The Health System We’d Have if Economists Ran Things

The following originally appeared on The Upshot (copyright 2020, The New York Times Company). It also appeared on page B5 of the print edition on February 19, 2020.

Imagine if American health policy were established by the consensus of health economists. What would the system look like? A survey of nearly 200 Ph.D. health economists working in the United States provides some clues.

The survey, presented at the American Society of Health Economists conference in Washington last summer, was conducted by the health economists John Cawley of Cornell University, Michael Morrisey of Texas A&M and Kosali Simon of Indiana University.

Whether the Affordable Care Act should be repealed has been one of the highest-profile health policy issues ever since its passage in 2010. Health economists are clear on this: They strongly reject repeal, with 89 percent opposing the idea.

Health economists also overwhelmingly (81 percent agreement) said the A.C.A.’s individual mandate — in which people paid a fine if they chose not to be insured — was essential for its success. Without it, they said, the people who sign up would disproportionately be sicker, causing insurance to become ever more expensive. This phenomenon, also known as adverse selection, could collapse the market.

The need for an individual mandate is consistent with both economic theory and research and seemed sensible at the time of the survey in 2018. But its necessity is less clear today. The tax cuts signed into law at the end of 2017 reduced the penalty for not having coverage to zero last year, yet marketplaces have by and large remained stable.

popular feature of the A.C.A. is that insurers cannot raise premiums for pre-existing conditions. Health economists appear to agree with this, with 80 percent saying premiums should not be higher for those with “genetic defects” (the poll’s wording).

But nearly 70 percent of health economists are comfortable charging people more if they engage in unhealthy behaviors that lead to higher health costs. The A.C.A. allows marketplace plans to do just that based on smoking. The idea that people should pay for the consequences of their personal choices — sin taxes, basically — has some intuitive appeal. (Another sin tax would be to increase taxes on soft drinks, an idea favored by 62 percent of health economists.)

But disciplines other than economics view health behaviors differently. Addictions, in particular, are often viewed as diseases, not informed choices. “Adult addiction to nicotine usually stems from decisions made as a teen, which are shaped as much or more by circumstances than rational thought,” said Michael Stein, chair of the Health Law, Policy & Management Department at Boston University School of Public Health. “Charging a higher premium for a smoker is punishing someone with a disease, so why this disease?”

Various ideas to cut costs in Medicare and Medicaid have been proposed in recent years. Health economists generally oppose those changes.

The poll asked them if they favored converting Medicare into a program based in part on income. That would mean that full Medicare coverage would not be available to everyone upon reaching 65, but only to those whose incomes are below some cutoff. This idea is opposed by 71 percent of health economists.

A related idea for Medicare is to convert it to a voucher-based program. This would establish a set amount the government would pay for your coverage so that you could shop for a health plan. Most health economists (61 percent) also oppose this idea. This is in step with the broader public, according to most polls over the years.

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