Taking Stock: Health care

Victor Fuchs, the Henry J. Kaiser, Jr. professor of economics and of health research and policy, emeritus, at Stanford University's Center for Health Policy.

TEXT OF INTERVIEW

Kai Ryssdal: It's healthy sometimes to step back. Away from the daily grind of the fallout from the financial crisis. Today we're going continue with Taking Stock, our series of occasional conversations with people who can give us the long view of our economic situation.

Obviously, there are a lot of needs that have to be met right now. Help for homeowners. Insurance for the unemployed.
Not to mention car makers, banks and home builders. But that forgets some of the problems that were around before the crisis. And that will become more important once we do struggle through it.

Stanford University economist Victor Fuchs has devoted the better part of his career to health-care policy.
So I asked him the most important thing that we, as a society, ought to be thinking about as we go through this very tumultuous time.

Victor Fuchs: For me, and this is a matter of values, the good society is one that encourages, that develops and honors both individual and social responsibility. We have tilted too far in the direction of individual responsibility. So if the balance is going to swing, it needs to swing back toward social responsibility. For example, I'm in favor of having some kind of health care system where everybody gets coverage for a basic plan.

Ryssdal: And it gets very quickly into a discussion of politics too doesn't it? I mean, none of this comes without political discussion.

Fuchs: Right. But the recent election suggests that the public, the body politic, is ready to make some kind of swing in the direction that I'm talking about. It won't come easily, for example, to get universal coverage for health care -- that's going to take some fundamental changes.

Ryssdal: Why is it that health care always seems to get worse and worse? The problem is more expensive, it's harder to fix. Why does that happen?

Fuchs: Well, I'm not sure that it gets worse and worse. I would rather say it gets more expensive and more expensive. I don't think health care is worse today that it was five years ago, or 10 years ago. I think it's better. But it just costs us too much.

Ryssdal: How do you get those costs under control in an environment where there are so many other things demanding money and political attention?

Fuchs: Well, we've inherited two ways of doing health care, both of which I think are inefficient and inequitable. One is the employment-based system, and the second is the income-tested system like Medicaid.

If people were to follow my recommendations -- and I have a collaborator on all of this work, his name is Ezekiel Emanuel, he's a physician and a bioethicist. If we had our way, we would replace the employment-based system and the income-tested system with some kind of universal-voucher system. Where everyone had coverage for a basic plan. And you where funded it through a simple tax, let's say just a tax on consumption. In that system, the healthy and the wealthy would be subsidizing the poor and the sick. And the middle class would be paying their own way, which in any sensible society, that's what's going to happen.

Ryssdal: If, as you say we have to work on controlling costs, and cost increases in health care, do we then risk some of the advances we've made in health care science in the past decades?

Fuchs: Absolutely. There's no free lunch. The main reason why health care costs rise every year is new technologies. Now some of those new technologies are wonderful. So what we need, and one of the things that Emanuel and I recommend, is an independent institute for technology assessment. Because up until now, technologies have never been evaluated in terms of their benefits relative to their costs. We need to know which of the new technologies are very valuable, and worth the money, and we need to know which ones are not. But is it going to have some effect? Absolutely. There's no free lunch.

Ryssdal: Let me back up for a second and talk again about some of the big societal issues that we face in this country. It's been clear over the past number of decades in this country that the rich get richer, the poor certainly get poorer and the middle class keeps on struggling. Is there a way that we can effectively level the playing field in this country?

Fuchs: Yes. Yes, but strangely enough it's not through the income tax. Many people fool themselves into thinking that you can achieve a great deal of redistribution by raising, putting in very high tax rates on the high income people. Actually, if you look at the example of countries like Sweden and Norway and Denmark, that's not the way they do it. The way they do it primarily is through transfer programs. In other words, if you have programs of health care, which are universal, so that the poor get them just as well as the middle income people do, if you have programs for social services, that is the most successful way to achieve redistribution in people's real living standards.

Ryssdal: One of the things that people who are opposed to things like universal health care will say is that, "Listen, this is not the way the free market is supposed to work. Let's let the market mechanisms figure out how much it ought to cost, who's going to get covered, and let things happen that way." What's your response?

Fuchs: My response is this: That there are several good things I want and I think most people want. I want efficiency, and I want justice. I want freedom, and I want security. Now as an economist I know that there have to be trade-offs. I can't have all the freedom and all the security that I would like to have. And that's where the judgment and the political balance comes in. We may have to give up a little bit of efficiency in order to get more justice. On the other hand, I would hold up a stop sign to those people who say, "Well, the only thing I'm interested in is security and justice. And I don't give a hang about freedom and efficiency." That's not right, either. What we have to some extent is, I would't say a polarization, but we have a lot of people who take extreme positions one way or the other. And that's not a recipe for a good society.

Ryssdal: Victor Fuchs, thank you very much for your time.

Fuchs: Well, thank you, Kai, it's been a pleasure talking to you.

About the author

Kai Ryssdal is the host and senior editor of Marketplace, public radio’s program on business and the economy.

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