Become a Creator today!Start creating today - Share your story with the world!
Start for free
00:00:00
00:00:01
Insurance – Health Insurance as Industrial Policy | Stanford Professor Maria Polyakova
44 Plays29 days ago
In this episode, we're speaking with Dr. Maria Polyakova, Professor of Health Policy and Economics at Stanford, about how insurance design influences far more than access to healthcare. Simply put, what if health insurance isn’t just about paying for care, but it's one of the biggest levers shaping the economy itself?
From Germany’s expansion of long-term care insurance that unexpectedly reduced unemployment, to IVF coverage that reshaped who gets to have children, Dr. Polyakova reveals how health policy acts as both economic stimulus and social design. She also explores why inefficiency, not just ideology, is one of the greatest barriers to reform in the U.S., and why fixing administrative waste might do more for Americans than any new program.
Recommended
Transcript
Introduction to Healthcare Theory Podcast
00:00:00
Speaker
Welcome to the Healthcare Theory Podcast. I'm your host, Nikhil Reddy, and every week we interview the entrepreneurs and thought leaders behind the future of healthcare care to see what's gone wrong with our system and how we can fix it.
00:00:17
Speaker
Today's guest is Dr. Maria Poyakova, an associate professor of health policy and health economics at Stanford.
Healthcare as Economic Policy
00:00:23
Speaker
And today we're diving into your really unique perspective that healthcare is more than just a way to pay for care and health outcomes, but with how much the government spends is a form of economic policy that affects jobs and family decisions and government spending as the billions we spend on healthcare care ripples throughout the economy.
00:00:43
Speaker
In particular, we go into two examples, Germany's expansion of long-term care insurance and our IVF but ivf coverage program in the United States to figure out what exactly happens when you spend hundreds of billions of dollars on these healthcare care programs.
00:00:57
Speaker
Thank you so much, Dr. Polyakov for coming on today. And I want to start off by getting into your background. You studied cognitive science at Yale and eventually switched to study economics. And that's not often a common path.
00:01:10
Speaker
But as someone myself who's an econ and cognitive science major, why is economics so important to understand healthcare?
Dr. Poyakova's Academic Journey
00:01:18
Speaker
I think coming into undergrad, I was more interested in sort of what you would call real science and trying to understand you know how people think and why they think. And think very um quickly, I realized that there is so much social context for people's views on many things and understanding kind of the impact of the society on how we develop our
00:01:45
Speaker
um our opinions is really important. and so That led me to you know take start taking econ classes and I just got really excited about them. and i guess I had fantastic professors who were, you know, i think the one class that actually convinced me pivoting to economics fully was economic history, believe it or not. um And that just opens up not just the context of a society, but, you know, there are so many things happening over a long period of time that influence um where we are today that I find that.
00:02:17
Speaker
um really exciting. I wasn't doing health economics as an undergraduate. I was primarily actually doing history. And then during my times in the PhD program, I was interested in how governments work and where does government money go to and how do we decide how much to collect, how much, how to spend it um And inevitably, especially in the US, that leads you to be interested in health because a lot of things, a lot of money that we spend both as people as ah and and as the government goes to
00:02:52
Speaker
healthcare care and I think you know and then there are also sort of personal reasons for like helping family members go through certain health shocks to just trying to understand the system um and that just was a kind of a perfect storm of both academic and personal interest yeah And I think it's history, yeah, and definitely.
Health Insurance and the Economy
00:03:11
Speaker
That's a great story. I think history is like a really interesting way, like not to understand like different facets of economics, like in health economics, without knowing the context of like how we got into this like employer based insurance system, how Medicaid and Medicare started. It's really hard to figure out like how are we going to fix this?
00:03:25
Speaker
What are some steps we can take if you just don't know what's happened in the beginning? And one thing I think you've always talked about, it's interesting, you said that health insurance is not just the way we pay for medical care, but it's a form of economic policy and industrial policy.
00:03:39
Speaker
But could you please explain, like, what does that really mean? Like, how can something like health insurance influence the economy or the labor market in the same way like a traditional piece of economic policy might? Yeah, so um I think traditionally people or or sort of if you read an undergraduate textbook on health insurance, the way we think or we teach health insurances, you know, people experience health shocks. It's expensive to, in the moment, it's expensive to go and get healthcare and people may not have enough liquidity or um cash in hand to do that.
