US Health Care Sucks, Even If You Have Health Insurance

Amy Finkelstein

It is a gross injustice that 30 million Americans lack health insurance — but the insured also face serious problems, paying through the nose for substandard care. We need a universal, automatic, free health care plan.

A patient sits in an exam room at a Planned Parenthood health center in West Palm Beach, Florida. (Joe Raedle / Getty Images)

Interview by
Sara Van Horn
Cal Turner

The American political mainstream often frames universal health care as too expensive, too extreme, and, above all, impossible. Even while acknowledging that the exhausting jumble of private insurance, public programs, and government stopgaps is grossly inadequate, centrist Democrats advocate for incremental patches instead of systemic change.

Amy Finkelstein, award-winning Massachusetts Institute of Technology economist and MacArthur Fellow, argues that the mosaic of private and public insurance in the United States is costly, inefficient, and brutally inadequate for both uninsured and insured Americans. In their new book, We’ve Got You Covered: Rebooting American Health Care, Finkelstein and Stanford University economist Liran Einav lay out a blueprint for a health care plan that is universal, automatic, basic, and free — as well as a convincing case that universal health care is not only necessary but possible.

Sara Van Horn and Cal Turner spoke with Finkelstein for Jacobin about the current failures of health care in the United States, the political struggles that led to universal coverage in other high-income countries, and the historical evidence that the United States is already committed to providing health care to all.

Sara Van Horn

Why do we need universal health care in the United States, and what is the current state of our health insurance system? Who is it working for, and who is it failing?

Amy Finkelstein

The current state is not good, to put it mildly. We don’t have universal coverage — we have a universal mess.

While a lot of the public policy discussion focuses, with understandable reason, on the challenges facing the thirty million Americans who lack health insurance, the problems run much deeper. They also exist for the 90 percent of Americans fortunate enough to have health insurance at any given moment. The key point is that health insurance is not actually a medical product. It’s a financial product that should be designed to protect people economically when they encounter large medical bills so that they don’t have to forgo getting essential care or struggle with housing, clothing, or food to pay their medical bills.

Of the thirty million Americans who lack health insurance at any given moment, estimates suggest that about six in ten of them are eligible for free or heavily discounted health insurance. They just don’t have it. They may not realize that they’re eligible for a program, they may have encountered difficulties assembling all the documentation and filling out all the forms to get access to that coverage, or the program has certain eligibility requirements and they have to periodically recertify that they still have the disease or that their income is low enough.

There are two major problems confronting the 90 percent of Americans with health insurance. The first is a high degree of insurance uncertainty. One in four Americans under sixty-five will be uninsured at some point over a two-year period. Most insured Americans face the risk of losing their insurance coverage if they lose their job, or get sick, or their income goes up, or they get a little older, or — in some strange cases — they get healthier, because many of the public programs are disease-specific. If you think of insurance as providing economic security, the idea that insurance itself is insecure and uncertain makes no sense at all.

The second major problem faced by people with insurance is that an enormous amount of medical debt in the United States is incurred by households with insurance. There are $140 billion dollars in unpaid medical bills held by collection agencies. That’s more than is held for all other consumer debt from nonmedical sources combined. Three-fifths of that medical debt is held by households that have insurance.

When you ask, “Who is insurance working for?” the answer is: very few people. People with employer-provided private health insurance risk not only losing that coverage if they change or lose their job, but also incurring large medical debts because of high deductibles. For people with Medicaid, the public health insurance for low-income individuals — which is about a fifth of the population — it’s highly uncertain. About one in five people with Medicaid will lose their coverage over a two-year period, either because they lose eligibility or fail to recertify their eligibility.

Finally, we currently have Medicare for some, and some people want that to be Medicare for All. Medicare does have the one virtue that it’s not uncertain, because you never get younger: you’re eligible if you’re sixty-five and older. But it also exposes individuals to substantial out-of-pocket costs. Medicare requires that the patient pay 20 percent of doctors medical bills out-of-pocket and the first $1,400 of hospital costs each year. A quarter of people on Medicare spend 25 percent or more of their income on supposedly covered medical care. That’s not how insurance is supposed to function.

