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Remembering Uwe Reinhardt

"Uwe E. Reinhardt, James Madison Professor of Political Economy and professor of economics and public affairs at Princeton University's Woodrow Wilson School of Public and International Affairs, passed away on Monday, Nov. 13, at the age of 80.... As a Founding Member of the National Academy of Social Insurance, Uwe was extraordinary in his commitment to our mission, and he made a number of significant contributions to the Academy's work."  MORE >>

Healthcare Economist Uwe Reinhardt Has Died

"Uwe Ernst Reinhardt (September 24, 1937 - November 14, 2017) was a professor of political economy at Princeton University and held several positions in the healthcare industry. Reinhardt was a prominent scholar in health care economics.... Reinhardt's research focused on hospital pricing, systems of health care around the world, Medicare reform, and health care spending." [BenefitsLink has been pleased to link our readers to articles about Reinhardt's research since 2003.]  MORE >>

Uwe Reinhardt Says Obamacare's Marketplaces Are Doomed

"Princeton University health economist Uwe Reinhardt offered the most dire and pessimistic assessment of the marketplaces' future. Namely, he believes they've already entered a death spiral and are heading toward total collapse.... [Mr. Reinhardt said:] 'If you got a bunch of Princeton undergrads to design a health care system, maybe they would come up with an arrangement like the marketplaces. The natural business model of a private commercial insurer is to price on health status and have the flexibility to raise prices year after year. What we've tried to do, instead, is do community rating [where insurers can't price on how sick or healthy an enrollee is] and couple it with a mandate.' "  MORE >>

Uwe Reinhardt's Proposed Health Plan for Rugged Individualists

"In 2009, Paul Starr had warned Democrats of a potential voter backlash against the individual mandate and proposed instead a nudging arrangement. Uninsured Americans would be auto-enrolled into health plan, if they chose not to select one, but could opt out of it with the proviso that for the next five years they could then not buy insurance through the insurance exchanges established by the ACA at community-rated premiums, and potentially with federal subsidies. My proposal is to make that a lifetime exclusion."  MORE >>

Uwe Reinhardt: A Response to John Goodman about the Republican Vision for Health Reform

"There actually is a current Republican vision. It has been expressed through the House budget resolution. I agree with Goodman, though, that in the past Republicans, John Goodman included, did offer visions on U.S. health care that differ sharply from the one expressed by the House and are worth considering."  MORE >>

Uwe Reinhardt: 'The U.S. is Not a Democracy; it's an Aristocracy' - Implications for Healthcare Reform

Excerpt: In a private conversation with bloggers at the Families USA healthcare conference last week, Princeton healthcare economist Uwe Reinhardt recalled a conversation, when he asked health care economist Victor Fuchs, 'When will we ever have universal health insurance in the U.S.?' Fuchs' answer: 'Not until World War III, a Great Depression, or a major epidemic that threatens everyone.'

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What Would Uwe Reinhardt Say About Walmart's Company-Sponsored Health Coverage?

"With average wages of $13.85 per hour ($28,808 per year if working 40 hours per week with paid vacations), they expect a worker with a child to pay $7,242 in health care costs ($1,742 towards the premium and $5,500 in cost sharing). That is one-fourth of the family's meager income! ... This is a prime example of the escalating shift to consumer-driven health care. It is not as if we didn't understand the issues long ago."  MORE >>

A Response to Uwe Reinhardt on ACA Premium Subsidies

"[I]f we take all of the tax subsidies for employer-provided health insurance and add to it all of the revenue used to pay for the (ObamaCare) subsidies in the exchanges, there is more than enough there to give a tax credit of $2,500 to every adult and $8,000 to every family of four. As it turns out, this is what the CBO estimates is needed for new enrollees in Medicaid. So we could not only give everyone the same tax credit, we could also give everyone the option to use his credit and buy into Medicaid."

