INTERVIEW (Part II): Health Care Policy Expert Talks About What Free Market Reform Actually Looks Like
Nurses in the accident and emergency dept of Selly Oak Hospital work during a busy shift on March 16, 2010 in Birmingham, England.
Photo by Christopher Furlong/Getty Images

The Democratic presidential primary has consolidated into a showdown between former Vice President Joe Biden and Sen. Bernie Sanders (I-VT). One of the key issues on which the Democratic candidates are running is health care.

While the progressive gold standard seems to be a single-payer system, there’s a break within the party, with some preferring a more “moderate” approach to reform. Both Biden and Sanders have presented health care plans that would greatly expand the role of the federal government, and increase government spending by billions to trillions of dollars over a decade.

The “Medicare for All” plan put forth by Sanders is estimated to cost more than $32 trillion over a decade, while Biden’s plan is estimated to cost approximately $750 billion.

The Daily Wire recently spoke with health care policy expert Avik Roy about Medicare for All and the Biden plan, as well as what more conservative, free market solutions would look like. Roy is the co-founder and president of the Foundation for Research on Equal Opportunity (FREOPP), which “conducts original research on expanding economic opportunity to those who least have it,” according to the organization’s official website.

In part one of this three-part interview, which you can read here, Roy discussed what “Medicare for All” really means, the flaws of such a system, the dangers of the “moderate” counterpoint, and if a nation can achieve so-called universal coverage without a health care mandate.

In part two, Roy talks about how the current health care system in the United States is neither free market nor government-run, and what a conservative solution could look like.

DW: Can you describe the United States health care system as it compares to a free market system versus a much more regulated system? Are we not somewhere in between?

ROY: That’s exactly right, we’re somewhere in between. We’re not a 100% public system, and we’re not a 100% private system. We’re somewhere in between. Roughly half of all health expenditures – and actually more if you define it in certain ways – are paid for by the taxpayer through taxes and spending. It’s more like two-thirds of all health care spending in America is public spending if you include the value of the exclusion from taxation of employer-sponsored coverage, which is effectively a form of subsidy for that kind of coverage. So, if you put all that together, it’s like two-thirds. If you don’t include the tax expenditures, it’s more like half. The government’s role in health care in America is considerable and growing all the time. It’s a misperception out there that the American health care system is a free market system, and European countries are all socialists. That’s not true at all. There are countries in Europe that are much more market-oriented than the United States.

In fact, at FREOPP, we’re doing some research on this topic, really trying to identify which countries have the most market-oriented systems, and which ones have the most socialized. We’re coming to an analysis that suggests that there’s somewhere around a half dozen countries that are more market-oriented than the United States. The most notable example is Switzerland. In Switzerland, you have a system in which everybody has private insurance. There are not government insurers, there are no public options, there’s no Medicare, there’s no Medicaid. Everyone buys private insurance. There is an individual mandate in Switzerland, and in terms of our own health reform proposals, we are opposed to an individual mandate.

In Switzerland, it’s all individual private insurance. Everyone shops for their own coverage much like we do in Medicare Advantage, and that coverage is subsidized for people in the bottom fifth of the spectrum in terms of income, illness, and things like that. So, it’s a pretty good system that’s much more fiscally sustainable than ours, and where everyone has universal coverage. That’s an example of the model that we can look to and say, “Hey, if you want to achieve universal coverage, you don’t have to go the socialist route. You can actually go the market-based route. You can learn from Medicare Advantage, you can learn from Switzerland.” That’s why at FREOPP, our health reform plan is called “Medicare Advantage for All,” because we really want to highlight that Medicare Advantage is a great model for thinking about how to expand coverage in an affordable way.

DW: What is the conservative solution to healthcare? What are the tentpole ideas of the solution to what we have now?

ROY: First of all, it’s very important to embrace the concept of universal coverage. I think too often conservatives have fallen into the trap of saying that just because the Left supports a certain policy outcome, we must be against it. That doesn’t make any sense because if you are a true believer in free enterprise, if you are a true believer in capitalism, you know that it’s free enterprise and free markets that have led to almost everyone in America being able to have a job, to almost every American having a smart phone, to almost every American being able to afford a laptop. These things are possible because of free market innovation and competition.

So, if we believe that free market innovation and competition can make those kinds of services cheaper and more accessible and more abundant and more available to every American, why don’t we think the same about health care? We should. We should understand that it’s actually free enterprise that does the best job of delivering affordable health insurance to every American.