00:04:12
Speaker
And so a better system to hedge the shocks in this, hedge this risk in the same way as we hedge many other risks is to pull money in advance from a lot of people. And then, you know, people will experience um some sort of events at different points in time. And then,
00:04:27
Speaker
this pool of money will pay out for them. right so this is sort of we We have insurance for many different things that are stochastic in nature and affect different people at different points in time.
00:04:38
Speaker
um so I think what has become special about health insurance um is that in in in the US, but in in fact, in in many different countries around the world, health insurance has been become tightly intertwined with the actual provision of healthcare. So very often, I'm sure many of your listeners will have the experience of when you call a doctor and you're very eager to tell them, you know, my head hurts or something like, what's your insurance?
00:05:03
Speaker
So the sort of the conversation ends up starting with um with with this financial aspect. um and and so In some sense, insurance already, health insurance in particular, kind of we interact with it much more than with any other insurance product on the market. so It sort of becomes this means of accessing healthcare.
00:05:25
Speaker
But above and beyond that, one thing that is also um possibly unique about health insurance, not fully unique, is that governments, even in even though in the US we have um ah ah large parts of the health insurance system or of the healthcare care system are paid for privately by people or firms, nevertheless, the government plays the main role in um funding of the health insurance systems.
00:05:51
Speaker
And in many European countries, you know the the health insurance system is the government system. um and so Effectively, one way to think about that is that's the way for the government to um channel a lot of money into this one particular sector. so When we think about say agricultural subsidies, basically we're giving tax breaks or direct subsidies to production in ah one particular sector.
00:06:18
Speaker
So if you kind of apply the same lens to health insurance programs, effectively you can say, well, we are channeling lots of funds, public funds in this case, um either to producers or consumers on this healthcare market, so either to patients or providers.
00:06:37
Speaker
And one can ask, well, is it reasonable then to evaluate this policy purely from the perspective of sort of insurance that protects your health risk? Or should we also think about this in a way that we usually think about many other government programs where governments channel funds into certain industries as a broader industrial policy or economic
Economic Impact of the Affordable Care Act
00:07:01
Speaker
policy? And think, for example, very specifically when there were debates about the Affordable Care Act in the US in the 2010 administration,
00:07:10
Speaker
um administration We kind of tend to think about, well, okay, so we'll have this spending on health insurance, and then that will affect health outcomes. Well, but what if it also generates jobs? What if it if some people if it leads some people to lose jobs? What if it you know if people change?
00:07:30
Speaker
who they marry or who they work for. There are all kinds of things that also can be affected by these policies that we tend to not directly think about when we're thinking about health insurance. At least that's my perception of how um these policies are usually discussed.
00:07:46
Speaker
Yeah, and when you explain it like that, it almost sounds obvious, right? We're spending so much- Totally. It's one of these things that sounds obvious once you think about it, but it's not quite how the conversation, you know, it's not the narrative the so the narrative that we usually hear.
00:07:59
Speaker
yeah and it's interesting. Like we say, yeah, exactly like you mentioned, we spend so much money healthcare, but somehow it's not like viewed in the same lens or the same end goal as other types of policy. It's viewed a bit differently.
Germany's Long-term Care Insurance Case Study
00:08:11
Speaker
And I know one example you looked into and studied recently was um Germany's introduction of long-term care insurance back in 1995, so nearly around 30 years ago now. Interestingly enough there, from what I know, expanding insurance coverage there didn't just help patients, but it increased jobs.
00:08:28
Speaker
And it helped a lot of people who are unemployed to get back into the workforce. I would love you can dive a bit deeper into that example. like How did insurance, for example, end up i like changing unemployment? How did it increase the amount of jobs there were?
00:08:41
Speaker
How did it boost that whole economy? i think its it's very obvious when you think about it extrapoli, but concretely, like what are the main mechanisms and levers going on? um Yeah. So this was a really interesting case study. Essentially, we were trying to find um ah case study for where you have a large expansion of a health insurance program.
00:09:02
Speaker
That would, you know, obviously, if you like expand health insurance a little bit and give it to 100 more people, we wouldn't expect that that would generate kind of this macroeconomic um general, what we would call general equilibrium effects.
