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Column: Here's one key reform that can fix U.S. healthcare
For more than 50 years, as the economics of American healthcare and health insurance have evolved, one theory has persisted, unchanged: To promote better and more efficient medical treatment, patients must have “skin in the game.”
The idea is that requiring fees for doctor or hospital visits — through co-pays, deductibles and other forms of cost-sharing — will prompt people to think twice before seeking treatment for anything but a truly serious condition.
“On the question of whether patients should have to pay part of the cost of their covered medical care, our profession’s advice has been unequivocal,” health economists Liran Einav of Stanford and Amy Finkelstein of MIT wrote in their 2023 book, “We’ve Got You Covered: Rebooting American Health Care.” “Patients must pay something for their care, otherwise they’ll rush to the doctor every time they sneeze.”
Among all advanced industrial countries, the U.S. goes furthest in using premiums, copays, and deductibles to influence access to care.
— Merrill Goozner, STAT
Einav and Finkelstein own up to having “preached the gospel” of skin-in-the-game “to generations of students.”
Now here’s their punchline: “We take it back.”
To healthcare reformers such as single-payer advocates Adam Gaffney, David U. Himmelstein and Steffie Woolhandler, the confessional by Einav and Finkelstein “may signal an encouraging shift in elite opinion, at least among economists,” as they wrote recently in the New York Review of Books.
Others have begun to take notice. “Among all advanced industrial countries, the U.S. goes furthest in using premiums, copays, and deductibles to influence access to care,” the veteran healthcare journalist Merrill Goozner observes. “It is time to put an end to this failed experiment.”
Yet the imposition of financial obstacles to limit access to care still exerts a powerful influence on healthcare policy in the U.S. In part, this is because it makes sense, superficially. The mantra goes: “If you want less of something, tax it more.” So it has a built-in appeal to government budget hawks and corporate executives who want to reduce healthcare spending.
For some, there’s a moral component — why shouldn’t people take personal responsibility for their own health, whether by smoking and eating less or paying for healthcare partially out of their own pockets, even if they have to be forced to make treatment choices based partially on their out-of-pocket costs?
Then there’s the empirical evidence: It’s true that the higher the co-pays and deductibles, the less medical care people seek, on average.
The seminal study on this topic was Rand’s Health Insurance Experiment, reported in 1981. Starting in 1971, Rand recruited 2,750 families — 7,700 individuals — slotted randomly into five groups: One was offered free care, three groups were offered different levels of cost-sharing, and the fifth was placed in a nonprofit HMO.
Rand found that the groups with cost-sharing made one or two fewer physician visits a year and had 20% fewer hospitalizations than the group with free care. Their dental visits, prescriptions and mental health treatments were also lower. Unsurprisingly, they spent less on healthcare.
The initial findings seemed to validate the skin-in-the-game theory. As Rand continued reporting out the results over the next few years, however, air began to leak out of the balloon.
It became clear that although the cost-sharing subjects cut back on ineffective or unnecessary care, they also cut back on effective and necessary treatments. The reduced utilizations, Rand found, occurred because the subjects decided to delay or forgo treatments, possibly inadvisedly. Once they initiated care, the effect of cost-sharing dropped away, as the patients ceded their decision-making to their healthcare providers.
Some decisions weren’t affected at all by cost-sharing. “The proportion of inappropriate hospitalizations was the same (23 percent) for cost-sharing and free-plan participants, as was the inappropriate use of antibiotics,” Rand reported. Nor did cost-sharing prompt subjects to seek out higher-quality care; the general quality of outpatient and dental care was “surprisingly low for all participants.”
Although Rand found “no adverse effect on participants’ health” from the reduction in services prompted by cost-sharing, the free plan led to better healthcare for plan members in four categories: improved control of hypertension, better vision care, better dental care for the poorest patients, and fewer serious health symptoms for the poorer patients, including less chest pain when exercising and fewer episodes of loss of consciousness.
Once cost-sharing became a standard element of American health insurance, Gaffney, Himmelstein and Woolhandler write, “the consequences were dire.”
The Heritage Foundation developed a model combining extreme deductibles and tax-advantaged savings accounts to pay the out-of-pocket expenses, which Heritage argued would “transform patients into prudent consumers.” The high-deductible/health savings account model was enacted into law, but plainly has failed to create an army of prudently cost-sensitive patients.