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Three Reasons Economist Uwe Reinhardt Blames Purchasers for Everything

"Reinhardt is rightfully troubled by a decade of escalating health care cost growth under employment-based health insurance. But seized by Actor-Observer Bias, Reinhardt blames this problem not on the world of health care that he played such an influential role in over the past few decades, but on external forces, the employers who purchase health care.... In fact, these employers aren't real people; they are straw men created to justify the Professor's contortionist logic that health cost inflation has nothing to do with actions of the health care industry itself."  MORE >>

Economist Uwe Reinhardt Explains Complexities in Pricing of Medicare Advantage Plans

"A fundamental question that has engaged health-policy researchers and commentators for some time is whether coverage of Medicare's standard benefit package under Medicare Advantage plans is cheaper or more expensive than it is under traditional fee-for-service Medicare. The answer is yes."  MORE >>

Uwe Reinhardt Explains Family Health Care Costs and the Health Care Reform Challenge

Excerpt: According to the Milliman Medical Index, this total health spending figure for a typical non-elderly American family of four had reached an average of $15,600 by 2008. It had grown at an average compound growth rate of about 8.6 percent from $11,192 in 2004. To return to our family with an assumed gross wage base of $60,000: If that gross wage base grew by, say, 3 percent per year over the next decade, to $80,600 by 2017, while total family health spending grew by, say, 8 percent per year over the same time frame, to $33,700 by 2017, then about 41 percent of the family's gross wage base would be taken up by health care alone, before any deductions for taxes or fringe benefits. If the wage base grew by 4 percent, health spending still would absorb about a third of the family gross wage base.  MORE >>

The Problem with Healthcare Pay-for-Performance

"Current political activity seems to be based on the concept that these flawed policies can eliminate much of the wasteful health care services provided. As [health economist Uwe Reinhardt] tells us, the problem with that rationale is that there is not nearly as much waste as has been thought. The initial results of experimentation have confirmed that there just is not that much recoverable by attempting to reduce or eliminate care that is not beneficial."

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Rethinking the Gruber Controversy: Americans Aren't Stupid, But They're Often Ignorant -- and Why

"How many politicians, for example, would forthrightly and bluntly proclaim on the campaign trail that, to control the growth of health spending, they favor the rationing of health care by income class, that is, by price and ability to pay? Yet that is precisely what they and their advisors are advocating when they promote health-insurance policies with very high deductibles and coinsurance. As any well-trained economist knows and some good textbooks in economics are careful to point out, prices in a market economy are instruments to ration scarce resources among people. So a market economy in health care that relies on high deductibles and coinsurance is not an alternative to rationing. It is just one of several methods of rationing."  MORE >>

Employer-Based Health Insurance 'Cheaper' Than Government-Sponsored Insurance? Say What?

"[D]oes anyone possessed of a modicum of common sense really believe that the Medicaid population is even vaguely comparable to the population and the services covered by employer-sponsored health insurance? Does anyone sincerely believe that private insurers could cover Medicaid's high risk population for 60% less money than it costs Medicaid?"  MORE >>

The Illogic of Employer-Sponsored Health Insurance

"The [Hobby Lobby] ruling raises the question of why, uniquely in the industrialized world, Americans have for so long favored an arrangement in health insurance that endows their employers with the quasi-parental power to choose the options that employees may be granted in the market for health insurance.... Furthermore, the arrangement induces employers to intervene in many other ways in their employees' personal life -- for example, in wellness programs that can range from the benign to annoyingly intrusive, depending upon the employers' wishes."

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Is the U.S. Too Corrupt for Single-Payer Health Care?

"The key to a single-payer system is that the government sets prices. Usually, it empowers boards of independent experts who set those prices low. [Uwe] Reinhardt's argument is that in the United States, health industry interests have so much sway over Congress that the prices would end up being set by health-care interests.... Reinhardt's argument is a reminder that the simple fact that a policy worked in another country does not mean it will work in this country. His point about the importance of independence is particularly crucial."

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The U.S. Path to Three-Tiered Health Care

"[Economist] Uwe Reinhardt ... does not see single payer in our future, but rather sees an 'officially sanctioned tiering of the American health care experience by income class.' We already have the three tiers that he describes, but the middle tier is rapidly evolving in a way that may provoke a renewed and more intense interest in single payer."

