A top economic health researcher says the coronavirus reveals the biggest weaknesses of our healthcare system


  • Economic health researcher Katherine Baicker says in the case of contagious diseases like coronavirus, it improves the health of the entire community if everyone else has access to healthcare.
  • Baicker says the lack of coordination within the US healthcare system has exacerbated shortages because resources cannot be moved to where they are needed when they are needed. Instead, states and hospitals are bidding against each other, she says.
  • The US healthcare and health insurance systems are really a patchwork of different programs, which creates gaps and expensive inefficiencies, according to Baicker.
  • Baicker says, “This epidemic is highlighting not only shortcomings in our patchwork insurance system but also a lack of public health surveillance that would let us identify and treat early, as early as possible, a potential outbreak.”
  • She says Medicare For All would not fix the inefficiencies where public money is used on expensive treatments with limited health benefits. Baicker adds that expanding Medicaid could be a better option.
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Katherine Baicker is a leading health economics researcher and dean of the University of Chicago Harris School of Public Policy. She spoke with Business Insider about the changes America needs to make to its healthcare system to prepare for another pandemic. Following is a transcript of the video.


Sara Silverstein: Kate, in situations like these where we have contagious diseases, why does it benefit everyone for other people to have health insurance?

Katherine Baicker: That’s a great question because most of the time when we talk about expanding health insurance, the main people who benefit from that are the newly insured who get access to care that improves their health and that’s the main benefit. But in the case of contagious disease, clearly, my health affects the health of my family and my neighbours and my community. So we all have a much stronger interest in ensuring that everyone has access to care for contagious diseases.

Silverstein: And I’ve heard you talk about the inefficient allocation of resources during the coronavirus crisis. Can you explain what’s happening there and how do you fix something like that?

Baicker: Well, that’s clearly the question of the day is ‘how can we address shortages that we have in some places that are really acute?’ And part of it is ramping up production of things like personal protective equipment and ventilators and of course [inaudible] vaccine. But it’s also about making sure that resources are positioned in the places where they are doing the most good. And that requires coordination, either at the federal level or among states, to make sure that resources can move around because this pandemic is moving across the country at a different rate. Different places are facing shortages at different moments in time. And we should be able to use that fact to make our resources do as much good as possible.

Silverstein: And what would be different about a more unified healthcare system or you’ve talked about deeper infrastructure in our healthcare system that would allow us to have ventilators where we need them as opposed to hospitals fighting over resources.

Baicker: Well this is symptomatic of a broader disconnect in our healthcare system. The US healthcare and health insurance systems are really a patchwork of different programs, partially overlapping, partially leaving gaps. Most Americans who are under age 65 who have health insurance get it through their jobs. So if they lose their jobs, they risk losing their health insurance. But older Americans get health insurance through the federal Medicare program. Lower-income Americans in some districts, some demographic groups get health insurance through Medicaid programs that vary from state to state. And as people’s incomes change, their ages change, their job circumstances change, who’s the insurer that’s responsible for their care changes or potentially goes away. And at the same time, all of those different insurers are contracting with different doctors, different hospitals, which leaves the system wildly uncoordinated for a national emergency like this.

Silverstein: And what sort of system would allow them to all speak to each other?

Baicker: Well, in part there’s a need for better coordination at the insurer level, where you want people to move seamlessly from one doctor to another, from one hospital to another, without their insurance status, meaning that there’s a loss of information about the continuity of their care or maybe a loss of coverage for things that are really important. But you also need coordination of the payment mechanisms and the coverage mechanisms at the provider level, so that if the federal government could better coordinate state health insurance exchange plan participants and hospitals, if there was an opportunity to make sure that resources could flow smoothly without states having to bid against each other or hospitals having to bid against each other, that could improve health outcomes for people who are in shortage areas right now.

Silverstein: And you talk about how our health insurance is often tied to our employment, and if we lose our job, we lose our health insurance. Does that make sense for America today, and what would be your recommendation for what health insurance should be tied to or what it should look like?

Baicker: Well, of course it’s vitally important that people have access to care for anything related to COVID or the coronavirus. And there’ve been some emergency funds made available and some states have opened up special enrollment periods for people to enroll in health insurance exchange or marketplace policies. So that there is some easing of those constraints. But by no means does it meet the full need of the population.

But in some ways, the broader healthcare needs of the population aren’t addressed by policies that focus on care for things like contagious diseases. Back, the first question you asked, it’s highlighted that people who have diabetes or cancer or heart disease need ongoing care and that care primarily benefits them and their families. Their care doesn’t really affect the health outcomes of their neighbours. So we need a healthcare system and a health insurance system that differentiates between care that has really the high health benefit and care that’s of questionable medical benefit.