Cal Turner

Could you outline your blueprint for universal health coverage in the United States?

Amy Finkelstein

We would say it’s universal, automatic, basic, free coverage, with the ability for those who want and can afford it to supplement it in a well-functioning market.

For the universal part: Our policy history of the last seventy years reveals a national commitment — if not its fulfillment — to provide essential medical care to everyone, regardless of resources. Although universal coverage may sound like a progressive or liberal slogan, if we as a society will eventually intervene when people are ill and lack resources for essential medical care, the idea that we should formalize that and fund it upfront is actually not a particularly liberal or progressive idea. It’s been embraced across the political spectrum by conservatives like Republican Mitt Romney, libertarians like Charles Murray, and conservative economic thinkers like Friedrich Hayek.

That’s also why, in our blueprint, coverage is basic. If you look at our history and philosophy, the commitment is to essential medical care, not to everyone having the same level of nonessential amenities. In many countries around the world, like Singapore and Australia, they design a basic system to provide the essential care, and then they allow people to purchase additional coverage.

As for automatic: at least in the United States, calling it universal doesn’t make it so. We’ve already enacted universal coverage in name — we have a requirement that everyone have insurance — but we haven’t enforced that mandate. If you want to get there, the way to do it is the way Medicare is designed, which is that it’s automatic when you turn sixty-five.

The final element is that everything should be free to the patients. At least for economists, such as ourselves, that’s about as close as you can come to professional heresy. Economists have preached for decades that patients should have to pay something for their medical care, because if they don’t, they’ll go to the doctor more often.

Empirically, that’s right. But the implications we and other economists drew from that evidence were wrong when it comes to universal, basic coverage. If we have a commitment to provide essential medical care for everyone, regardless of resources, and then we introduce copays, there will always be individuals who can’t afford them. Cost-sharing is not sustainable within a basic system whose purpose is to make sure that everyone gets access to essential care.

The other plank of our blueprint is that its purpose is to provide a floor, not a ceiling. We advocate supplemental coverage of nonessentials, like shorter wait times for nonurgent procedures, greater flexibility and choice of doctors, and nicer amenities in your hospital room. In these cases, we want people to pay just the incremental cost of the additional thing that they’re buying.

Sara Van Horn

How do you respond to the objection that supplemental coverage might weaken the basic coverage that’s offered to everyone?

Amy Finkelstein

That is by far the biggest concern with having a supplemental system. In some countries, there have been concerns that if many people are buying supplemental coverage, it will undermine support for adequate funding of the basic system, or it will limit the supply of high-quality physicians in the basic market. If you look at the experience of many Latin American countries, those concerns have unfortunately played out. There’s a highly unequal system in which the basic system is really not adequate.

The unglamorous but true answer is that you deal with this problem through oversight and vigilance. This is what Israel did: they put together a committee to address this question, and that committee recommended and implemented greater funding for the basic system. So you need both vigilance and a series of financial incentives and regulations. The UK did something similar to encourage physicians to practice in both systems.

This is a real problem. It needs public policy attention to make sure it doesn’t happen. But it’s not an inherently insurmountable problem.

Cal Turner

You write that our health care system is implicitly based on a social contract of access to health care for all, regardless of resources. Where in our history and current policy do you see evidence of this tacit contract? And where does our current system fall short of delivering on it?

Amy Finkelstein

It was kind of shocking for us to realize that the problems of the uninsured exist not because of a lack of policy attention, but despite it. There’s an enormous array of local, state, and federal programs designed to try to get low-income individuals access to free or low-fee primary care, preventive care, and nonemergency hospital care. The uninsured receive about four-fifths as much medical care as they would receive if they were insured, and they pay for only about 20 cents on the dollar of that care. We have an incredibly complex web of public programs to provide care for the uninsured.

I’d also point to the long history of programs enacted to provide coverage to particular groups in particular circumstances. One famous example is prime-age people dying from end-stage renal disease. A miraculous new dialysis technology comes in that can provide life-saving treatment, but most people can’t afford it. It produces an uproar that there are people dying in America because they can’t afford life-saving technology, and in 1972, the United States enacts the end-stage renal disease program, which provides insurance coverage for individuals suffering from end-stage renal disease.