00:09:15
Speaker
um So we we wanted to find a large expansion of a health insurance program that was permanent. and that also would have good data for us to be able to study. so This is actually a really non-trivial task because many expansions many large expansions of these um kinds of health insurances or generally social insurance um policies that we have today, they happened quite early on where like say in Medicare and Medicaid were introduced in the sixties in the US, it's very hard to find detailed granular data from that time.
00:09:47
Speaker
um German health insurance, the actual health insurance system goes back to that. Speaking of history goes back to the 19th century. It was actually Bismarck was the introduced the first health insurance system in the world. In some ways, many of the institutions that we have in the US health insurance system, actually this idea of giving health insurance to workers as a benefit kind of originates from that um um from that from that time. and so German health insurance has existed for a long for a long time and has been the model for many other countries.
00:10:22
Speaker
But this um the the country had lots of discussions because there were pretty dramatic aging trends. in starting from the mid 80s, they have been debating for forever that you know health insurance cannot really bear the cost of long-term care because it's a very different, it's not an acute episode. Basically, the main difference in risk in long-term care is that and unlike a heart attack where it's kind of very limited, right you you have an episode, you go to the hospital, um and then you may have some follow-up if you survive,
00:10:59
Speaker
But long-term care is this much more complicated object where people may need care for years. And so health insurance has not really been set up for that.
00:11:11
Speaker
um And so so so then ultimately in 1995, they had this massive expansion of their of their and insurance system to introduce this long-term care bit.
00:11:26
Speaker
I should notice here... um you know i guess bringing your listeners back to the US context for for a moment, ah part of there were some discussions during the ACA about having long-term care piece in that legislation for the United States. and ah Since there was no way to impose the mandate to buy long-term care insurance,
00:11:54
Speaker
um essentially all actual calculations of solvency of this program completely failed because basically long-term care insurance is in some ways even worse than health insurance in that no one wants to believe that they will face any risks of long-term care. That's not something we like to think about. um Even though that is becoming a reality also in the US for many people as the society is aging.
00:12:19
Speaker
and um Basically, the only people who buy long-term care insurance are those who have very strong expectation that they will for some, you know, they have additional information basically that they will need um long-term care with high certainty.
00:12:32
Speaker
But of course, if, you know, most people who buy insurance and then end up using insurance, insurance markets don't work that way. So then you have this massive adverse selection. And so this long-term care piece didn't pass and long-term care insurance in the U.S. is, is, is, um,
00:12:50
Speaker
is basically provided as as sort of by Medicaid as the insurer of last resort for when people exhaust all of their assets. So that's kind of separate. ah and the like The long-term care piece here is particularly interesting in the US s policy context. But going back to Germany, so then we had this large expansion, or they had this large expansion of their insurance system in 1995.
00:13:12
Speaker
Effectively, what that meant is, well, if you believe that people don't change their consumption of healthcare in response to having insurance, then nothing should happen.
00:13:23
Speaker
right The government says, okay, now you have this health this this kind of insurance mechanism. And in principle, if you buy as much long-term care with insurance as without insurance, you wouldn't expect anything to happen. But we know that in reality, people have pretty elastic demand for healthcare um or different types of healthcare. care It turns out that long-term care may potentially be kind of on the more elastic side because there are different types of care and there is a margin of moving from having someone being cared at home to having more formal caregiving.
00:13:58
Speaker
um And so so basically, there was increase in demand for long term care services as a result of this program. And so once you need, once you have more people who want to get this care, you need to hire workers to provide this care.
00:14:12
Speaker
um And that was kind of the mechanism by which um this program ended up generating We essentially see that there was very rapid growth on the supply side of nursing homes and workers who work in these places. and Then Germany has fantastic labor market data going back to the 70s. You can track the whole population who are working um as employees.
00:14:41
Speaker
in the German system, so it's literally record of every job people held from you know the 70s up until today. and um Then we're able to see kind of where those people who are now entering into the jobs, where they were coming from. and One thing that we found was quite interesting is because presumably, because the labor market was pretty slack,
00:15:03
Speaker
At that point in time, there was very high unemployment in Germany. um that It seems that many of these new workers who were entering the long-term care in general, you know once you have more workers entering the long-term care sector, you're kind of pulling people into other sectors of the economy potentially.
