Uwe Reinhardt - Priced Out: The Economic and Ethical Costs of American Health Care

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Paul Krugman

When Uwe Reinhardt died in 2017, many people, myself included, lost a friend; the world at large lost one of its leading experts on the economics of health care. But Uwe was a moral as well as an intellectual force.

Uwes professional reputation rested to a large extent on his brilliant analyses of the forces driving health care costs. In particular, he did more than anyone to document and elucidate the inefficiency and sheer craziness of the U.S. health system. His most famous paper (with Gerald Anderson, Peter Hussey, and Varduhi Petrosyan) was titled Its the Prices, Stupid: Why the United States Is So Different from Other Countries. It showed that while America spends much more than any other country on health care, it doesnt actually get more careit just pays higher prices.

Nor was he merely an analyst and a critic. Although he never mentions it in his book, Uwe, together with his colleague and wife, Tsung-Mei Cheng, helped devise Taiwans highly successful single-payer health care system, which is both an object lesson in how to avoid the worst of the pathologies we experience here and a demonstration of how we could do far better.

But Uwe Reinhardt was much more than a clinician, diagnosing the ills of insurers and hospitals and prescribing treatment. For he never forgot the forest for the trees. He never lost sight of the purpose of our, or anyones, health care system: to prevent illness where possible, to treat it where necessary. And he never forgot that the fundamental flaw in the U.S. system wasnt technical; it was its failure to serve that higher purpose. It was always obvious to those who knew him, and I suspect to his readers as well, that behind the incisiveness of his analysis and the wit of his commentaryfor Uwe was a very, very funny manlay a fine sense of outrage at the way the sacred task of medicine has been corrupted by cruelty and greed.

Priced Out: The Economic and Ethical Costs of American Health Care is, alas, Uwes final book. Fittingly, as the title suggests, its a book that showcases both sides of his professional persona.

The first half of the book is a brisk but fact-filled tour through what he calls the wonderland of U.S. health care. Thats not a term of praise: the wondrous thing is how bad a system weve managed to build.

For anyone coming at this subject fresh, the books tour of the system will come as a revelation, and not in a good way. Even people who have paid considerable attention to health care issues will be richly rewardedwhich is to say, disgustedby the details of dysfunctionality he documents, by the overpayment and bloat that make U.S. health care as expensive as it is.

For example, although Im not a health economistI just play one on TV, sometimesIve written about health economics for many years (with Uwe giving me crucial guidance and helping me avoid big mistakes). Yet I didnt know the extent to which administrators, not caregivers, now dominate the health care workforce. According to Robert Kocher, MD, of Venrock Capital, Today, for every doctor, only 6 of the 16 non-doctor workers have clinical roles. The other ten are administrative and management staff, most of whom arent helping to provide care, even indirectly.

Nor did I fully appreciate just how wildly variable the costs of any given medical procedure are, even in the same city (indeed, the same hospital), and how invisible this variation of costs is to patients.

Theres an influential school of policy thought that advocates consumer-based health care, that is, trying to make shopping for health care more like shopping for cars or cell phones. Members of this school argue that we can save money by giving patients skin in the game, that is, making them pay a larger share of costs out of pocket. As Uwe points out, the available evidence says that this doesnt actually workand anyone trying to understand why should read his description of what really faces patients, who dont know either the value of treatment or how much anything will cost them. They are, as he says, like blindfolded shoppers pushed into a department store to shop around smartly.

What emerges from all of this is a devastating portrait of a system that doesnt just consume huge resources to no good end, but denies care to many Americans, not because it would really be too expensive to provide, but because the system prices them out by making care arbitrarily expensiveand/or rations health care in ways that are fundamentally indefensible.

For that is the theme both of the books prologue, which highlights the ethical issues at the core of health care, and the whole second half, which shows how our collective refusal to face up to ethical choices has led to a system thats both cruel and inefficient.

As Uwe says, the crucial question is one that he stated in a Journal of the American Medical Association article after the failure of the 1993 Clinton health plan: Should a child of a poor American family have the same chance of receiving adequate prevention and treatment as the child of a rich family?

Libertarians would argue that the principles of economic freedom prohibit government intervention to force equality in health care, no matter how unfair the outcomes may seem. Thats a defensible philosophical position. But few are willing to take that position openly. Instead, Uwe found himself attacked as a socialist propagandist for even asking the question.

The reason, as Priced Out makes clear at some length, is that many people in our political system want to have it both ways. What they really favor and are trying to impose is a system in which health care is rationed by income class, with only the well-off receiving the full benefits of modern medicine. But saying that openly would be very unpopular, so they never admit their real goals, instead pretending that their policies would be good for everyone. And they lash out with accusations of socialism, not to mention personal attacks on anyone who tries to get at the real issue.

And as Uwe points out, even those on the other side of the U.S. political spectrum, who basicallylike the citizens of every other advanced countrysay yes to the Reinhardt question, are afraid to say so forthrightly, perhaps because theyre afraid of being labeled as socialists. Americans, he writes, typically shy away from an explicit statement on social ethics in debating health reform. Instead, that debate is couched mainly in terms of technical parameters.