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Healthcare System
Well, that’s it for healthcare reform. I really think the U.S. can have its cake and eat it too. In other words, we can have universal healthcare and eventually reduce healthcare spending in the process. Check out Parts I-VIII of this series for details.
Yes, insurers do contribute to the high cost of healthcare in the U.S., mostly by increasing the administrative burden of providers, e.g., time and staff needed for care authorization and payment. However, this administrative burden serves a purpose: to reduce unnecessary spending associated with healthcare fraud and low-value care, an estimated $300 billion per year for fraud and $340 billion a year for low-value care. I’m sure there are ways to lessen the burden, perhaps by standardizing forms, requirements and procedures across insurers. But administrative reform isn’t going to put a big dent in U.S. healthcare spending, because it already plays a relatively small role in overall spending.
Here’s an idea, inspired by Amazon’s example. Why not offer “reward points” to patients for using healthcare providers offering clinically necessary care at a price below a region’s mean? …Similar to Amazon’s system, reward points would be converted to a cash value and applied to a patient’s co-pays, deductibles or insurance premiums. Since Medicare and private insurers already use regional price means to determine payment rates, a reward point system wouldn’t be that hard to implement. However, it wouldn’t work well without other conditions, such as mandatory insurance, transparent pricing and a sufficient number of local providers for meaningful price comparisons
Despite decades of cost-saving reforms, U.S. healthcare is still the most expensive in the world (per capita and GDP). Yet U.S. physicians keep making more money every year. And the entire healthcare system benefits financially from income generated by our doctors.
Roemer's law states that "a hospital bed built is a bed filled." In essence, Roemer's Law argues that hospitals and physicians do what they can to take advantage of their available resources and if demand for services are less than capacity, hospitals and physicians will figure ways to induce more demand. The motivation here is to make as much money as capacity allows.
For the purposes of this post, I’m defining mandatory insurance coverage as 99% of the U.S.population with some form of public or private health insurance. As for the remaining 1%, there will always be a few conscientious objectors, especially in America.
So how do we do it? Mostly by following the example of Massachusetts, which has already achieved 98% coverage. So how does Massachusetts do it?
A universal healthcare system could be established in the U.S. by leveraging existing structures like Medicare, Medicaid, and the insurance industry, using a range of provider and consumer incentives to control costs. Our current system already covers around 92% of the U.S. population under age 65 - only 8% to go!. That seems eminently doable, especially considering that over half the currently uninsured are actually eligible for healthcare coverage but simply have not enrolled in a government program. The rest are ineligible for government assistance, mostly due to immigration status or affordable alternatives given their income. Here’s the breakdown…
California, Massachusetts, New Jersey, Rhode Island, Vermont, and Washington, D.C., already have insurance mandates. Residents in these areas must have qualifying health coverage or face tax penalties. Except for New Jersey, their uninsured populations are lower than the U.S. rate of 7.9%. For instance, the uninsured rate is just 2.8% in Massachusetts and 3% in Washington D.C. That’s not too far from universal coverage.
A universal healthcare system can be established in the U.S. by leveraging existing structures like Medicare, Medicaid, and the insurance industry, using a range of provider and consumer incentives to control costs. The old and disabled would continue to receive Medicare and government support would be available for low-income households.
Here are components of the existing system that would be retained, expanded or tweaked in my proposed universal healthcare system…
Should the U.S. have a universal healthcare system? By all means! No American should be denied necessary care. Besides, according to the latest Pew survey, 66% of Americans want a universal system, the younger the stronger the support. Even Republicans are getting on the universal healthcare bandwagon - 41% in the latest poll, up from 32% in 2021 (Pew Research, 2025). The time has come to get serious about what such a system should look like in the U.S.
Per capita healthcare spending in the U.S. was over $15,000 in 2024. That’s around 2,5 times the OECD average for member countries and most of those countries provide universal care. U.S. healthcare spending is projected to grow faster than inflation over the next several years, reaching over $24,00 per capita by 2033, or roughly 20% of GDP. This is an untenable situation, especially if we want universal healthcare, which would require coverage for another 25 million Americans. We obviously need to come up with a less costly healthcare system that performs well and serves all Americans. Here are some ideas on what that system would look like, bare bones version…
Based on statements submitted by 1,225 health insurers, the National Association of Insurance Commissioners (NAIC) reported the health insurance industry experienced a significant decline in both net income and profit margin in 2024. The net income dropped to $9 billion, a sharp decrease from $25 billion in 2023 and the profit margin fell to 0.8%, down from 2.2%.
What the American Medical Association says: “Nurse Practitioners are essential members of the physician-led care team, but they are plainly not trained to practice independently.” What researchers have found: “Public safety is often used as an argument against expanding scope of practice (SOP) for nurse practitioners, despite the benefit of filling unmet health care demand…[We found] absolutely no evidence that states that expanded scope of practice performed worse than states that chose not to in terms of public safety.” Bhai & Mitchell, 2025
As documented in the last post, the AMA gives “three big reasons” for opposing independent nurse practitioners (NPs):
It won’t solve the rural access problem.
It will raise health care costs, not cut them.
It threatens patient safety.
I tackled the rural access issue in the last post. This time I will address the second reason the AMA gives for opposing independent NPs.
According to its website, the mission of the American Medical Association (AMA) is to “promote the art and science of medicine and the betterment of public health.” The AMA is also a lobbying organization that promotes the self-interest of its members: physicians and medical students. But sometimes the greater good does not mesh with the self-interest of physicians. And sometimes the AMA puts self-interest first.
I’m more interested in the salary gap between physicians and the average worker. As it turns out, that gap is also bigger in the US than in Canada, France and Germany. And yet Americans see their doctors less often than the Canadians, French and Germans. In fact, the bigger the salary gap, the fewer doctor visits per capita…
One reason the federal government spends so much on Medicare and Medicaid (M&M) is that the entire US healthcare system is expensive, no matter who pays the bills. The providers and suppliers are pretty much the same, whether the payer is private or public. Sure, the feds have some pricing power, but squeeze too hard and healthcare service providers will simply say thanks but no thanks.
The Centers for Medicare and Medicaid Services estimates that up to 25% of health care spending in the United States pays for low-value services, defined as unnecessary or ineffective procedures, tests, scans, and medications. A recent study estimates that in 2022, 71 per 100 Medicare beneficiaries received low-value services. In 2023, Medicare and Medicaid spending reached $1.9 trillion. Reduce that by 10%…
For comparison, as of 9/30/24, the Dow Jones average net profit margin was 2.46%; the Nasdaq average net profit margin was 16.09%. And according to a January 2024 analysis by NYU Stern School of Business, the average net profit margin for US corporations across 94 industries was 8.54%, based on a sample of 6481 firms.
The authors don’t tell us why Medicare and insurers are increasingly relying on prior authorization, nor do they address the prevalence of unnecessary or low-value medical care or the risks associated with such care. That’s a huge omission. Potential harms should be weighed against potential benefits, the better to find solutions that preserve benefits while reducing harm. As for the prevalence and risk of unnecessary and low-value care, evidence suggests that up to one-fifth of healthcare spending is wasted on such care and around 10% of patients are harmed in the process.