Post-COVID Healthcare Reforms
My new Yankee Institute policy report on Connecticut has relevance for all states
Bastiat’s Window is a journal of economics, science, and culture—with a special focus on healthcare and technology. Some recent healthcare articles have focused on medical prices, occupational regulation, eugenics, the politicization of medicine, artificial intelligence, and 1,600 years of medical hubris. Other recent articles have dealt with censorship, freedom, presidential history, the gig economy, effective altruism, and my travels as an economist in Sub-Saharan Africa and in Scotland. More eclectic pieces have covered the anthems of America’s eight (nine?) uniformed services, the peculiarly American story of paw-paw trees, the case for awarding the Nobel Literature Prize to Vince Gilligan, and the Worst Best Movie of All Time.
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New Policy Report
The Yankee Institute for Public Policy in Hartford, Connecticut, has just published my 16-page policy report: “Reforming Connecticut Healthcare after COVID.” While it focuses on one state, its lessons are applicable across the whole United States. Summing up the piece:
America has great healthcare, but there are problems.
Since World War II, discussion of healthcare reform has focused on insurance (the Affordable Care Act, Medicaid, etc.), which has turned most healthcare policy debates into rancorous zero-sum games.
Insurance matters, but it is more productive to focus reform efforts on the delivery system side of things.
Before COVID, Connecticut offered less leeway than almost any other state for patients and providers to work together to solve problems.
COVID forced all states, including Connecticut, to grant far greater leeway to patients and providers in managing care. Physicians could practice across state lines, restrictions on telehealth were dropped, nurse practitioners and other nonphysician providers were granted greater power to treat patients, and hospitals no longer had to beg the permission of states to offer new services. The emergency allowed states to serve as “laboratories of democracy,” and in doing so, all Americans participated in an enormous, unplanned scientific experiment.
Now, Connecticut, like all states, must choose whether to build upon this great experiment, or whether to return to pre-COVID business as usual.
There are seven areas where Connecticut could build upon the COVID experiments: (1) expanding physician licensure, (2) expanding nursing licensure, (3) offering greater autonomy to nurse anesthetists, (4) offering prescriptive authority to qualified psychologists, (5) dropping certificate of need laws, (6) making COVID emergency telehealth provisions permanent, and (7) authorizing association health plans.
In its 16 pages, “Reforming Connecticut Healthcare after COVID” offers data on Connecticut’s laws and regulations before COVID, discusses how COVID changed the policy environment, and explores how those seven possible reforms might change the delivery and quality of care in the Nutmeg State. Here’s the text of the introductory page:
Along many dimensions, America offers the finest healthcare available in the world. That said, numerous aspects of American healthcare have long been problematic. The COVID-19 pandemic tossed quite a few new lemons into the basket (or revealed some older ones), but the pandemic also created an unprecedented array of new opportunities to improve healthcare. As the old adage goes, if you have lemons, make lemonade — and the Nutmeg State is primed to take advantage of that bit of folk wisdom.
Most observers can rattle off a menu of complaints about American healthcare. These include constricted supplies (particularly in rural areas and inner cities), fragmented provision and varying quality of care, high prices, lack of transparency, surprise medical bills, varying health status across demographic groups, unevenly distributed outcomes and sizable uninsured populations. There’s even widespread agreement across party lines about these problems.
“Great system” and “all of the above problems” are not mutually inconsistent. It does suggest the need to try some unconventional approaches to solving those problems — approaches that differ from those that dominated the debate from the end of World War II to the passage of the Affordable Care Act (ACA) and after. Deciding what to do — and what not to do — is the challenge.
The problem comes in finding unconventional solutions to the problems. Politically, the American establishment has been fractured sharply along party lines when it comes to healthcare, particularly due to debate being focused on insurance rather than delivery systems. Each party has pursued what it perceives to be a radically different approach from that advocated by the other party, leading to a rancorous debate. The key is to aim for solutions that are not zero-sum games. The debate over the ACA and alternative proposals was contentious because they were largely redistributive in nature — improving the care and coverage for one segment of society required worsening the situation for another. Expanding coverage for some, for example, led to higher deductibles for others. Debate over redistribution is always rancorous.
The alternative to redistribution is to seek changes in production techniques that, at least in theory, benefit the entire population. Rather than asking, “How can we increase coverage?” we can ask, “How can we provide better health to more people at lower cost, year after year?” Toward that end, this paper is based around several questions:
How does Connecticut’s healthcare compare to other states’?
