Title: The Skyrocketing Cost of Health Care

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Brian Lehrer: Brian Lehrer on WNYC. The government shutdown ended without Democrats getting the key provision they were fighting for, extending the Obamacare tax credits. With open enrollment for 2026 underway, people who get their health insurance through the Affordable Care Act, are seeing how much their monthly premiums will rise without the extended subsidies being continued, in some cases doubling or tripling.

Our next guest argues that the argument over subsidies is far too small. In fact, the infighting highlights just how dysfunctional the American health care hybrid of public and private health insurance is. He is Hayden Rooke-Ley, Senior Fellow at the Brown University School of Public Health. Hello Brownies. His scholarship focuses on corporate consolidation in health care, Medicare and Medicaid financing, and labor and workforce issues in the health sector. He recently wrote a post on Katelyn Jetelina's Your Local Epidemiologist Substack. Some of you know Katelyn Jetelina. We have her on the show periodically, with her writings under Your Local Epidemiologist. Hayden Rooke-Ley wrote on that, an article titled 5 Ways Our Healthcare System Has Become Utterly Insane. Hayden, thanks for sharing this with us. Welcome to WNYC.

Hayden Rooke-Ley: Thanks so much for having me.

Brian: True or false: Did Obamacare increase the cost of health care and why, even though it's called the Affordable Care Act?

Hayden: I'll go neutral on that question. The answer here is that the Affordable Care Act significantly expanded coverage for folks and has been vital, for example, for the 20 million people who are on the ACA exchanges. But part of what we discussed in the post here is that the ACA really didn't tackle the underlying costs of the US Healthcare system. That continues to be a significant issue for not just the folks who are on the ACA exchanges, but also the 180 million Americans who get their private insurance through their employer.

Brian: Right. Talk about that because over the past two decades, you write about how the cost of employer sponsored health insurance has skyrocketed and it's climbed higher, it's climbed faster than wages have. Employer sponsored health insurance is still how most Americans get their health care unless they're over 65. Can you talk to us about that lopsidedness?

Hayden: It's probably not a surprise to folks that we spend an incredible amount of money on health care in the United States, about double our peer nations, and costs have been accelerating particularly in the last few years. It's estimated that covering an average family on employer sponsored Insurance is costing $35,000, again, for the coverage of insurance this year. For reference, the median wage in this country is just over $80,000. So we're talking about substantial portion of health expenditures going towards health care.

We've seen over the last few decades the growth in premiums, deductibles, out-of-pocket costs, on the employer sponsored insurance market, really outpace wages and inflation. That's why so many folks are feeling these costs when they go to the doctor, when they pay their premiums, when they try to access care.

Brian: Listener writes, and we're going to go down your list of 5 ways our health care system has become utterly insane. We're going to tick them off. Listener writes, "Wasn't Obamacare a stopgap measure to prop up the status quo with tax dollars until real reform could be implemented? And didn't Trump run on reforming the system?" Let's take the first question there first. Was Obamacare a stopgap measure to prop up the status quo with tax dollars as health care costs continue to rise, until real reform could be implemented?

Hayden: I think that's a fair way to characterize the ACA. Again, vital expansion of coverage for people who weren't formally insured. It's easy to forget that we still have tens of millions of folks in this country that don't have basic health insurance. We have far fewer than we used to have. The number used to be upwards of 50 million. So the ACA was consequential in expanding insurance coverage for folks who couldn't access it. But as the listener writes in, it really didn't address the fundamental drivers of healthcare costs in this country, and in that sense, I think can be said to be sort of a stopgap measure.

Brian: Your 5 Ways That the US Healthcare System is Utterly Insane. Number one, we just discussed a little bit, costs versus wages, a 20 year disconnect. Number two is, we pay the most and get the least. Number three, Americans don't over consume health care. Prices and private bloat drive costs. Number four, corporate and financial firms have taken over care. Number five, existing approaches have failed and the latest proposals are more of the same.

Let's drill down on a few of those. Your item number three: Americans don't over consume health care. Prices and private bloat drive costs. What comparison are you making there?

Hayden: There's a misconception, certainly I think amongst a lot of the policy elite, and potentially the public as well, that we spend too much on health care in the US because we overutilize care. We're sicker, we go to the doctor too much. We have bad incentives for physicians so they don't practice the right medicine, they over deliver healthcare. That's a common narrative that you hear certainly in the policy discourse, when in reality Americans actually don't overutilize the health care system. In many cases, we actually underutilize the healthcare system and can't access care.

Compared to our peer nations, we don't visit the doctor more, in fact less. We have fewer hospitalizations. We have lower lengths of stay when we do go to the hospital. Even for some of our really high priced procedures in this country, for example, certain cardiac interventions, knee replacements, hip replacements, gallbladder and prostate removals, just to name a number of different examples, we actually access these forms of care much less frequently than our peer nations. What jumps out when you look at- when you compare our country to other countries, is the price of care when we access it.

