Americans voters say affordability is their top concern. The rising cost of health care is one of the main reasons life feels so expensive right now — and it’s about to get worse.
Open enrollment began this week, and people buying coverage through the individual market are seeing premiums that are up about 13 percent on average — and that’s after they increased by 26 percent last year. Employer-sponsored coverage is expected to be up 10 percent, coming in at more than $10,000 per person per year.
High out-of-pocket costs are already keeping Americans from getting the care they need. Rising health care costs are also an immense drag on the national budget and contribute to the growing debt that’s fueling inflation and putting the federal government on shaky fiscal footing.
When politicians in Washington talk about fixing health care, they’re quick to talk about sweeping, one-shot solutions. One example is Medicare for All, which is front and center in the Michigan Senate race. Regardless of the midterm results, neither party is likely to have the margins to pass such broad reforms. Indeed, comprehensive health care reform is unlikely to be on the docket until after the next general election in 2028, at the earliest. And even if it passed, it could take years to carry out. We need to find ways to curb the costs that are hurting people today.
The emphasis on big health reform can give a false impression that there is one health system in the United States, with one problem that only comprehensive reform can fix. It’s not. Focusing on silver bullets understates the complexity of the health system.
We have a $5.5 trillion system of systems — Medicare, Medicaid, commercial insurance and the Veterans Health Administration — each with its own failures and inefficiencies. If it were a country, the U.S. health sector would be the third-largest economy in the world, in dollar terms. And dissatisfaction with the system does not necessarily mean Americans want their own coverage replaced: 65 percent rate theirs as good or excellent. Any sweeping reform will have to lower costs while convincing people that it will preserve or improve the care and coverage they have now.
An alternative way to think about the genesis of high health care costs is that they are a function of dozens of discrete inefficiencies and small pockets of greed that add up to hundreds of billions of dollars in waste. The solution to high health care costs, using that view, looks more like plumbing — fixing the leaky pipes raising health care costs — and less like highbrow architecture designing a new building from scratch. This isn’t a disagreement about the scale of the problem; rather it’s a distinct approach to fixing it.
Recently, my team at the Health Care Affordability Lab at Yale asked health care experts to identify evidence-based interventions that could save a percent or so of health care spending without harming the quality of care. A few weeks ago, we posted what we found via a project called the 1 Percent Steps for Health Care Reform. It turns out that savings from a series of discrete changes can add up. We describe 23 targeted interventions that could save as much as $400 billion annually — approximately 8 percent of U.S. health care spending.
Many of the reforms are wonkish and technocratic. Most states have separate insurance markets for small businesses and for individuals. Michael Dickstein of New York University found that bringing the two markets together, which Maine and a handful of other states have done, could lower premiums by reducing administrative costs and expanding the pool of insured people. Doing so could save about $500 annually per household and upward of $8 billion annually for the federal government.
Some reforms are remarkably simple. Flu season is here, and health officials recommend that children 6 months and older get vaccinated, yet about 50 percent don’t. A big reason is convenience, according to Michael Anderson of the University of California, Berkeley. The flu shot comes out around September each year. He found that vaccination rates are higher among children with fall birthdays, since they can easily get a flu shot during their annual checkup. In turn, spending on vaccinated children is vastly lower during flu season. He estimates that getting all children ages 2 to 5 vaccinated for the flu, in part by encouraging more families to get their children vaccinated in retail pharmacies, would cut doctor visits and emergency room trips, and save approximately $500 million annually.
Other recommendations are more substantial, like regulating the prices that hospitals negotiate with insurers. A handful seek to end entrenched, anticompetitive behavior, such as agreements between brand-name and generic drug manufacturers that delay cheaper medicines’ entry into the market. Some focus on reducing greed and graft, like fraudulent billing for home health care services.
So why don’t reforms like these get passed more regularly?
Partly, it’s that these sorts of reforms are not inspiring on the stump, so they don’t generate huge interest from lawmakers. Then there’s the sharp political asymmetry. While there are interest groups galore representing stakeholders in the health care system, there’s no real constituency for efficiency pushing for these targeted interventions. In contrast, every dollar of wasteful health care spending is a dollar of revenue for people and companies that don’t want to see their income go down and can lobby to thwart change.
However, the savings add up. The reforms described here would save the federal government more than the combined budget of the F.B.I. and the Centers for Disease Control and Prevention.
None of these fixes will end the big debate about American health care, which will heat up only more as the 2028 presidential race takes shape. Nor should they. We will eventually need to pair these sorts of incremental reforms with larger changes — my preferred solution is allowing people to buy into the Medicare program.
The uncomfortable truth about comprehensive health care reform is that it is a long list of small decisions that stand to anger entrenched interest groups. Under a system like Medicare for All, policymakers would still have to decide, for example, the price for a hip replacement. Those smaller decisions are where the money is and where the fights will take place.
Focusing on achievable reforms today offers a pathway to bring real savings to Americans who are being crushed by health care costs now. It also builds the legislative muscle we’ll need to create durable larger changes when the political window for more sweeping health care reform opens.
Zack Cooper is the director of the Health Care Affordability Lab at Yale.
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