If we spend a lot of public dollars on expensive treatments with limited health benefit, we’re not going to have enough money left over to make sure that everyone gets vaccinated, that everyone has access to life-saving care. So we have to think more broadly, once we get through this crisis, about designing public insurance plans and private insurance plans that focus resources on the care that makes the biggest difference in people’s health. And that may mean limiting care that has questionable health benefit.

Silverstein: And the US spends a higher percentage of its GDP on its healthcare system than any other country in the world, but I don’t think everyone would say that we have the best healthcare system. So where are the inefficiencies and what are they coming from?

Baicker: Well, the patchwork system that we have certainly leads to some inefficiencies, and we are probably overusing some kinds of care at the same time that there are shortages of other kinds of care. We spend a lot of money on care that has really limited health benefit, and our public insurance programs like Medicare cover an almost unlimited quantity of care for the people who are on those programs. So it’s a very strange time to be talking about too much healthcare use when we have too little care available for this crucial health crisis. But part of the reason that we’re under-resourced to address something like the coronavirus pandemic is that too much of our dollar has been going to care that is probably not worth devoting public resources to for people who can afford to get access to that care on their own.

Now, there are other reasons that we spend a lot more than other countries. Our population looks very different from that of the countries that we’re often compared to. And people sometimes compare the Norwegian healthcare system to the US. The US is much more heterogeneous in terms of the population’s health needs, the condition that we enter the healthcare system in, the social determinants of health. All of those things that lead to higher rates of diabetes and cardiovascular disease. We have very different risk factors [inaudible] Minnesota maybe we look more similar. But in the US we’ve got Minnesota and Texas and Mississippi and California and New York, and those populations look very different and they have very different health needs. So I think we have to look even more broadly beyond the walls of the healthcare system when we’re thinking about managing population health in a more effective way.

Silverstein: And I just want to make sure I understand, because you’ve mentioned a few times about spending public dollars on very expensive treatment with limited health benefits. Can you explain to me what type of situations you’re talking about there?

Baicker: I’m very glad to have the chance to clarify that because I think people sometimes think that I’m talking about expensive care, but I’m not. I’m saying there’s some care that is expensive and worth every penny spent because it’s life-saving. Cancer treatment that extends life by years. [inaudible] that’s wildly cost-ineffective because it’s just not doing patients any good. Medications that are contraindicated for those patients. For example, medications that lower cholesterol. They’re really important for diabetic patients. They’re very cost-effective. Really important that every low-income diabetic patient have access at no co-payment to a cholesterol-lowering drug. But that same drug used in a patient who has no other risk factors, mildly elevated cholesterol, that’s not nearly as cost-effective. In fact, maybe high-income patients should have to pay a pretty high copay for that because it’s not actually improving their health by nearly as much as it would for a patient for whom it’s targeted.

So some cancer care that’s very expensive is extending life by months or years, and some is not really very different from a less expensive alternative that’s available. What I’m trying to get at with thinking about where our public resources are focused is that when we have important unmet health needs of huge swaths of the population, we can’t afford to spend an unlimited amount of public dollars, particularly on higher-income populations who could afford to buy augmented health insurance plans on their own.

Rather, my preferences would be to ensure care that’s of high value for everyone and then make sure that our public programs have enough dollars to do that. And then people who want to get additional care that is maybe of lower health benefit, that’s not extending the quality or length of their life by all that much. Maybe our public programs can’t cover that and that’s up to people to buy extra policies if they want to have extra coverage of that.

Silverstein: And for someone who is not, this is a very complicated subject and it’s very hard to figure out the solutions to, what do we want our healthcare system to look like so that when we meet something like a coronavirus epidemic, that we are prepared to handle it in the most effective way possible?

Baicker: Well, this epidemic is highlighting not only shortcomings in our patchwork insurance system, but also a lack of public health surveillance that would let us identify and treat early, as early as possible, a potential outbreak. So there are all sorts of population health surveillance tools that we ought to be implementing outside of the health insurance system.

Right now we don’t have the capacity to do population-based sampling measurement of who’s been exposed to the disease, who’s cleared the disease. If we had population-based metrics of that, we would have a lot more flexibility to start reopening activities in a way that guarded against a resurgence in the disease and that targeted activities that had the least health risk and the most economic benefit. But we don’t have the population surveillance data that we need, public health surveillance data, that we need to be able to implement a nuanced policy like that.

Those systems could be in place all the time because the next epidemic could look very different. Right now we’re focused on things like ventilators. The next epidemic might not be respiratory. So it requires a certain flexibility and constant vigilance, and that’s important outside of how we ensure people’s access to healthcare, which is another really important public policy question.

