are wary of opening a debate in which its left wing will demand steps toward a Medicare for All system that makes for an appealing slogan but requires politically toxic middle-class tax hikes.
There is a better approach: Call it supply-side economics, but for health care. Focus less on the way insurance works than on expanding care to increase competition and reduce prices.
To cope with the pandemic, federal, state and local governments have already taken dramatic steps, such as setting up mass vaccination centers. They are not just paying for care, they are providing it.
Greater investment in what the progressive think tank Data for Progress calls the “public infrastructure for care” — community health centers, publicly owned hospitals and so on — makes sense even in non-pandemic times. Last year saw a record number of rural hospital closures, while low-income urban communities tend to be bypassed by the trend toward pharmacy-based retail health clinics or urgent-care centres.
In economic terms, both choices are sensible. Rural populations are dwindling, and profit-seeking companies naturally want to locate near customers with spending power. But poorer communities have health needs too, and there’s a clear opportunity for the public sector to serve customers the private sector isn’t.
An even more basic funding opportunity is simply to train more doctors. Last year Congress increased the cap on medical residencies for the first time since 1997. It’s a good first step, but they should raise the cap even higher. The idea of capping residencies reflects a misguided desire to reduce aggregate health-care spending. But what people actually care about is the price of services. More doctors means cheaper access to care — and if that makes total spending go up, then who cares?
Just as the aging of the US population is going to continue, so is its need for doctors. Not only is the cap on residencies too low, many of the slots are taken by foreign-born doctors because you’re not allowed to practice medicine in the US without first completing a residency in the US. Economist Dean Baker has long argued that the US should allow qualified foreign doctors to practice in the US if they complete an equivalent residency program in another country.
The US currently has the highest-earning physicians in the world but a relatively low number of doctors per capita. Residency reforms could flip that around. In a more free-market vein, all 50 states should be encouraged to follow the lead of New England, the Great Plains and the Pacific Northwest and allow nurse practitioners the full scope of practice recommended by the Academy of Medicine.

—Bloomberg