Co-pays and deductibles became permanently etched into employer-sponsored health plans. When the initial Rand findings were published, report Gaffney, Himmelstein and Woolhandler, only 30% of private health plans had a deductible for hospital stays; today 90% of workers with employer plans have annual deductibles averaging $1,735 per participant. Conservative governors and legislatures have tried to impose cost-sharing fees on patients in Medicaid, the nation’s healthcare program for low-income households.
And, of course, the cost-sharing revolution has utterly failed to control U.S. healthcare costs or bring about a healthier nation. Per capita healthcare spending in the U.S. has risen from about $350 in 1970 to $14, 470 in 2023. In inflation-adjusted terms, it has increased nearly sevenfold.
As for health outcomes, of 13 wealthy countries tracked by the Peter G. Peterson Foundation, the U.S. spends the most per capita by a wide margin and scrapes the bottom of the barrel on outcomes — the worst average life expectancy, worst infant mortality rate, worst rate of unmanaged diabetes, worst maternal mortality and nearly the worst heart attack mortality.
Obviously, the American healthcare system has many flaws other than its reliance on cost-sharing. But all its flaws are related in some way to its economic structure, which has produced legions of uninsured and underinsured people, as well as crushing medical debt for millions. (On Tuesday, the Consumer Financial Protection Bureau made final a rule requiring medical debts to be removed from consumers’ credit reports. But the debts still remain.)
In recent years, the U.S. has started to get its arms around the uninsured crisis. That’s largely due to the 2010 Affordable Care Act, which has brought access to Medicaid and subsidized health plans for about 42.5 million people. The uninsured rate fell from nearly 18% (or 46.5 million people) in 2010 to 9.5% (25.3 million) in 2023.
Can these gains be advanced and sustained? The incoming Trump administration doesn’t present grounds for optimism. In his first term, Donald Trump and his acolytes worked tirelessly to undermine the ACA and Medicaid. The number of uninsured rose to 28.9 million in 2019 from 26.7 million in 2016.
It would surprise no one if the new administration takes a hands-off approach to the increasing corporatization of healthcare, including the takeover of hospitals and nursing homes by penny-pinching private equity firms and the pushing of more Medicare enrollees to join private Medicare Advantage plans, which have become known for costing the government more than traditional Medicare, and for profit-seeking through claim denials.
Still, it’s the installation of cost-sharing as a medical management tool that harms people day in and day out. That the tool has never fulfilled its promise doesn’t seem to faze policymakers. On the surface, after all, it should work, shouldn’t it?
The rolling robots that deliver groceries and hot meals across Los Angeles are getting an upgrade.
Coco Robotics, a UCLA-born startup that’s deployed more than 1,000 bots across the country, unveiled its next-generation machines on Thursday.
The new robots are bigger, tougher and better equipped for autonomy than their predecessors. The company will use them to expand into new markets and increase its presence in Los Angeles, where it makes deliveries through a partnership with DoorDash.
Dubbed Coco 2, the next-gen bots have upgraded cameras and front-facing lidar, a laser-based sensor used in self-driving cars. They will use hardware built by Nvidia, the Santa Clara-based artificial intelligence chip giant.
Coco co-founder and chief executive Zach Rash said Coco 2 will be able to make deliveries even in conditions unsafe for human drivers. The robot is fully submersible in case of flooding and is compatible with special snow tires.
Zach Rash, co-founder and CEO of Coco, opens the top of the new Coco 2 (Next-Gen) at the Coco Robotics headquarters in Venice.
(Kayla Bartkowski/Los Angeles Times)
Early this month, a cute Coco was recorded struggling through flooded roads in L.A.
“She’s doing her best!” said the person recording the video. “She is doing her best, you guys.”
Instagram followers cheered the bot on, with one posting, “Go coco, go,” and others calling for someone to help the robot.
“We want it to have a lot more reliability in the most extreme conditions where it’s either unsafe or uncomfortable for human drivers to be on the road,” Rash said. “Those are the exact times where everyone wants to order.”
The company will ramp up mass production of Coco 2 this summer, Rash said, aiming to produce 1,000 bots each month.
The design is sleek and simple, with a pink-and-white ombré paint job, the company’s name printed in lowercase, and a keypad for loading and unloading the cargo area. The robots have four wheels and a bigger internal compartment for carrying food and goods .
