There is no shortage of proposals for health insurance reform, and they all fail. They invariably focus on the nearly 30 million Americans who lack insurance at any given time. But the coverage for the many more Americans who are lucky enough to have insurance is deeply flawed.

Health insurance is supposed to provide financial protection against the medical costs of ill health. However, many insured people still face the risk of huge medical bills for their “covered” care. A team of researchers rated that in mid-2020, collection agencies held $140 billion in unpaid medical bills, reflecting care delivered before the Covid-19 pandemic. To put that number in perspective, that’s more than the amount held by collection agencies for all other consumer debts from non-medical sources combined. As economists who study health insurance, what we found really shocking was our calculation that three-fifths of that debt was incurred by households. with Health insurance

What’s more, in any given month, about 11 percent of Americans younger than 65 are uninsured. But more than twice that number — one in four — will be uninsured for at least some time during a two-year period. Many more face the constant danger of losing their coverage. Perversely, health insurance – whose very purpose is to provide some stability in an uncertain world – is itself highly uncertain. And while the Affordable Care Act has substantially reduced the share of Americans who are uninsured over time, we found that it did little to reduce the risk of insurance loss among the currently insured.

It is tempting to think that incremental reforms could address these problems. For example, extending coverage to those who lack formal insurance. Make sure all insurance plans meet certain minimum standards. Change the laws so people don’t face the risk of losing their health insurance when they get sick, when they get well (yes, that can happen) or when they change jobs, give birth or move.

But those incremental reforms won’t work. More than half a century of such well-intentioned, piecemeal policies have made it clear that continuing this approach represents the triumph of hope over experience, to borrow a description of second marriages usually attributed to Oscar Wilde.

The risk of losing coverage is an inevitable consequence of a lack of universal coverage. Whenever there are various paths to qualification, there will be many people who fail to find their way.

About six in 10 uninsured Americans are eligible for free or heavily discounted insurance coverage. However, they remain uninsured. lack of information about which of the set of programs they are eligible for, along with the difficulties of applying and demonstrate eligibility, means that the coverage programs are designed to deliver less than they could.

The only solution is universal coverage, which is automatic, free and basic.

Automatic because when we require people to register, not everyone does. The experience with the health insurance mandate under the Affordable Care Act makes this clear.

Coverage should be free at the point of care — no co-pays or deductibles — because leaving patients on the hook for large medical costs is counter to the purpose of insurance. A natural retort is to take small co-pays — a $5 co-pay for prescription drugs or a $20 co-pay for a doctor’s visit — so patients can make more informed choices about when to see a health professional. Economists have preached the virtues of this approach for generations.

But it turns out there’s a major practical wrinkle in asking patients to pay even a very small amount for some of their universally covered care: There will always be people who can’t manage. even modest co-payments. The United Kingdom, for example, introduced co-payments for prescription drugs but then also created programs to cover those co-payments for most patients – the elderly, young, students, veterans and those who are pregnant, low-income or suffering from certain diseases. All told, about 90 percent of prescriptions are exempt from the co-payments and distributed free of charge. The network result was to add inconvenience for patients and administrative costs for the government, with little effect on the patients’ share of total healthcare costs or total national healthcare expenditure.

Finally, coverage must be basic because we are bound by the social contract to provide essential medical care, not advanced experience. Those who can afford and want to can purchase supplemental coverage in a well-functioning marketplace.

Here, an analogy to airline travel can be useful. The main function of an airplane is to move its passengers from point A to point B. Almost everyone would prefer more legroom, unlimited checked bags, free food and high-speed internet. Those who have the money and want to do so can upgrade to business class. But if our social contract ensured that everyone could fly from A to B, a budget airline would be enough. Anyone who has traveled on one of the low-cost airlines that have transformed airline markets in Europe knows that it is not a wonderful experience. But they do lead you to your destination.

Keeping universal coverage basic will also lower the cost to the taxpayer. It is true that as a share of its economy, the United States spends about twice as much on health care as other high-income countries. But in most other rich countries, this care is primarily financed by taxes, while only about half of US health care spending is financed by taxes. For those of you following the math, half of twice as much is… well, the same amount of taxpayer-funded health care spending as a share of the economy. In other words, US taxes already pay for the cost of universal basic coverage. Americans just don’t get it. They could be.

We arrived at this proposal using the approach that comes naturally to us from our economic training. We first defined the target, namely the problem that we are trying but failing to solve with our current American health policy. Then we thought about how best to achieve that goal.

However, once we did that, we were struck – and humbled – to realize that at a high level, the key elements of our proposal are ones that every high-income country (and all but a few Canadian provinces) have embraced: a guaranteed basic. coverage and the option for people to purchase upgrades.

The lack of universal US health insurance may be exceptional. The fix, it turns out, is not.

Liran Einav is a professor of economics at Stanford. Amy Finkelstein is a professor of economics at MIT They are the authors of the upcoming book “We’ve Got You Covered: Rebooting American Health Care,” from which this essay was adapted.

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