Using that as our philosophical premise, we start by saying we should embrace the cause of universal coverage, and show how markets can achieve it. So, how would markets achieve it? The simple answer is, we should learn from Medicare Advantage. The irony of Bernie Sanders talking about “Medicare for All” is that if you look at the Medicare program today, from 15 years ago to now, there has been zero growth in the number of people enrolled in the single-payer component of the Medicare program.

All the growth and enrollment in Medicare has come from private insurance, from the Medicare Advantage program. Why is that? Because the private insurers have shown that they can deliver the benefits of the Medicare program at a lower cost, on average about 10% less expensive than the traditional government-run Medicare program. They’ve gotten so much more efficient that they’re now adding extra benefits like vision care and dental care on top of the traditional Medicare benefits – and prescription drug coverage. So, you’re getting a lot more benefits at a lower cost.

Every year, the gap between private plans under Medicare Advantage and the single-payer or government-run approach under the traditional Medicare widens. Our concept, what we propose, is to learn from that, to offer more affordable options to people elsewhere who are under the age of 65.

We basically describe “Medicare Advantage for All” with four core principles. The first is that you have to have a system that’s affordable for every generation. What do I mean by that? It means that we haven’t solved the problem if we’ve made health care and health insurance affordable for the Americans living today, but made the system fiscally unsustainable for future generations. It’s incredibly important to do both, to make health care affordable for those who need it today, but also make health care and health insurance affordable for the taxpayers of tomorrow. That’s number one because if we have a system we can’t afford, either today or tomorrow, we haven’t solved anything.

Principle number two is to have personalized insurance and personalized options. Milton Friedman famously wrote a book called “Free to Choose,” and that is an essential principle of market-based health reform, that all Americans should have the freedom to choose among a wide variety of plans that suit their needs. So, under Medicare for All, you have no choices, you just have the government0-run plan, so-called Medicare for All. Under the current system, under the status quo American system, very few Americans actually have a choice in the way they get their health insurance.

If you’re in Medicaid, you’re basically handed a government-assigned plan. If you get insurance from your employer, yes, it’s a private insurance plan, but you didn’t choose it – some HR bureaucrat at your company chose it, and imposed it on you whether or not that’s a good plan for you. That’s not a choice. And a lot of people who are in the Medicare program are basically in a single-payer system where they don’t have any choice. All Americans should have the freedom to choose among a wide variety of private plans, just like they can in the Medicare Advantage program. That’s a core element of our approach.

The next element is fairness to taxpayers. What does that mean? That means that to the degree that we publicly finance our health care system, those taxpayer revenues must be as focused as possible on the vulnerable population. The sick, people with pre-existing conditions, people with birth defects, and childhood genetic disorders, and the very poor and the disabled. Not the wealthy.

One of the things that’s most wrong with our system today is that you and I pay taxes so that the wealthiest Americans – millionaires and billionaires, to borrow a phrase – can have government-subsidized insurance. Why is it that steel workers and truck drivers are asked to pay taxes so that millionaires and billionaires can have government-subsidized health insurance? That’s insane, and that’s something we absolutely have to reform. If we do that, we can save an enormous amount of money in terms of the deficits and debt, and what we spend on health care without threatening coverage for anyone.

The fourth point is innovation and competition for patients. What we’re talking about there is the rise of monopoly power, and crony capitalism in the U.S. The problem of crony capitalism and monopolies that both extract favors form the government and extract monopoly prices from patients is a huge problem in the United States – and they go together because regional monopolies, like a regional hospital monopoly, has incredible power not only to charge higher prices to patients, but also to lobby their congressman and say, “Hey, we control a lot of the economy in this district and we control a lot of jobs in this district, and unless you do what we want, we will scream bloody murder.”

A lot of congressmen and state legislators cave into that. That’s a huge problem. We’ve got to do more to curtail the power of monopolies to raise prices on patients, and also because monopolies prevent the rise of innovation. You have to have competition in order to have a more innovative system.

Competition is really important for reducing prices and also for increasing quality and increasing innovation. Innovation and competition for patients is essential. Monopolies are not the solution. Again, there are a lot of people in conservative and Republican circles who are confused about this. They say, “If it’s a monopoly, but it’s a private sector monopoly, that’s okay.” What we’re arguing is that monopolies are bad regardless of whether they’re private sector monopolies or government sponsored monopolies. If you really want a market-based system, you actually have to have a market, and having a market means that you have to have choices as to where you get your care and your coverage.

In part three of this interview, which will be released on Sunday, Roy discusses hospital monopolization, the real progress that conservatives have made on health care legislation, the pressures faced by elected officials to retain the status quo, and more.

I’d like to thank Avik Roy for taking the time to speak about such an important issue. For more information, you can follow him on Twitter or visit the FREOPP website here.