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Controlling Health Care Spending, Revisited

"[If] either inflation or the growth in real G.D.P. in the United States should pick up again, then the growth of national health spending should be expected to pick up again as well. There is an emerging consensus among health economists, however, that other factors within United States health care itself have contributed to the decline in health spending growth and will prevent that growth rate from returning to levels observed in previous decades.... [A] pronounced decline in the annual growth of health spending is not unique to the period 2002-12. There was a similar decline during 1989-96, only to end up in a sharp reversal. So is this time different?"  MORE >>

Yes -- Employers Really Are to Blame for Our High Medical Prices

"I do stand properly accused, however, of accusing employers being party -- passive or active, I care not which -- to a deal to keep prices for health care in the private sector opaque from the public. Well, haven't they? After all, they had half a century to flush these prices out into the open. Indeed, I recall that one of the major complaints among employees with high-deductible policies has been the lack of information on prices by provider and procedure."  MORE >>

Unpacking the Meaning of Health Care 'Rationing': A Response to Dowd and Allison

"[A]ccording to Dowd and Allison, rationing occurs only when limits are placed upon choices that some potential buyer of a good or service would otherwise be willing and able to make, and I emphasize here the words 'and able.' ... Dowd and Allison certainly are free to posit this as their definition of rationing. They should not assume, however, that their definition is universally shared, even among economists, nor should they assume that in the debate on health policy the more expansive definition of rationing, including price-rationing, is abusive."  MORE >>

'Premium Shock' and 'Premium Joy' Under the ACA

"Younger and healthier members of the pool should realize that, in effect, they are buying a call option that allows them to buy coverage at a premium far below the high actuarial cost of covering them when they are sicker. The price charged the healthy for this call option is the difference between the premium they must pay and the current lower actuarial cost of covering them."  MORE >>

Are Employers to Blame for High Medical Prices?

"In a recent New York Times blog, Uwe Reinhardt places much of the blame for high and rising medical prices on passive employers.... Reinhardt gets the economics wrong here and, in the process, he puts too much of the blame on employers. Reinhardt is right in one respect -- employees care about their entire wage/benefit packages. If benefits deteriorate, employers will have to increase wages to retain workers. Thus, it seems that if an employer reduces benefit costs, it must increase wages by an equal amount. If that is true, we can understand why employers are passive."  MORE >>

Wal-Mart Could Transform Health Care -- But Does It Want To?

"Back in 2007, Princeton University's Uwe Reinhardt suggested to NPR that Wal-Mart could be 'taking aim at the entire health care system' by expanding its new discount drug program.... And in subsequent years, Wal-Mart did grow its health care footprint, from launching retail clinics based within its stores to advocating for national health reform. Considering its history -- as recently as 2005, Wal-Mart had little involvement in the health care market and was being pilloried for skimping on its own employees' benefits -- it's been a significant turnaround for the firm, and has positioned Wal-Mart as one of the leading disruptive innovators in health care."  MORE >>

Cost to Workers of the ACA Employer Mandate Penalties Is Greater Than You Think

"[Y]ou might think that the new $2,000 penalty would reduce wages by about $2,000 per employee per year. But ... the employer responsibility levies are not deductible from employer business taxes ... To have the same after-tax profit, an employer ... would have to cut wages by $3,046. An employer paying the $3,000 penalty would have to cut wages by $4,569. That would push someone working full-time at $10 per hour down to minimum wage."  MORE >>

Health Care as an Economic Stabilizer

"[T]otal private investment fluctuates considerably over booms and busts. By contrast, health care spending remains fairly stable over time. It does tend to growth less rapidly in times of deep recessions, but it has not declined in the United States."  MORE >>

Why an MRI costs $1,080 in America and $280 in France

There are many possible explanations for why Americans pay so much more. It could be that we're sicker. Or that we go to the doctor more frequently. But health researchers have largely discarded these theories. As Gerard Anderson, Uwe Reinhardt, Peter Hussey and Varduhi Petrosyan put it in the title of their influential 2003 study on international health-care costs, 'it's the prices, stupid.'  MORE >>

How Health Care Reform Can Help Small Businesses

"There are many who argue that we should do away with the practice of employers providing health care. In 2009, Princeton economics professor Uwe E. Reinhardt wrote in The New York Times that the practice poses two problems."  MORE >>

