As we navigate the complex waters of 21st-century healthcare, we find ourselves in a storm of heightened politicization and bureaucratic inertia. The challenges facing our healthcare system are immense and multifaceted, and the stakes have never been higher. What we need now is not another government program, but market-oriented policies grounded in facts and sound economic principles.
This is why I am launching the Health Economists and Academic Leaders (HEAL) Network, a community for academic scholars to debate and advance data-driven solutions that can genuinely improve our healthcare system. I invite all my academic colleagues to consider joining our effort.
The High-Stakes Challenge
In the post-pandemic policy environment, our healthcare system remains at the mercy of political winds that threaten its stability and effectiveness. The relentless politicization of healthcare policy has turned vital reforms into partisan battlegrounds, obstructing progress and creating uncertainty for providers and patients alike. The bureaucratic maze created by regulatory agencies, including the Food and Drug Administration (FDA), Federal Trade Commission (FTC), Centers for Medicare & Medicare Services (CMS), and Centers for Disease Control and Prevention (CDC), is further exacerbating these issues.
One of the most concerning developments is the growth in hospital consolation over the last three decades and the corresponding impacts on healthcare access and costs. According to the University of Pennsylvania Leonard Davis Institute of Health Economics, there were nearly 2000 hospital mergers announced between 1998 and 2021. What does this mean for patients? A growing body of evidence finds hospital consolidation is increasing prices and producing lower-quality care.
Another area of concern is the CMS Medicare Drug Price Negotiation initiative. While intended to control costs, CMS’s negotiation efforts are harming the very patients the agency seeks to benefit. CMS’s price negotiation process is stifling competition and innovation in the pharmaceutical industry by undermining research and development (R&D) investments. Patients are still facing higher out-of-pocket costs and seniors and people with disabilities enrolled in Medicare Part D will have less access to needed medicines. Lawmakers are already calling out a bureaucratic attempt by CMS to cover up the fallout from these policies, and the fight will continue to play out in the coming months as these new regulations surrounding Medicare and Medicaid add more complexity to the system.
Current policies governing telemedicine, medical data privacy, and Pharmaceutical Benefit Manager (PBM) rebate practices are also falling short. Even well-intended programs meant to help low-income patients, such as the 340B Drug Pricing Program and Affordable Care Act subsidies, are failing to achieve their primary goals because they are poorly designed and lead to rampant inefficiencies and waste.
The current climate is focused on short-term political gains, overshadowing the critical need for comprehensive, long-term solutions. Poorly designed policies and regulations are not just a nuisance; they are a significant barrier to effective healthcare delivery and improved patient outcomes.
Opportunities Amidst Challenges
Despite these daunting challenges, there are immense opportunities for transformative change in our healthcare system. Approximately 30 percent of healthcare spending in the United States is now considered wasteful, but more than 25 percent of that waste could be reduced with policy changes.
Advances in technology, particularly artificial intelligence (AI) and telemedicine, hold the potential to revolutionize patient care. AI can enhance diagnostic accuracy, tailor treatment plans, and streamline administrative processes, while telemedicine can expand access to care, especially in underserved and rural areas.
To push the boundaries of medical science, researchers must have access to the best information available. This is why proposals to improve access to government data to inform more research and evidence-based policymaking also hold significant promise.
However, realizing the full potential of healthcare research and innovations will require us to shift our approach to healthcare policy.
The Future of Healthcare
As we look to the future, it is clear that better ideas, rooted in rigorous research and sound economic analysis, are essential.
Through HEAL, we aim to promote policies that are informed by empirical evidence and economic realities. Markets have always provided the best opportunities for people to prosper. The role of government is to ensure that markets are working for the public. My academic career in healthcare economics has been rooted in this principle.
By leveraging the expertise of healthcare economists, researchers, and policymakers, we can develop strategies that lower costs, increase access, and drive progress. Our goal is to create a healthcare system that is not only sustainable but also capable of adapting to future challenges.
As we chart this course, it is essential to remain committed to evidence-based policy-making and economic analysis. The path to better health does not lie in expanding government programs but in engaging patients, empowering providers, and fostering innovation and efficiency through policies rooted in economic reality.
The stakes are high, but with the right approach, we can navigate through the storm and steer our healthcare system toward a brighter future.
Stephen T. Parente is the Founding Director of the Health Economists and Academic Leaders (HEAL) Network