00:15:22
Speaker
They were not necessarily just being grabbed from say hospitals into nursing homes, they were actually um entering from unemployment, formal unemployment, or out of the labor force, which which is particularly interesting because it's not clear what this whether these workers would have necessarily found jobs in the absence of this um of this stimulus, I think you want to call it.
00:15:47
Speaker
Yeah, and I think in the U.S., it's definitely... I know, ah no I lost your audio. lost your audio. Sorry, can you yeah hear me now?
00:15:57
Speaker
Mm-hmm. Okay, that's fine. I'll just edit that part out. But sorry, yeah, um as was saying, so in the U.S., it was definitely something to really... Sorry. In the U.S., it's definitely a really difficult issue with this, like, adverse selection problem. It's going to be hard to kind of regenerate this policy, but within Germany, I am curious. Like, you had this...
00:16:16
Speaker
usage of health insurance and and expanding to long-term care insurance, was able to get more jobs, decrease unemployment. But how would that kind of kind of compare to other forms of economic policy in that instance? Like, do you think it would be more or less efficient than, for example, a subsidy or something else? Or how would you actually look at this, like, holistically?
00:16:33
Speaker
If the main goal was to just increase unemployment, it would be effective? Or would you say it's more like a secondary goal for a country like Germany? Yeah, that's an excellent
Political Motivations in Health Reforms
00:16:43
Speaker
question. So, I mean,
00:16:46
Speaker
I think this was definitely not the goal of this original policy. The goal of this original policy was in some ways was 1995, I don't know exactly what their goal was, but if according to contemporary sources, it seems that a lot of the goals were actually related more to political economy, unsurprisingly, as these things go, right? so so So imagine you have a situation where population is aging, lots of people need long-term care. Essentially, what does that mean lots of people like you need long-term care? Well, that just means you have a lot of people who are not sick enough to be in hospitals and you don't want to keep people in hospitals for years, but they're just not able to live on their own, right? So they need someone to help. They may not have relatives that are able to help them or these relatives may, you know, they may have relatives, but they may be taking care of their small kids or like,
00:17:41
Speaker
family situations are are different different difficult ah different and complicated. um so Then the question is, what like how do you help this? What do you do? and and What they were doing before this whole program was rolled out is that the counties, I'm going to call them counties for simplicitly simplicity, but basically local geographic units, they had um some kind of programs where people could come and say, you know i need some support,
00:18:11
Speaker
I don't necessarily have income to pay for this support myself. Can you help me? And so they had this kind of welfare style, what you would call in the US program that would support people specifically for long-term care services.
00:18:26
Speaker
And since there were more and more people who needed help, these local budgets were just exploding. And the local budget in principle is not set up to run a long-term care program, right? But these things are incredibly expensive.
00:18:39
Speaker
um And so that triggered kind of the political discussion of relocating these expenditures essentially to the federal level, right? So the the program that was rolled out was a federal program.
00:18:51
Speaker
Interestingly, it was not means tested. So everyone was eligible. It was a universal program. um And, um, um,
00:19:03
Speaker
and and and kind of the employment effects that we're thinking about. i mean, I think they definitely expected that since they will have more people going into long-term care, they were expecting that there should be more, or they were hoping that there would be more supply of caregivers. Otherwise, it's not clear what do you do.
00:19:21
Speaker
um But I don't think this was like conceptualized as a as a stimulus program in any. So I think the question then is, Is this like a better way to spend public money than any other competing program that you can imagine?
00:19:38
Speaker
That's a really tough question to evaluate. So yeah um there is this concept that you may have heard of in your classes called marginal value of public funds.
00:19:50
Speaker
So you sort of can calculate what's the return on investment essentially of every public program and figure out which ones pay have a higher return than others.
00:20:02
Speaker
um The nuance to that is like you can only do that well after the program is rolled out and you can evaluate it and who benefited from it and who lost and how much money did we end up spending.
00:20:15
Speaker
um It's a little bit, you know, it's kind of harder to do prospect prospectively, although that's basically what CBO scoring does. So when the Congressional Budget Office thinks about different and scores, different policies, they're kind of trying to prospectively evaluate what would be the budgetary impacts.
00:20:30
Speaker
um One thing that is interesting with this particular program for long-term care is that generally, so there's been some um really interesting work done in this area of trying to kind of collect compare these returns of investments across different public programs.
