Another day, another proposed fix to a pressing national problem by a Democratic presidential hopeful. Former Vice President Joe Biden has positioned himself as the "moderate" leader of the Democratic Party, putting pressure on him to come up with a "sensible" alternative to Sen. Sanders' (I-Vt.) Medicare for All plan. But Biden's healthcare proposal, released July 15, doubles down on flawed, top-down solutions without offering any new ideas. Presidential hopefuls should instead pledge to unleash market innovation and lower healthcare prices for all.
Of course, a former vice president will inevitably find it difficult to make a clean policy break from the administration he has repeatedly hailed and defended. Biden's tenure as vice president made him into a second-tier political rockstar, and it makes sense that he's reluctant to separate himself from former President Obama's Affordable Care Act (aka "Obamacare"). It's also no surprise that "Bidencare" preserves Obamacare's disastrous expansion of Medicaid, the federal government's insurance program for low-income Americans. His plan even provides a public option for residents of states that have not expanded Medicaid. Perhaps more surprising, or just disappointing, is how thoroughly the Democratic orthodoxy has embraced government medical insurance even at gargantuan cost, despite little evidence that it'll work.
Back when he was a heartbeat away from the presidency, Biden vigorously defended Obamacare, criticizing Republican governors for failing to expand Medicaid and predicting that all states would eventually see the light. That never quite happened (as of now, 17 states wisely refuse to expand health insurance targeted at low-income Americans). But the Obama administration tried to cajole red and purple states into expanding the Medicaid eligibility threshold "up to 138 percent of the poverty level." Nevertheless, states such as Texas, Florida, and North Carolina wisely considered the evidence that Medicaid was breaking the bank — without helping the poor get access to the care they needed.
This evidence isn't just based on one or two stray studies produced by the "right" think-tank. In June 2018, Health Affairs published a blockbuster analysis of 77 studies on Medicaid's effectiveness, and the results may be disappointing for fans of government-provided insurance. Around 60 percent of the studies included in the meta-analysis found that health status and quality of care failed to improve for low-income patients after Medicaid expansion. The analysis also finds that a majority (56 percent of studies) found no improvement in the financial performance of hospitals post-Medicaid expansion. This finding contradicts claims by Obama, Biden and co. that Medicaid expansion would shift patients from the emergency room to doctor's offices, lowering system-wide costs.
These findings are scandalous for an expansion program that costs federal taxpayers at least $70 billion per year. How could all of this money be failing to improve outcomes? Plausibly, the types of institutions that accept Medicaid are larger facilities that aren't as great at delivering quality health-care as smaller offices? The copious paperwork and documentation required by the program don't really allow smaller facilities the bandwidth to deal with Medicaid in an efficient manner. Yet this documentation is necessary to curb rampant fraud in the program that costs taxpayers tens of billions of dollars each year.
Greater Medicaid funding and corresponding anti-waste measures fail to address the cancer undermining the healthcare system: sky-high drug prices and expensive medical equipment.
Greater Medicaid funding and corresponding anti-waste measures fail to address the cancer undermining the healthcare system: sky-high drug prices and expensive medical equipment. Instead of pushing for ever-higher government spending, a President Biden could push for a streamlined Food and Drug Administration approval process for drugs and medical devices, which would keep medical costs down and give a green light to innovators everywhere. The cost to develop a single medication is now more than $2 billion, and an onerous FDA approval process costs lives by being too risk-averse.
Presidential hopefuls such as Biden should also pledge to work with states to roll-back "certificate of need" laws, which force medical institutions to jump through countless barriers to expand their facilities and invest in new services. It's not just hospitals and their patients that suffer from these needless laws; Harvard medical scholar David Grabowski sums up the evidence that these laws make nursing homes far worse and costlier than they need to be. Getting rid of these laws nationwide would give patients and consumers far more options when shopping around for the care and facilities they need.
The price problem gripping the American healthcare system simply won't go away while regulatory barriers and onerous approval processes continue to stifle the sector. Presidential hopefuls such as Biden can make a dent in this problem by supporting market reforms, instead of doubling-down on failed government healthcare.