Silverstein: And if for somebody like me who says, OK, well I, everything that you’re saying sounds so smart and I agree with Kate, I want to see these things happening, but it’s still hard for me to make that connection between the policy that I want to support that will make up, where it will feel where like we have less gaps and we are more prepared and that everyone has the coverage they need to protect themselves and other people. And I don’t want to politicize it at all but would it be helpful to understand what specific policies. Like are we talking about Medicare For All or does Medicare For All have similar problems?

Baicker: So the policy that I described that would have more limited coverage of care of questionable benefit, that looks very different from Medicare For All. I think when most people talk about Medicare For All, they’re thinking of our current Medicare system expanded across the population. And our current Medicare system funds a lot of really important care for people but it also funds a lot of care that has much more limited health benefit. And expanding that to the whole population would be very expensive in terms of the dollars required to cover it and wouldn’t really leave any money left over for all of the other things that are so important to our prosperity and wellbeing, like education and housing and food and infrastructure.

Another way to expand coverage would be to expand Medicaid to populations that don’t currently have it. And I think there’s a strong body of evidence suggesting that being [inaudible] uninsured, even before a pandemic –

Silverstein: Sorry, there’s, you’re being cut out. One second. Can you go back?

Baicker: I was saying something very important.

Silverstein: That’s what I thought. OK. If you wouldn’t mind just backing up a tiny bit.

Baicker: Sure. Another policy that people debate is expanding Medicaid coverage. States have different options. Some states have chosen to do that and some states have chosen not to. I think there’s a huge body of evidence that being insured is really important for your health, even aside from the pandemic. It just amplifies that importance.

People who have insurance are much more financially secure because they don’t risk being evicted because they can’t pay their bills because they had an expensive hospitalisation. They have much better access to care. They’re more likely to get preventive care – cholesterol screenings, mammograms, pap smears, all recommended screenings. They report the quality of their care as much higher. Their mental health is better.

Their physical health. It’s less clear that it effectively addresses things like diabetes, high cholesterol, high blood pressure, but it does seem to lower mortality overall and dramatically improve mental health, as I said. So expanding Medicaid coverage to everyone poses enormous health benefits but comes at a cost. Expanding coverages isn’t free. People use more care and that costs money.

So what I would love for the public to be wrestling with is how to devote public resources and how to make that trade-off for the health and wellbeing of the people who are insured, balancing the taxpayer cost of financing those programs. And the sloganeering about Medicare For All, federal rights, state rights, all of that sort of glides over the really tough questions of how much care do we want our public programs to cover.

Silverstein: And you mentioned sloganeering and I feel like we’re hearing a lot about post-truth and narrative economics or zombie ideas. And healthcare is something that we talk about kind of in these sort of soundbites that we don’t always understand. Are there certain myths or beliefs or things that you hear over and over again about the healthcare system that you could help us dispel? That are not really as they appear?

Baicker: That’s a perfect question for me. As Dean of the Harris School of Public Policy at the University of Chicago as well as a health economist, we focus on bringing evidence to bear on these questions, because the ideology can’t answer the tough questions. And it’s easy to tell a story on either side of a question that sounds possibly true but doesn’t bear out in the evidence. And expanding Medicaid is a great example of myths on both sides of the aisle.

So for example, some people who are opposed to expanding Medicaid say it’s a terrible program. People are no better off when they have Medicaid than if they were uninsured. And you might think that if you didn’t have a sophisticated way of doing the data analysis, because people who are on Medicaid have a higher mortality rate than the uninsured. So you might think, Oh, what a terrible program.

But in fact, one of the main avenues by which you get on Medicaid is by being poor. And being poor is really hard on your health. And so it’s not that Medicaid is increasing mortality, it’s that being low income is increasing mortality. Once you strip away that confounding factor, it’s clear that being on Medicaid is much better for you than being uninsured.

But there are also myths on the other side of the aisle. People say expanding Medicaid would be such a wonderful thing that we would actually save money because people would go to the doctor instead of the emergency room. They would get care much earlier, which would be not only better for their health but more cost-effective. We’d save money. People would go back to work. They’d pay taxes. We’re all better off when we insure everyone and all of their care through Medicaid.

Well, when people get access to healthcare through Medicaid, they go to the doctor more and to the hospital more and to the emergency room more and they use more prescription drugs and all of that is very good for their health. But it costs money. You do not save money by expanding Medicaid.

Now, this is a very fraught question in a time of pandemic where it’s one of the rare cases that my health affects your health as much as it affects my own. And it’s very important that everyone have care for conditions that are contagious like that. But it’s also important that people have care for cancer and pregnancy and diabetes and all of those other things. But that care is primarily about ensuring the wellbeing of all Americans. It’s not about the spillover effects or the contagion that are so salient in the case of the pandemic.