Jason Furman's Reviews > We've Got You Covered: Rebooting American Health Care

I have learned more about health economics from Amy Finkelstein than from anyone else in my generation (or younger). I learned some more from this book--and a lot of what I thought I knew was challenged as well. Overall, this was a very enjoyable read that is written in a broadly accessible and even chatty and informal style which is not burdened by all the learning underlying it.

Both Liran Einav and Finkelstein have largely confined themselves to research and not policy, which makes it exciting that they are drawing on their own work and their command of the literature to ask why we have health insurance and what that means about how we design it.

Any such undertaking is necessarily normative, being grounded in our values. They argue that in the case of health insurance that relatively minimal and widely shared values can be the basis for designing policy, specifically the idea that people should get treatment regardless of their ability to afford it. If someone is extremely ill hospitals are required to treat them whether or not they have insurance--and the recourse to collecting medical debt is considerably less onerous than, say, student debt or taxes.

Using this as their normative staring point they diagnosis the problems in the current system, many of which afflict the insured as much as the uninsured. Thus they argue that health reform should be about everyone not just filling in the gaps for the uninsured. (I agree with their normative frame and am impressed by how far it takes them, but also have a hard time separating my own views that health reform should be used as a way to achieve what I view as a more fair distribution of resources.)

For insurance to work on the terms they describe it needs to be automatic (because we automatically cover everyone in some way regardless). It can't be automatic without being free. And finally, for this to be affordable they argue it should be basic.

They do not define the "basic" and this is where I'm most worried in practice. "Basic" could easily end up being just about everything plus dental and vision--which would end up being extremely expensive. Absent a mechanism to link people's choices about what health insurance should cover to their own costs it is hard to understand how "basic" would be limited.

A way to partially do that is more cost sharing. The evidence (much of it from Finkelstein and co-authors) is that copays, deductibles and coinsurance can reduce spending and not necessarily worsen health outcomes. The authors argue that having thought about it more, and looked at the experience in other countries, that cost sharing is not viable when not everyone can afford it. They have a lot of compelling arguments but I'm also nervous that this interacts with the "basic" issue, that if you could really do basic you could avoid cost sharing but if not then you might need it. Also, it is hard to understand how a system is optimal that has cost sharing of either 0% or 100% (the later for everything not covered by the basic insurance) instead of intermediate values.

Finally, the book is really radical. It does not start from where we are now but instead tears down the entire system to rebuild a new one. That, of course, would make it harder to do in practice given all the vested interests. But it also increases the risks that what works on paper may not work in practice when compared to the many ways our system has evolved to address issues. As such, the book is not about next week's health debates but instead a marker for a longer-term debate and discussion. And that is a very productive and needed thing given the sorry state of much of American health insurance.