How did the COVID-19 pandemic induce a shift in the healthcare debate?
What are some specific policies by which Connecticut could improve its healthcare system?
Many thanks to the splendid folks at the Yankee Institute for working with me on this report.
Lagniappe
Cabinets in Connecticut
For those Connecticut residents reading Bastiat’s Window for the first time, the “Lagniappe” section generally offers some amusing little piece that’s tangentially related to the main story above. Back in April, my article titled “Bureau, Hotel, Daycare, Chicken” included the following story about my late father’s work for the federal government in Connecticut almost a century ago:
In the 1930s, my father worked for the federal government, ultimately winding up in Washington, DC. For a time, he ran a small office for the Department of Treasury in New Haven, Connecticut.
At some point, the office had become impossibly jammed with filing cabinets, and there was little room for incoming files. So, he undertook a detailed survey of the contents of those cabinets. He determined that a sizable percentage of the documents were obsolete and could be safely discarded.
Dad filled out the detailed forms required by the National Archives before destroying any official documents. He sent his requests off to Washington for approval. After some time, he received a letter approving his plan to destroy the obsolete documents.
But the letter of approval came with one tiny stipulation. For any document destroyed, he would have to make three copies and send those copies to three different bureaus in Washington. Keep in mind that this was 20 to 30 years before photocopiers became readily available. Copying the documents by hand would have been a lengthy, all-consuming task for his staff. So, Dad, creative fellow that he was, simply rented a nearby office (at Treasury expense, of course) and stuffed it full of filing cabinets and their unwanted, unloved contents. He then bought new cabinets for the extant office.
I have half-jokingly speculated (but only half) that, nearly 90 years later, the Treasury Department is probably still paying rent on the cabinet-stuffed office. The documents will next be read when archeologists uncover the building’s ruins in a few millennia.
When I think of this story, I also think of the final scenes of Citizen Kane and Raiders of the Lost Ark.
> Rather than asking, “How can we increase coverage?” we can ask, “How can we provide better health to more people at lower cost, year after year?”
It's good to see people starting to see through the conflation of health *care* with health *insurance.* One of the strongest criticisms I remember being raised against the Affordable Care Act when it was still just a proposed bill was that you can't fix a problem by making it worse: the insurance system is responsible for so much of the problem with the health care system, so why feed tens of millions of Americans who've successfully evaded it thus far into its maw?
A proven solution that actually succeeds at lowering costs is what's called "restaurant pricing." It has two parts. 1) Every medical facility (hospitals, clinics, etc) publishes a public "menu" of every product and service they sell and what that product or service costs. 2) Everyone gets charged the price on the menu, regardless of how they're paying for it.
This simple, common-sense solution has a proven track record of driving medical costs down pretty significantly and improving care, through the basic market forces of transparency and competition. So of course hospitals and insurers fight tooth-and-nail against it whenever the idea comes up. But if we could get restaurant pricing instituted as national policy, it would go a long way towards fixing health care problems in this country. It wouldn't magically fix everything, but it's probably the single biggest improvement we could make.
Perhaps 30 years ago, I wrote a public health policy for Robert Blank, then a leading Poli Sci expert in that field.
Part of the 35- or so - page paper was a suggestion for extending HSA type insurance to many possible clients who didn't work for companies that had the capacity to do so.
Briefly, I believe that the feds could randomly sort, say, 50-100,000 potential individuals/families that are either on Medicaid or uninsured/underinsured and have insurance companies bid to sell the government HSA + catastrophic health insurance for that group. In addition, for very poor individuals/families, the feds could create and fill the HSA accounts up to equal the copays/deductibles. Just like regular HSA, anything left over for the year could go into a pre-tax investment account. I understand that not all would understand that last part, but still . . . And you could put into the account on a sliding scale, like the idiotic ACA up to maybe 4 times the poverty level.
I don't have the numbers any longer, and they would be dated anyway, but back then the cost was way less than the cost of Medicaid and the management of Medicaid. Plus it would save resources of hospitals and doctors' offices.
Please think about that, in a fleshed out form.
I got an A for the paper, and Prof Blank loved the idea, but said it would never get passed due to rent seeking. I agreed, but I still think it would work.