SUMMARY

  • Curing What Ails U.S. Healthcare
  • Child Care Is A Global Economic Issue
  • When It Comes To The U.S. National Debt, History Will Not Repeat

Editor’s Note: This is the second in a series of pieces that will examine key economic issues surrounding the 2020 U.S. election.

No one can avoid the doctor’s office forever. Whether for routine checkups or emergency interventions, everyone will have the experience of being a patient: first receiving care, then paying for it. Especially on the latter front, the U.S. healthcare system has many opportunities for improvement—a familiar debate now recurring in a new context.

The U.S. healthcare system is a complex patchwork of medical providers and payers. Payers include private insurers and government programs like Medicare, Medicaid and Veterans Affairs. Half the population has private insurance through an employer, while a third use government services. There is relatively little expense discipline in the system, which has allowed medical costs to escalate at rates that are double the rate of general inflation. Employers and workers pay ever-higher premiums, patients pay high deductibles and co-pays for care, and insurers face rising prices charged by providers.

Public spending on healthcare has reached 6% of U.S. gross domestic product (GDP) and is projected to rise, compounding the nation’s fiscal challenges. Demographics will continue to escalate government payments for healthcare, as more of the aging U.S. population becomes eligible for Medicare.

Weekly Economic Commentary - 10/02/20 - Chart 1

The most recent reform to the healthcare system, the Patient Protection and Affordable Care Act of 2010 (ACA), made only marginal changes. The core of the legislation opened greater access for individuals to purchase private insurance, and it included a few reforms like eliminating exclusions for pre-existing conditions and lifetime coverage caps for chronically ill patients. However, it did little to contain costs, and despite creating a coverage mandate, over nine million Americans remained uninsured after its passage. In the decade since, political and legal challenges to the ACA have left it weakened.

Rising costs and growing demand for this essential service have made clear the need for further legislation. The two presidential candidates’ proposals on this front vary widely.

A Biden administration, with the support of a Democratic-controlled Congress, would prioritize further reform. Candidates in the Democratic presidential primary aired a wide range of ideas, including a dramatic move to a single-payer Medicare for All model, in which government programs are expanded to replace the role played today by private insurers. Joe Biden does not endorse Medicare for All, but its mere discussion reflects the push for reform from within his party.

Instead, Biden supports more modest reforms. He would advance a public option, making government-run insurance available to people who do not currently qualify for a government program. He has proposed lowering the Medicare eligibility age from 65 to 60. He seeks to build on the ACA by lowering the cap on the share of income that households spend on their insurance premiums, and increasing the cost index to compensate for a more useful level of coverage.