We simply have astronomically high prices for care, and we also have unparalleled levels of private sector administrative waste when we look at the amount of money that's spent not on actually delivering care, but on administrative expenses. We just jump off this chart when we compare to other countries. This is a basic finding that we've known for a while, but we seem to forget oftentimes, again in our policymaking discussions, because as we can get into here, so much of the policy interventions have been oriented around trying to get folks to use the health care system less in order to save costs, when that's really not the problem here.

Brian: Listeners, does anybody have a question or a story? I'm going to read a text from a small business owner here in a second who has a story. A question or a story for our guest on the government shutdowns, let's say defining issue, but how it's much, much deeper than even what they're fighting about. It's Hayden Rooke-Ley, senior fellow at the Brown University School of Public Health, who's got a post called 5 Ways Our Healthcare System Has Become Utterly Insane. 212-433-WNYC. 433-9692.

You can call or you can text with a story or a question. Hayden, listener writes, "The ACA was absolutely instrumental in being able to keep health insurance for us small business owners and gig workers, given how fast rates were rising pre-ACA, but it still didn't fix the issues, with policies still increasing rates and adjusting coverage every year. Pay same or more and get less. I think that text brings us to your item number four on your list of 5 ways the system is utterly insane. Number Four: Corporate and financial firms have taken over care. What has changed since the Affordable Care Act was implemented almost 15 years ago?

Hayden: Since the ACA and really since the '90s, we've seen a radical transformation in the ownership landscape of our medical system. Vanishing are the days of physicians owning their medical practices, of local pharmacists owning their pharmacies, of nonprofit local hospitals truly being charities rooted in the community and having a commitment to their foremost charitable mission. What we've seen instead is a rapid rise in corporate consolidation and financialization of the US Healthcare system.

What I mean by this, is that we've seen the growth of financial firms get in the business of care delivery, and also a sort of ethos, a culture of financialization permeate into the healthcare delivery system. For example, our large nonprofit healthcare systems oftentimes are behaving in the interest of generating profits over delivering care to their patients. One way of looking at- statistic of looking at this transformation towards corporatization and financialization, is that physicians now are 80% employed by a corporate entity, which is again, a radical transformation from decades prior.

What we've seen is that some of the nation's largest corporations, some of the world's largest corporations, really become dominant in the health care system. For example, UnitedHealthcare is not just the nation's largest insurance company, it's now the largest employer of physicians. It's the largest owner of home health and hospice facilities. It owns one of the three largest pharmacy benefit managers, or PBMs. These are these intermediaries that really dictate pricing and control over pharmacists. So, a real sort of transformation in who owns and controls care delivery, not to mention the growth and financialization of hospital systems and also of private equity and other financial investors.

Brian: They would probably argue, like the executives at UnitedHealthcare, for example, might argue that vertical consolidation, which is what you're describing, the largest insurer also now being the largest employer of physicians and the largest operator of home health and hospice agencies, that that would make it all very efficient. Rather than having all these independent companies that need to each take some profit out each time something happens in healthcare. Why doesn't it work that way?

Hayden: This has been one of the, I think, pernicious narratives that has taken hold both in law and policy over the last number of decades. We've had these coinciding forces. One, on the antitrust and more legal side of things. There's been a much more permissive approach towards consolidation. Really prior to the Biden administration and the FTC and DOJ that tried to revive to some degree, antitrust enforcement. Really, for the last number of decades, there's been a retreat from antitrust enforcement, and in particular, there's been a retreat from vertical antitrust enforcement.

Exactly the theory that you put forward, has gained purchase amongst enforcers and in courts, and that's this idea that vertical integration almost always is going to be efficient, is going to deliver lower costs for patients. This narrative has also very much taken hold in the healthcare policy space folks. There's been a lot of discussion and a lot of belief that if we can just integrate everything, that healthcare costs are going to go down. This actually connects up to what we discussed a little bit earlier around utilization. There's been really prevalent narratives around integrating all of care and therefore reducing the amount of care that people access.

The problem is there's very little literature showing that vertical consolidation of any sort in the health care system has yielded efficiencies, and even if when it does yield efficiencies, that those efficiencies have been borne by taxpayers and consumers. I can give you an example for United, let's say. The approach to governing our Medicare program over the last number of decades has been essentially privatization. There's been a push, really catalyzed by the Bush administration in 2003, to outsource the governance of Medicare to private insurance companies, UnitedHealthcare being the biggest one. So instead of directly paying for care through-- the government, instead of directly paying for care for Medicare Beneficiaries, essentially pays UnitedHealthcare and other large insurers hundreds of billions of dollars a year to administer the Medicare benefit.

