The Epicycles of Health Care Market Design: Time for a Paradigm Shift in Health Policy

Frank Pasquale – 

Back in June, I attended the annual conference of health law professors held by the ASLME. This conference is a real intellectual feast for anyone interested in political economy. National experts describe the latest developments in the Affordable Care Act’s exchange marketplaces. Antitrust scholars consider the proper balance between delivery system integration and competition in accountable care organizations. The role of the state in structuring economic activity is critical to nearly every panel on insurance markets, licensure, and access to care.

SinglePayerNow

But there was very little buzz about what has become one of the hottest topics in progressive health policy in 2017: state efforts to develop single-payer health care systems or public options (like a Medicaid buy-in). Politicians and activists appear to be leading this charge, pushing proposals in California, Nevada, and New York. They have generated a lot of enthusiasm, and they will get more attention if the GOP manages to repeal the individual mandate and further damage insurance markets. Even self-described neoliberal Matt Yglesias has called on experts to further develop ideas here. And yet the academy seems slow off the mark. What explains this tardiness?

I think part of the problem is the sheer complexity—and thus intellectual challenge—of market design in a neoliberal era. Sarah Kliff recently eulogized the great health care economist Uwe Reinhardt by memorializing the “joy he always took in trying to understand the maddening, baffling inner-workings of the American health care system.” “Joy” seems like an odd emotion to express, upon encountering the complexities of ERISA, MedPAC, MACRA, MIPS, and the rest of the health care finance alphabet soup. But once you teach in these areas, the incrementalism of the well-informed is hard to shake.

This incrementalism persists even when the failures of U.S. health care seem most manifest. Consider, for instance, this recent article by Austin Frakt on narrow networks in the ACA exchanges. Frakt offers minimalist policy responses, despite expertly laying out the scope of the problem:  

Many health insurance options offered by employers or sold on the Obamacare marketplace come with narrower networks — covering treatment from a limited slate of doctors and hospitals. . . . Narrow network plans are cheaper, and insurers say they try to maintain quality as they narrow the choices they cover. Some appear to succeed, but some don’t, and that’s hard to fully assess before you sign up.

study of 2016 marketplace offerings in 13 states found that only two provided indications of network size. . . [O]nly two could filter plans to show only those with providers a consumer selects. . . A crop of new studies shows some of the specialties for which networks are likelier to be narrow, and suggests that what consumers don’t know might hurt them. Researchers at the University of Pennsylvania found that plans with more narrow networks systematically excluded oncologists affiliated with higher-quality cancer centers. . . . Another study by Mr. Polsky and colleagues, published in Health Affairs, found that many marketplace plans offer relatively few choices of mental health care professionals. . . Marketplace plans also tend to be narrower for pediatric specialists than for adult specialists, according to other work by Dr. Wong and Mr. Polsky. And parents might have no idea until a child is ill.

Health law professors have, by and large, already learned the arcana of the United States’s complex system. So when we hear about these complexities, we immediately think of how to deploy a whole toolbox of legal doctrines and business strategies (any-willing-provider statutes! tiered payment levels!) that could soften the blow of narrowing provider networks. Less examined are the simpler paths to universal coverage pioneered by Germany, Canada, France, Taiwan, and so many other nations.

The harsh reality of “market forces” in the health care system is also under-emphasized. Neoliberals want to give patient-consumers the “choice” to buy cheaper plans with access to fewer doctors. In their class-blind framework, some of us just happen to choose the best plans, while others have different preferences. But in reality, the choice to spend $200 more a month, say, to cover the best cancer specialists in case of an unexpected diagnosis, means very little to someone with $5 million in brokerage accounts (why not splurge?), may be very difficult for someone with $20,000 in the bank (who could increase their net worth significantly by opting for the cheaper plan), and may not exist at all for someone living paycheck to paycheck.  Until neoliberal technocrats openly acknowledge that they are stratifying the health care system by class, they are not being frank about the true nature and history of the ACA.

So how do you solve a problem like narrow networks? Frakt mentions that “Insurers that wish to offer narrow network plans could be required to also offer broad network ones.” Good luck getting that regulation in the 25 states with GOP control of both houses of the legislature, and the governor’s mansion. States like New York and California may make their exchanges more of an “active purchaser,” which could help rein in the worst abuses. But even in the most wealthy and progressive states, regulators are often outmatched by insurers’ attorneys and lobbyists.

Frakt also thinks information could help: “Sites like Yelp and RateMDs.com may be worth a look,” he tells readers. But online rating systems are wracked with problems—and scholars like Ann Marie Marciarille and Kristin Madison have discussed how few patients/consumers actually take advantage of extant disclosure initiatives, like Hospital Compare, Physician Compare, and Nursing Home Compare.

So perhaps it’s time to reframe the question, looking beyond the technocratic wonkery of market-oriented health services research, to writings focused on the actual experience of consumers. In a sharp article on the ACA exchanges, Helaine Olen disputes the basic metaphor that all too many ACA supporters have used to justify market competition in health care: shopping.

326 million Americans cannot combat our high-cost medical system with one savvy purchase. The term [shopping] prioritizes the values of the marketplace and financial world. It also signals that instead of contemplating how to make the medical-industrial complex work for us, our energy is channeled into getting the best deal we can from a system that’s designed not for our benefit, but to extract the greatest amount of profit from every patient.

Health care is much more than a mere consumer item, even if we do spend money to get it. It’s fundamental to our lives. So hear me out. Whether you are a reporter on deadline, an insurance official discussing plans or someone reviewing your options, just say people should “choose” or “pick” a plan. But whatever you do, don’t conflate the pleasurable experience of real shopping with the dreary task of finding a health insurance plan.

There is a growing genre criticizing the market metaphor. For example, Corey Robin has observed just how crushingly boring and frustrating insurance “shopping” can be.

So can these insurance markets be saved? Unless the ACA’s supporters are willing to massively increase the number of insurance regulators, user experience designers, economists, and attorneys available to fight for consumers against armies of private insurance industry employees, the odds are not good. When they dismiss the emergent movements for single payer (or even Medicare for All), centrist health technocrats call activists “unrealistic,” “dreamers,” luftmenschen of cuddly capitalism. But what’s more unrealistic than yet another attempt to constrain insurers’ infinite resourcefulness at segmenting risk pools? At some point, even Charlie Brown stops trying to kick the football.

In past work, I’ve called the endless efforts to “fix” broken health care markets an example of “Rube Goldberg neoliberalism.” I do have a grudging respect for those Sisyphean souls in health law and policy who will, once more, attempt to regulate better health care markets into existence. But I will be focusing my reading on the work of scholars who are examining how other advanced industrial nations have managed to cover so many more people, at lower cost, with similar levels of quality—and how the US may achieve a fair and just transition to universal coverage.

Frank Pasquale is a Professor of Law at University of Maryland Francis King Carey School of Law.

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