There are many more examples in the book: special programs for low-income women with breast and cervical cancer, people suffering from HIV, people suffering from tuberculosis, COVID-specific coverage programs. All of those programs reveal this instinct that when things get enough attention, we tend to provide a patch.

But those patches never work. Take the end-stage renal disease program. The coverage only kicks in when you’re at the end stage, instead of when you start to have chronic kidney problems, when we might be able to do medical treatment that would prevent further deterioration. If you’re lucky enough to be one of those rare people who finds a match and you get a transplant, you no longer have end-stage renal disease, so you lose your coverage for this program — despite having to pay thousands of dollars a month for immunosuppressants for the rest of your life.

The history of US health policy going back to the eighteenth century also provides evidence of this social contract. At the urging of then Treasury secretary Alexander Hamilton, the United States enacted the first national, compulsory, tax-financed health insurance program. It was a requirement that all sailors pay a payroll tax deducted from their wages. That was handed over to the federal government, which returned it to the port communities to finance local hospitals that provided care to those sailors. As Hamilton explained, it’s our natural tendency to protect people from want. This is a very deep-seated impulse in our society. It’s not some new, progressive notion.

Sara Van Horn

In the book, you talk about a few inflection points where it seemed possible that universal health care would become a reality in the US. What can we learn from looking at these near misses with universal coverage in our own history?

Amy Finkelstein

What we can learn from both the very near misses that we had in the United States and the real struggles that occurred in essentially every high-income country that has enacted universal coverage is that the narrative that it was the destiny of every other country to have universal coverage, whereas we were destined to never have it — because we don’t have a strong labor movement, or we have too much of an individualistic culture, or the American Medical Association is too powerful, or what have you — is a naive and pessimistic reading of history. Every country that has enacted universal coverage experienced a sustained political struggle to do so.

In the UK, the reality was far from the rosy picture of the postwar consensus in which the National Health Service (NHS) sprang seamlessly out of the solidarity from surviving the Blitz and the experience of World War II. Instead, the proposal for the NHS was defeated twenty-one times before it was enacted. There was such a bitter fight between the Labor government that was pushing for it and the Tory opposition that on the eve of enactment, the Labor health minister famously gave a speech in which he proclaimed his deep, burning hatred for the Tory party and declared them lower than vermin. The British Medical Association threatened to boycott the new NHS up until the last second, when they were bought off with additional fees inserted into the program.

Similarly, Canada had its own struggle. The first province to adopt universal medical coverage was Saskatchewan, in 1962. Physicians went on a three-week strike in protest — they had to bring in doctors from the United States and the UK to provide essential medical care. Later, when the federal government enacted universal medical coverage in Canada, there was sustained opposition from the Canadian Medical Association, the Canadian Dental Association, the Canadian Chamber of Commerce, the Canadian Manufacturers’ Association, the Canadian pharmaceutical industry — the list goes on and on.

I don’t think it would be easy in the United States, but it never has been easy. The view that there’s something unique about the US that makes it impossible is a gross misreading of the history of both our country and other countries.

Cal Turner

How does your blueprint differ from other plans, on the Left or more generally, for universal coverage?

Amy Finkelstein

We were a bit surprised and, to be honest, humbled to realize that our proposal is what every other high-income country does. The details are different, but every other high-income country does universal, automatic, basic, free coverage with the ability to supplement.

Usually, when you dig deeper into a problem, you realize that facile answers are not going to cut it. But in this case, it turns out that the person on the street who says, “Every other country does this, why can’t we?” is onto something. You can feel either optimistic that this isn’t some complicated, newfangled thing, or a little embarrassed. How did it take us all this time to realize that, in fact, every other country has basically gotten it right?

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Amy Finkelstein is the John & Jennie S. MacDonald professor of economics at Massachusetts Institute of Technology and a MacArthur Genius fellow. She is the author, with Liran Einav, of We’ve Got You Covered: Rebooting American Health Care (Portfolio, 2023).

Sara Van Horn is a writer living in Serra Grande, Brazil.

Cal Turner is a writer based in Philadelphia.

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