With that money, United, Humana, Aetna, the largest insurers, have not only covered a lot of folks through Medicare, but they've done this vertical integration where they've acquired pharmacies and physician practices and home health, and putting forth the theory that you described that this is going to be more efficient. What we've actually seen in Medicare is that this privatized version is significantly more expensive than traditional Medicare, to the tune of 80, 90, $100 billion a year. Instead of lowering costs and delivering the Medicare benefit for a cheaper price, what we see with this vertical integration are all the concerns that have historically animated antitrust enforcers, which is that there are ways of gaming regulations when you vertically integrate. There are ways to disfavor your rivals if you're competing with them in adjacent markets. So the story of efficiency really hasn't borne out in the healthcare system, but it remains a really seductive narrative that policymakers, and I think to a large degree, antitrust enforcers and courts continue to adopt.

Brian: I'm sure you know up there at Brown, that in New York City, we have basically a revolt underway, by I don't know how many thousands of New York City public employee retirees who they're trying to move from traditional Medicare onto a Medicare Advantage program. They're freaking out and trying to get that reversed. With Hayden Rooke-Ley senior fellow at the Brown University School of Public Health, and he wrote a post on the Substack Your Local Epidemiologist called 5 Ways Our Health Care System Has Become Utterly Insane.

We're going to take a few phone calls on what has happened to Obamacare that extending extended subsidies became the focal point of this government shutdown. But then we're going to close by me asking you what you think we can actually do about it. Is it Medicare for all or is it something else? But first, Danny in Manhattan, you're on WNYC. Hi, Danny.

Danny: Hi. How are you?

Brian: Good. I see you work in health care, right?

Danny: Yes, I do. Can you hear me?

Brian: Yes.

Danny: Oh, so just a couple of quick things about Obamacare. It's been chipped away by the Republicans and one of the things was to have everybody buy in, which would allow like younger, generally younger, healthier people buy in, which would reduce the cost of the premiums. Once you got away with that, it tended to be sicker people that are buying into the program, which of course makes the premiums go up.

About 35 years ago maybe, I was in graduate school. I did a project on changing health care and paying for health care. In a short, basic way, it was if you're getting your premiums help from your employer, 5, 6, 7, $8,000, If I give it to the employee and let the employee spend it the way they want to spend it, it leads to a whole bunch of incentives, and you get to keep the difference at the end of the year if you don't use it. So people would try to be healthier so they get to keep that extra money. People might stop smoking or like go to their doctor twice a year for checkups to make sure everything's okay.

Brian: Right. Danny, thank you for that. Let me turn that into a question for Hayden. Hayden, he talks about how Obamacare was chipped away at. Remember they ditched the requirement that everyone had to buy in and that everyone was required to have health insurance, one way or another, in the United States. The argument being that if you have a lot of young and healthy people who also have to have insurance, that there's going to be more money in the pot for the people who are older or sicker, and that's how you socialize the system. But of course, there was such a Conservative revolt against that mandate to own insurance.

Another listener points out in a text that Obama wanted a public option in Obamacare where people could basically sign on to government health insurance, like a Medicare-for-all program as one option, if you didn't prefer the private health insurance options. So the original design of Obamacare got chipped away at politically and in the courts and so we can't expect it to have held down prices because it got dismantled by politics to that degree. Agree?

Hayden: I think in some sense it is the case that the individual mandate did not hold up. However, the ACA exchanges have been resilient in terms of providing coverage for folks and expanding that coverage, and this was largely through the enhanced premium tax credits. So keeping people in the insurance pool, a mandate is one way to do this. Another way is to try to make insurance affordable at the point of purchasing it. Again, this is a different discussion from actually holding health care costs down. For many folks on the ACA exchanges, health care is still expensive, but it's far less expensive than it was before the enhanced premium tax credits were passed.

What we may see if they are not extended, is the sort of death spiral of the insurance market that has long been the concern of constructing these sort of market oriented approaches. The Republicans quite explicitly want to see less risk pooling. They want to move government subsidies to essentially high deductible health plans. This gets to the some of the issues we were talking about earlier around utilization and this idea that really the way to reform the health care system is to expose patients to more and more risk of covering care or paying for care. That's why you've seen this has long been the North Star of the Republican Party.

It's really been their one policy proposal in addition to the Affordable Care Act, which was originally their idea. Really exposing patients more to the cost of health care by putting money in a health savings account and requiring that they have a high deductible health plan. That appears to be the latest proposal from the Republicans, and in that sort of move would begin to break down the risk pooling in the ACA marketplaces and potentially move us more towards a system where you saw elderly and sicker patients in an isolated risk pool that could spiral costs out of control and then younger and healthier patients in these high deductible plans.