00:20:47
Speaker
and They tend to find that things that invest in children have much higher ah ROIs than things that invest in older people. Basically, that's because once you invest in a child, the child has many more years of life. and so if you you know If you compute um ah value of life years as as the the outcome of anything, you essentially have more return on any investments in children.
00:21:12
Speaker
so This calculation that we're doing is interesting in the sense that um if you just take the direct beneficiaries of this program, almost mechanically, you will conclude that it doesn't generate a return on investment.
00:21:30
Speaker
because essentially what you're doing is you can just view it as a subsidy. right You're providing people with a subsidy for this care. If they were not buying this care at the market price before the subsidy was provided, then they are not valued. The standard sort of Chicago theory style argument would be these people don't value ah these services at the full price. So when you subsidize the care, um you cannot get more than $1 return on $1 because we know that people value the dollar less at at less than $1.
00:21:59
Speaker
But when you add these additional jobs, like benefits from jobs and or any other benefits that may be generated through this, like another, you know you generate jobs, this also means that you save on unemployment insurance or you potentially save on some kind of um payments to workers who are unemployed in the long run.
00:22:19
Speaker
Then you suddenly make this program that is targeted at older age adults, look like it's an infinite ah ROI. Yeah, because you're spending very little, you're getting people into these jobs, and jobs are very valuable.
00:22:36
Speaker
um And so the the problem is that once you have a bunch of programs that all have infinite ROI, it's very hard to adjudicate between them, right? So then we need some other, some other kind of mechanism to think about, like, how how do we compare um different programs?
00:22:53
Speaker
Mm-hmm. And it is, like, very interesting. Like, it's, of course, like, we found kind of how they answered the first question. Like, is healthcare, health insurance a way to impact, like, labor, like, or labor economics and the amount of unemployment? and We know it does.
00:23:07
Speaker
But then, yeah, as you mentioned, like, the question of, like, is it the best way to do so it's still kind of a little things, like, things we're trying to answer and go further into. But I also know, I mean, like, as you've kind of spoken on before, it's more than just like labor policy. Health insurance can impact labor policy, which is really interesting. But you've also researched one other area, which thought was really cool, which is and infertility and IVF access.
00:23:29
Speaker
um You found that, I mean, being able to unforet fertility treatment takes a serious toll on people versus mental health, increases divorce rates, and it helps really damages children.
00:23:41
Speaker
people and the way they spend. But when insurance covers IVF, it drastically utiliz increases utilization um among lower income couples and essentially changes who gets to have children across lower income levels. And I would be curious, like what did you take away from that research about the role of insurance in people's life decisions and well-being beyond just kind of that unemployment level? like How does insurance impact people in cases like this, like infertility, for example?
IVF Insurance and Life Decisions
00:24:05
Speaker
Yeah, great. So I think the employment stuff is more about like, this is kind of a very policymaker lens, right? And what we're hoping to move with this study on the on the the German case study is kind of changing how changing the narrative that the policymaker has in mind when thinking about like, what will be the effects of this large bucket of spending, is this going to be only on health or are there other things to to potentially keep in mind, such as um this broader economic effect?
00:24:37
Speaker
But of course, in everyday life, you know most of us are not policymakers and we and and and ah potentially, you know the The sort of representative interaction with health insurance is getting various explanation of benefits where you have no idea of what's going on. and like Something is denied and something is paid for and some prices show up and then you call insurers for a long time. and And so I guess people have generally um kind of a pretty, my sense is pretty kind of negative view, I guess, of the of the insurance system in their everyday life.
00:25:17
Speaker
um And that gets particularly painful, not when you're dealing with paperwork, although that's probably also painful. um But in the cases where there are certain treatments that you think may work for you, um or at least you want to hope that they may work for you.
00:25:38
Speaker
um And essentially, the insurance system says, well, according to, you know, there's sort of research and and general evidence on this on this treatment, this is kind of not, you know, we we will this this is sort of a waste of money basically to pay for this treatment, for you right? So this can be, i think, very hard for people, especially if you feel like, well, you know, yes, maybe on average the study shows that this will not work.
00:26:10
Speaker
but maybe it will work for me, right? we Especially in in challenging health situations, there is a sense that you want to try everything. um And so I think that actually is why it's so hard to discuss health insurance policy, both in the US, I mean, in Europe, they have a different funding system, but it's also true that they have to decide which set of services are covered.
