J. Gruber: No market-based solutions to cost control

Interview of Jonathan Gruber by Caroline Miller
American Healthcare Journal, September 9, 2020

Caroline Miller: Ten years on, how would you grade the Affordable Care Act?

Jonathan Gruber: Before the ACA was in place, people could say, “Well, we’ve got these market-based solutions, and they work,” but they never would. The ACA moved the bar in terms of saying, “Well, here’s a real market-based solution to healthcare.” If you’ve got something better, let’s see how it does.

I think having the law in place and covering those people sort of put the lie to the whole idea of “replace,” or that there’s some ambiguous market-based solution out there that’ll work.

CM: I know you helped design the single-payer system in Vermont. What are the lessons learned from that experiment, and should Green Mountain Care be a cautionary tale moving forward for Democrats on the federal level now that it’s become a priority for progressives?

JG: I think the bottom line is it shows that it’s just too expensive. Not in the sense that it’s too expensive for society. I said that single payer would probably lower social healthcare costs. It’s too expensive in the sense that single payer is a transfer of the burden on the private sector, to the burden of putting it explicitly on taxation, and people don’t like that transfer.

In Vermont, I found that if they did single payer, total healthcare costs would fall by at least 10 percent. That was a conservative estimate. But since they were moving away from employer insurance to government insurance, to pay for it, they would have had to more than double the entire tax bill of the state of Vermont, and that just killed it.

You could say that shouldn’t have killed it, because overall we should care about society’s total healthcare costs and who cares who bears them, but in fact people do care who bears them.

Right now, America has a system financed by a hidden tax: When our employers give us health insurance, they just pay us lower wages. Single payer would replace that with an explicit tax, which is literally raising people’s taxes, and as Vermont shows, that’s a politically difficult transition.

CM: What do you think the U.S healthcare system will look like in 2030?

JG: The bigger question is, will we take serious steps to control costs? Things like regulating prices, or forcing people into more rigorous value-based care? And that, I simply do not know.

If I had to guess, I’d say healthcare in 2030 will look a lot like healthcare in 2019, plus some “digital health stuff.”

CM: What would you say it should look like?

JG: After decades of trying to figure out market-based solutions to cost control, I don’t think there are any. I think it’s time to regulate healthcare prices. I do not see a purely competitive market-based solution to the excessive prices we charge in healthcare. Healthcare costs are a pricing problem. Our prices for things like specialist services, medical equipment and drugs are too high. I think we have to put in a smart regulatory regime where we start to bring those under control.

https://americanhealthcarejournal.com…

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Comment:

By Don McCanne, M.D.

Jonathan Gruber says, “After decades of trying to figure out market-based solutions to cost control, I don’t think there are any. I think it’s time to regulate healthcare prices.”

And what better way than enacting and implementing a well designed, single-payer, improved Medicare for All? But the people have to demand it.

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