What Is 'Socialized Medicine'?: A Taxonomy of Health Care Systems

Excerpt: With another 'national conversation' about health reform upon us -- as it is every decade or so -- we will hear a lot of derisive talk about the evils of 'socialized medicine.' The term is regularly confused with 'social health insurance,' which is not at all the same concept. The chart [followed by text explanations in the article] may be helpful in appreciating the distinction.  MORE >>

The Economy and Health Care Jobs: A Reason to Fast Track Coverage

Excerpt: Health care is one of the few relatively healthy parts of our unhealthy economy right now. Since January 2008, the economy has lost 4.3 million non-farm jobs.... But where did employment go up the most since January of last year? You guessed it: Health care, which added 383,200 jobs.... These numbers underscore a similar point made recently by my friend Uwe Reinhardt. Cutting back on health care spending is tricky right now because health care is one of the few things fueling our economy, which desperately needs a boost.  MORE >>

Single-Payer Insurance Puts More of the Money Spent Into the Health Care Delivered

Excerpt: The Senate Finance Committee has heard about the problem of overhead. On Nov. 19, Professor Uwe Reinhardt, who is also on the board of trustees of the 900-bed Duke University Hospital, used Duke to illustrate the problem: 'We have 900 billing clerks at Duke. I'm not sure we have a nurse per (each) bed, but we have a billing clerk per bed?it's obscene.' Two days later, the New York Times published his article: 'Why does U.S. Health Care Cost So Much? (Part II): Indefensible Administrative Costs.'  MORE >>

Princeton Economist Says Health Care Key to Stimulus

Excerpt: Uwe Reinhardt, professor of economics and public affairs at Princeton University, calls the health care sector the 'strongest economic locomotive working for us.' He estimates that by 2015, health care will be one-fifth the size of the U.S. economy and says this is a good time to expand health insurance coverage for the uninsured.  MORE >>

Why Does U.S. Health Care Cost So Much? - It Is not an Aging Population

Excerpt: [R]esearch around the world has shown that the process of the aging of the population by itself adds only a very small part -- usually about half a percentage point -- to the annual growth in per-capita health spending in industrialized societies, which tends to range between 5 and 8 percent, depending on the country and the period in question. The bulk of annual spending growth can be explained by overall population growth (about 1.1 percent per year), increases in the prices of health care goods and services, and the availability of ever more new, often high-cost medical products and treatments used by all age groups.  MORE >>

Audio: Controlling Health Care Costs

Excerpt: Princeton professor and health care economics expert Uwe Reinhardt talks with Madeleine Brand about why health care costs are rising in the United States, and the options for controlling them.  MORE >>

Letter to the Editor: Make Corporate Executives Sensitive to Their Own Health Care Costs?

Excerpt: In [the WSJ] Nov. 20 editorial 'AHIP Hop' on the health-insurance proposal recently unveiled by America's Health Insurance Plans (AHIP), [the WSJ laments] the fact that 'individuals generally aren't sensitive to the price of their treatment decisions.' For that reason, [the WSJ has] long supported high-deductible health insurance that puts patients' 'skin in the game,' to use the colorful metaphor for 'high deductibles.'  MORE >>

Audio: Understanding Health Savings Accounts

Guests on the broadcast included: Dr. Henry Simmons, president of the National Coalition on Health Care; Frank Ciotola, co-owner and vice president of DaVinci Restaurant in Columbus, Ohio; and Uwe Reinhardt, professor of economics and public affairs at Princeton University.  MORE >>

Audio and Text: Are Health Insurers' Profits As Low As They Claim?

Excerpt: America's Health Insurance Plans (AHIP), the trade association for the nation's health insurers, is fighting a familiar battle. It is fighting the perception that health insurance companies focus more on their shareholders' bottom lines than the interest of their patients. To negate this notion, AHIP features a dollar bill with one tiny slice out of it (shown below) on their Web site, illustrating that their members only make 1 cent of every dollar spent on health care.... That may be the case, says Princeton economist Uwe Reinhardt, but 'whether it's fair or not depends on what it is you want to describe,' he says. 'All that statement says is, if you eliminated all our [insurance company] profits, national health spending in America would be 1 percent lower. It has meaning only in that context,' Reinhardt says. Insurers are measuring their profits against total health care spending. That's all the money you and I and employers and insurers and the government spend for doctors' visits, hospitalizations, drugs and other things.  MORE >>