Brian: Ellen in Princeton, a physician. Doctor, you're on WNYC. Hello.

Ellen: Hi. Thanks so much for having me. I just wanted to say I was so happy to hear someone finally pointing out that administrative bloat is a huge driver of cost in the healthcare system. I think any physician who's been employed would tell you the same. I used to be employed by one of the big universities in the city and the only way these departments really make money is from the physician-patient interaction. Every visit is what generates dollars for the department. So when you start hiring more administrators than you actually have physicians and you don't keep that in check, suddenly there's a downward pressure on our salaries.

You can't recruit incoming physicians because their salaries have to be lower than they've been previously. It's a real problem and it's tough to say exactly how much benefit we're getting for all those dollars.

Brian: Thank you, Ellen. One more. Roger in Tamworth, New Hampshire, wants to suggest an alternative system. Roger, you're on WNYC. Hello.

Roger: Hi. I just wondered if Hayden thought that returning to a nonprofit model like we once had in this country, or something like maybe like I believe the Swiss have, where it's a nonprofit system run by independent, competing companies. If that might help to look at this differently.

Brian: Thank you, and interesting that you reference a system from another country. Here's one more text that says, "I was able to retire at 58 thanks to the Affordable Care Act, but my premiums have tripled to $1,500 a month, single person. I can pay it but this is the straw that broke the camel's back. I will be leaving the US. I want to live in a country where I am more than a resource to squeeze me for every single penny. Of course they don't make pennies anymore. We'll talk about that later in the show, but Hayden, go to your solutions. I know you have a list and then we're out of time.

Hayden: I think there's the kind of hopeful aspect of this, is that these are eminently solvable problems if we have the political will and the policymakers who are willing to tackle directly the sources of cost growth and the really misallocation of resources throughout our healthcare system. We've been, I think, bathed in a cynical approach to collectively governing our healthcare system for decades now. There's been an attempt through so many different policies to essentially do healthcare through cutting subsidies to private insurance companies and having these large corporate conglomerates essentially be the private governors of our healthcare system.

The listener physician who called in, experiences what so many of us do today, which is that really the folks in control of the healthcare system are these massive conglomerates, these financial investors, these large vertically integrated companies. That's a policy choice. If we wanted to, we could much more directly govern the US Healthcare system through a whole range of measures that really tackled costs and that ensured that folks have access. So a number of different policies here. We need to tackle prices directly instead of trying to outsource regulation and essentially try to have these insurers manage the utilization of doctors and patients.

We need to have a much more sophisticated process of stewarding high value technologies. We need to eliminate middlemen and other intermediaries in the system that are frankly unnecessary. If you look at how we fund the Medicare Part D drug benefit, for example, we don't negotiate prices by and large. We basically hand that authority over to pharmacy benefit managers and insurance companies. That's a policy choice that we don't need to make. We ought to be breaking up these large corporate behemoths that are vertically integrated and enforce some level of competition in the areas of healthcare where we do want markets to function. Then we need to be thinking about who actually we want to own and govern the healthcare system. Do we want private equity or do we want local community ownership?

Then I think we need a real commitment to an industrial policy around the healthcare system. Right now, the industrial policy, certainly of the Trump administration, has been to build up the military state and to build data centers. That's essentially been the policy choice that we have right now. We can imagine a totally different one that build health centers and clinics in rural areas. We have to actually build the labor and capital, build the labor workforce and infrastructure to meet the care needs of Americans where they need it. Right now, we're failing at that and we could certainly move in that direction if there was the political will to do it.

Brian: The last question, that's still a lot of moving parts. What do you say to the many listeners who are texting us with things like this? "I'm originally from Canada and I truly believe that Canadians having a basic care right has made Canada a kinder society." Translation, why not Bernie Sanders' Medicare for All?

Hayden: Nothing that I said here is in conflict with Medicare for All. I would be a proponent of moving towards that system. The only point I would make is that it doesn't necessarily answer the rest of these questions. We've got to govern the Medicare program much better. We've privatized it. I certainly think that maybe the most significant leap we could make is to just get rid of private insurance. But of course right now over half of Medicare is private insurance. The entire Medicare Part D benefit is private insurance, so that's one of many steps. Medicare for all doesn't answer the question of whether we ought to have private equity ownership of medical clinics of where our capacity is. There's so much to be done here to govern the health care system. Answering the insurance question is one of many that have to be addressed.

Brian: Hayden Rooke-Ley, senior fellow at the Brown University School of Public Health. He wrote a post on the site, it's a Substack newsletter, Your Local Epidemiologist, called 5 Ways Our Healthcare System Has Become Utterly Insane. Thank you for sharing them with us and your solutions.

Hayden: Thanks so much.

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