Free-market economic policies, often championed in the healthcare industry, are leading to a “weakened economy,” according to a new report by Nobel Prize-winning economist Joseph Stiglitz.
Stiglitz—a top economist during President Bill Clinton's administration whose ideas are anathema to many conservative economists—and his colleagues at the liberal-leaning Roosevelt Institute released a wide-ranging report on how to improve the U.S. economy. The general thesis of the report, Rewriting the Rules of the American Economy, revolves around fixing income inequality and regulations that inherently favor the wealthy.
Healthcare has its fair share of problems, Stiglitz and the others wrote. And as our editor, Merrill Goozner, wrote late last year, healthcare is far from being an actual free market, contrary to conventional wisdom.
Stiglitz takes particular aim at the surge of mergers and acquisitions. Many hospitals, physician groups and insurers “operate in conditions approaching monopolies,” he and his colleagues write.
“Firms across the healthcare industry, from hospitals to insurance companies to drugmakers, have been allowed to consolidate and expand, reducing competition and thus raising prices,” the report reads.
The result, the authors argue, is that patients wind up paying more for healthcare than any other industrialized country in the world. The Commonwealth Fund has confirmed this on numerous occasions, as the U.S. spends roughly $8,745 annually per person on healthcare.
While the report primarily prescribes remedies for the financial sector, tax system and workforce, it also makes several suggestions on how to make the healthcare system more equitable. The solutions may sound familiar to those who follow the progressive policy sphere.
Stiglitz called for a Medicare-for-all proposal, in which Medicare would be the public option for employees and those who buy health plans on the Affordable Care Act's exchanges. Allowing anyone to enroll in Medicare would lower premiums and give people more plan choices than the high-deductible and narrow-network options that dominate many markets, the report said.
Medicare Part D should no longer be banned from negotiating bulk drug prices from pharmaceutical companies, Stiglitz wrote. The Veterans Affairs Department and Medicaid, conversely, are able to haggle on drug prices.
Reproductive healthcare is also a “matter of economic security” for American women—something President Barack Obama has tried to address through the ACA, although not all health insurers have been complying with the mandate to provide free coverage for all approved birth control.
Sen. Bernie Sanders (I-Vt.), now a Democratic presidential candidate, has advocated fiercely for proposals that are similar to Stiglitz's. On Tuesday, Sanders wrote a letter to VA Secretary Robert McDonald asking the department to break patents on hepatitis C drugs so all veterans can receive the treatments.
Some in the healthcare business community have embraced economic theories that address wealth inequality. When Aetna CEO Mark Bertolini decided to raise the company's wage floor to at least $16 per hour earlier this year, he said the pervasive income gap in the country weighed on his mind after reading a book by French economist Thomas Piketty. It's worth noting, though, that Stiglitz and Piketty differ on why wealth inequality exists.
