Official Washington still is struggling to understand and adapt to the populist wave that carried Donald Trump to the White House. Anger and denial linger still, emotions rooted in the social and economic chasm between Trump voters and the political class.
What does this mean for health? The first fight is already shaping up, of course, over Obamacare. Before the election, the way forward seemed obvious enough. With a Hillary Clinton win, the threat of Obamacare repeal would have been laid to rest; the President would have tasked the usual Washington experts with the unpleasant work of salvaging individual health insurance markets.
It now falls on President-Elect Trump, his presumptive HHS Secretary Tom Price (R-GA) and the GOP-controlled Congress to make good on his campaign promise of replacing Obamacare with “something terrific.” This won’t be easy, and the latest reports are that the can might be kicked down the road a few years. Just making it work in the short term means somehow fixing an individual insurance market where losses exceeded gains by $5.2 billion in 2015 and losers outnumbered winners by more than five to one. In that environment, convincing insurers to keep offering policies while bigger changes to the law are being phased in won’t be easy.
But health policy is far more than the Obamacare battle, and the ups and downs of those efforts should not distract from larger demographic and social trends that produced this populist moment— trends that will have profound and lasting effects on how we deliver health care, how we pay for it, and how we talk about it in America.
Policymakers are familiar with those trends — we are growing older, less likely to work or seek work, more socially isolated and less trustful of our institutions and leaders. But their policy assumptions don’t take those trends into account. Health policy remains trapped in a twentieth century industrial age paradigm that no longer connects with reality as tens of millions of Americans experience it.
Medicare is one artifact of that broken paradigm. Everyone knows the strains an aging population places on the program, but neither presidential candidate proposed a path to long-term solvency. The Treasury Department has been borrowing money to pay seniors’ hospital bills since 2008. Government actuaries project the program’s borrowing authority will be exhausted in 2028, when today’s 50-somethings will be enrolling in the program at a rate of 10,000 per day. At that point, there will be only 2.3 people of working age for every beneficiary, down from a 4:1 ratio when the program was created.
The worker-to-beneficiary ratio masks a deeper trend that few commenters have noted: a multi-generational decline in labor force participation rates among men of prime working age. Nicholas Eberstadt of AEI has observed that between 1948 and 2015, the labor force participation rate among men aged 20 to 65 has fallen from 85.8 percent to 68.2 percent. President Obama’s Council of Economic Advisers reports that the U.S. now ranks with Italy at the bottom of OECD countries in male labor force participation rates.
Those declining work rates have been accompanied by social dislocations. It is no coincidence that Trump carried seven of the ten states that the CDC has identified as having the highest death rates from drug overdose. Communities ravaged by opioid abuse nurse deep resentments against the political status quo.
Populist disenchantment with elites arises from the sense that public policy is detached from their own real-world experiences. They don’t share Elizabeth Warren’s narrative about income inequality. Instead, they see public policy as benefiting those above and below them on the income scale, at their expense. That is how many view Obamacare, which is why it still stirs such deeply-felt opposition.
Responding to these populist frustrations will require policymakers to recognize that long-held policy assumptions may no longer apply in a rapidly changing economy. These include:
- The link between jobs and coverage. The employment-based system and Medicare financing work well in an industrial economy with high workforce participation rates. Health insurance became part of the compensation package for most workers and a tax on their labor kept the Medicare trust fund flush with cash. That reality is changing, and tax and fiscal policy have not yet caught up. How workers – and seniors — get coverage will evolve.
- The broken link between “health” and health insurance. Health coverage also will change. What we call “health insurance” actually finances the treatment of illness rather than the promotion of health. Regulators will at some point give insurers room to innovate, permitting new forms of coverage that promote health and offer new ways to finance care for chronic conditions, like health status insurance.
- The broken link between premium and risk. Obamacare and health policy more generally have sought to attenuate the link between premiums and medical risk, often with disastrous results. A health promotion approach will require restoring this link, allowing insurers to encourage and reward healthy behaviors.
- New technology. Health policy rests on the conceit that knowledge is reserved for a priesthood of providers and regulators. By democratizing knowledge, technology is transforming virtually every aspect of the market. It will one day penetrate the health care regulatory encrustation and dispel the lingering paternalism that regards consumers as incapable of making informed choices about their medical care.
Those trends suggest that we’ll be moving toward a system built less around job-based insurance benefits and more around consumer-centered arrangements that include incentives to engage in healthy behaviors. Consumers will use new technology to monitor and improve their health, while detecting warning signs of more serious illness sooner. Doctors, insurers and regulators will need to unlearn their habits of condescension and begin to regard consumers as adults capable of managing their own health with professional assistance.
Breaking with 20th century systems and politics won’t be easy, as official Washington tries to reckon with an ascendant populism that it neither foresaw nor fully understands. But these shifts – unlike big, systemic expansions of government into healthcare—are the kind of thing you might be able to sell in a populist moment, when people are increasingly distrustful of experts and eager to assert their own autonomy. It’s a whole lot of change, true, but it is change consumers will increasingly demand.