00:26:35
Speaker
And that is always a hard and challenging discussion. So I think um fertility is an interesting case where it affects a lot of people.
00:26:48
Speaker
And there are a lot of debates, I would say, around the world as to whether infertility is in some ways a disease that falls under the scope of health insurance systems.
00:27:02
Speaker
or whether it's not. it's so It's interesting that even just classifying infertility as a disease happened relatively recently. in um and so but and Then the question is, so okay, so now suppose the infertility is classified as a disease, um what should be the coverage? The unique thing about infertility right in comparison to many other health conditions is I think there is this sense from the policy makers that there is sort of like and And that's why I think there is variation in these decisions. Is like is it the choice of the couple that they want a child? right it's not it's sort of not um
00:27:44
Speaker
so in for I think people recognize that infertility is a health shock, but then it's always cheaper for the policymaker to say, well, and that's too bad, and we can't help you in any way.
00:27:59
Speaker
um and And so I think at that point, there is also the question of like for fertility stuff is is this is this kind of more health insurance policy or is this really a demographic policy of the country, right? And so I think ah many countries make different decisions about coverage depending on their general kind of demographic policies.
00:28:21
Speaker
But in any event, so but I think this is a very just the IVF coverage is a very stark example of where um we definitely see that expensive procedures. so This study was done in the context of Sweden where IVF is substantially less expensive than in the US in terms of um a nominal cost, but it is quite similar and or even higher in terms of like if if measured in in average monthly income.
00:28:51
Speaker
um So it's an expensive procedure. the Swedish government right now covers or in in the context of this study, which is not it's not quite done with in 2025, but in the two thousand and later data, it covers certain number of cycles, say three cycles um of IVF. And then if they don't work, they say, the so sort of this this society should pay for three cycles.
00:29:20
Speaker
And if that doesn't work, it's your private decision then if you want to continue, but it will not be paid for anymore. um Yeah. And so we see that for lower income households, that's definitely a binding constraint. like They're not able to um So, yeah, there there there is no, you know, it's not, it's very hard to borrow, for example, to suppose even if you have if you say, okay, but I still want to pay for it out of pocket. I just don't have liquidity. I want to borrow to do this procedure.
00:29:50
Speaker
Nowadays, um there are a lot of interesting new financial products that are coming online to b to to offer people liquidity and fun financing for IVF, both in the US and in Europe.
00:30:03
Speaker
And they were less common during the time that we studied. um and i And so I think that just underscores that there is, you know, insurance can make can really make um people's lives quite different, right? Because you can, and thank you it's it's sort of, i think the thing that is unique about healthcare is that if you know that if you have some health problem and you know that there is a solution and you cannot afford to pay for it,
00:30:31
Speaker
that's incredibly painful and probably much more... And we don't walk around saying like, oh, everyone should get like, I don't know, some ah luxury good X. We sort of understand that we're okay, it's it's not.
00:30:45
Speaker
um But I think with healthcare, knowing that something may help you and not be able to try it is very painful. At the same time, from the government's perspective, they have to have some kind of...
00:31:01
Speaker
notion of, you know, like what is reasonable to pay for, because there are other competing priorities, right? If you pay for 10 IVF cycles, maybe you can pay less for schools.
00:31:14
Speaker
So these opportunity costs are real. um and And so, but that this leads to very hard decisions, because I think in the moment, it's kind of everyone is just thinking, well, but it's my health and it's my life and the this system is somehow making it impossible for me to access this. um And you're not thinking about the opportunity to cost at some aggregate level.
00:31:40
Speaker
Yeah, and it's it's interesting. Like I just starting this podcast have been asked like from people like how, okay, you know a lot about healthcare. How can you fix it? And as you know, as health economists, it's a lot deeper and more complicated than that. And I'm sure you get similar questions and and things like that, which okay you can't really answer as well. And as you just spoke on, it's a question of not only values, but trade-offs.
Healthcare Policy Trade-offs
00:32:00
Speaker
Like where do we want to make these decisions?
00:32:02
Speaker
What are we willing to sacrifice for others? What is the opportunity cost of certain things? It's a really intercom, intercom. kind of complex set of decisions that's hard to make. But for you, mean, you've spent so much time looking into labor policy, industrial policy, different ways to use health insurance as a mechanism to basically improve the way we spend and allocate funds.
00:32:21
Speaker
i'm I'm curious, like from your perspective, if you were kind of advising these policymakers or could even just talk to everyday people, how would you suggest we redesign or prioritize different areas in health insurance to maximize like economic upside for everyday people? What are the things you're looking for, suggesting, or maybe things we want to explore in the future?
00:32:41
Speaker
Yeah. i mean i I think the kind of trade-off between sort of you know individual health and social trade-offs is ah is a very challenging topic. and there is never the right like Economists cannot provide you the right answer because it depends on on on um on the social values, right, in some ways.
00:33:02
Speaker
um But I think what economists can definitely provide an answer to is that I think we're spending, in the US, we're spending massive amounts of resources on just the bureaucracy and administration of the system.
00:33:18
Speaker
And that money test like, there is no trade, there is no trade-off that I can identify. Yeah. There's no benefit. this country no benefit yeah It just, you know, I'm sure the health insurance ah companies themselves don't love it. Like no one likes it. And yet we're somehow stuck in not being able to, you know, now people are hoping, well, AI will fix it. I'm not sure.
00:33:42
Speaker
it was the It is it the technological barrier that we're facing. you know there is There are plenty of computers, computing computing power to ah to fix it now. I think it's some kind of a political problem or just or or not even political, but just being, you know speaking of historical, like things just evolved this way and it's very hard to undo something that has been on on this.
00:34:07
Speaker
um that has been in the making for so long because it's always like things are fixed in small, like we fixed a little bit here and we fixed a little bit there. But I think finding a way to, as the first order, before we start talking about trade-offs that are very hard, I think genuinely hard decisions of what should and shouldn't be paid from this kind of general um social contributions bucket, right? Like what the decide what risks should the society take versus any any given individual?
00:34:38
Speaker
I think we can like make lots of progress by just reducing the administrative ah burden And it goes through so many layers. It's like the number of papers that are written on different aspects of this, the number of companies that I think are started in different aspects of this are just massive. right it's good like Every hospital negotiates with every insurer and then and the employer has to negotiate with insurer. Then you have all of these different prices floating around. then you have
00:35:09
Speaker
all of the paperwork and then the physician kind of never has any idea of what's covered, what's not, what can i prescribe, what's not, who pays for what. ah It's kind of throughout the system, people are spending enormous amount of effort on this, the well, yeah, administrative administrative cost in both public and private insurance systems that I think if we can fix that, we'll make a lot of,
00:35:38
Speaker
a lot of progress without even starting with the with the harder discussions of of the genuine trade-offs.
Conclusion and Reflections
00:35:47
Speaker
Definitely. And I think like it it is a little interesting. like You always see like startups or maybe like saying they can fix everything with one simple software. Maybe you see like also you see bigger insurance companies saying they're going to spend millions of dollars on overhaul, ask if that will fix everything. Of course, i think what we're probably going expect is like incremental steps to ideally get to a system that's a bit more efficient and able to have a transparency for people, but also just the different counterparties that are constantly negotiating and trying to help their side to get more profits. So it's going to be complicated, but as you just spoke on, health insurance is much more in this like complex web of different stakeholders that actually will impact everyday people if we spend more, creating jobs, providing better social welfare for for children and such through infertility.
00:36:32
Speaker
um program. So I mean and really have appreciated your time today, Dr. Poliakova, just kind of walking through all of this and sharing you're notly your story, but just going on, going deep into like, why is health insurance so important?
00:36:43
Speaker
I think a lot of people tend to underestimate how much we kind of spend on it. But I really appreciate your time today. And thanks so much for coming on to Healthcare Theory. Thank you for having me.
00:36:55
Speaker
Thanks for listening to The Healthcare Theory. Every Tuesday, expect a new episode on the platform of your choice. You can find us on Spotify, Apple Music, YouTube, any streaming platform you can imagine.
00:37:07
Speaker
We'll also be posting more short-form educational content on Instagram and TikTok. And if you really want to learn more about what's gone wrong with healthcare care and how you can help, check out our blog at thehealthcaretheory.org. Repeat, thehealthcaretheory.org. Again, i appreciate you tuning in and I hope to see you again soon.