Many of the bots will be used for expansion into new markets across Europe and Asia, but they will also hit the streets in Los Angeles and operate alongside the older Coco bots.
Coco has about 300 bots in Los Angeles already, serving customers from Santa Monica and Venice to Westwood, Mid-City, West Hollywood, Hollywood, Echo Park, Silver Lake, downtown, Koreatown and the USC area.
The new Coco 2 (Next-Gen) drives along the sidewalk at the Coco Robotics headquarters in Venice.
(Kayla Bartkowski/Los Angeles Times)
The company is in discussion with officials in Culver City, Long Beach and Pasadena about bringing autonomous delivery to those communities.
There’s also been demand for the bots in Studio City, Burbank and the San Fernando Valley, according to Rash.
“A lot of the markets that we go into have been telling us they can’t hire enough people to do the deliveries and to continue to grow at the pace that customers want,” Rash said. “There’s quite a lot of area in Los Angeles that we can still cover.”
The bots already operate in Chicago, Miami and Helsinki, Finland. Last month, they arrived in Jersey City, N.J.
Late last year, Coco announced a partnership with DashMart, DoorDash’s delivery-only online store. The partnership allows Coco bots to deliver fresh groceries, electronics and household essentials as well as hot prepared meals.
With the release of Coco 2, the company is eyeing faster deliveries using bike lanes and road shoulders as opposed to just sidewalks, in cities where it’s safe to do so. Coco 2 can adapt more quickly to new environments and physical obstacles, the company said.
Zach Rash, co-founder and CEO of Coco.
(Kayla Bartkowski/Los Angeles Times)
Coco 2 is designed to operate autonomously, but there will still be human oversight in case the robot runs into trouble, Rash said. Damaged sidewalks or unexpected construction can stop a bot in its tracks.
The need for human supervision has created a new field of jobs for Angelenos.
Though there have been reports of pedestrians bullying the robots by knocking them over or blocking their path, Rash said the community response has been overall positive. The bots are meant to inspire affection.
“One of the design principles on the color and the name and a lot of the branding was to feel warm and friendly to people,” Rash said.
Coco plans to add thousands of bots to its fleet this year. The delivery service got its start as a dorm room project in 2020, when Rash was a student at UCLA. He co-founded the company with fellow student Brad Squicciarini.
The Santa Monica-based company has completed more than 500,000 zero-emission deliveries and its bots have collectively traveled around 1 million miles.
Coco chooses neighborhoods to deploy its bots based on density, prioritizing areas with restaurants clustered together and short delivery distances as well as places where parking is difficult.
The robots can relieve congestion by taking cars and motorbikes off the roads. Rash said there is so much demand for delivery services that the company’s bots are not taking jobs from human drivers.
Instead, Coco can fill gaps in the delivery market while saving merchants money and improving the safety of city streets.
“This vehicle is inherently a lot safer for communities than a car,” Rash said. “We believe our vehicles can operate the highest quality of service and we can do it at the lowest price point.”
President Trump on Friday directed federal agencies to stop using technology from San Francisco artificial intelligence company Anthropic, escalating a high-profile clash between the AI startup and the Pentagon over safety.
In a Friday post on the social media site Truth Social, Trump described the company as “radical left” and “woke.”
“We don’t need it, we don’t want it, and will not do business with them again!” Trump said.
The president’s harsh words mark a major escalation in the ongoing battle between some in the Trump administration and several technology companies over the use of artificial intelligence in defense tech.
Anthropic has been sparring with the Pentagon, which had threatened to end its $200-million contract with the company on Friday if it didn’t loosen restrictions on its AI model so it could be used for more military purposes. Anthropic had been asking for more guarantees that its tech wouldn’t be used for surveillance of Americans or autonomous weapons.
The tussle could hobble Anthropic’s business with the government. The Trump administration said the company was added to a sweeping national security blacklist, ordering federal agencies to immediately discontinue use of its products and barring any government contractors from maintaining ties with it.
Defense Secretary Pete Hegseth, who met with Anthropic’s Chief Executive Dario Amodei this week, criticized the tech company after Trump’s Truth Social post.
“Anthropic delivered a master class in arrogance and betrayal as well as a textbook case of how not to do business with the United States Government or the Pentagon,” he wrote Friday on social media site X.
Anthropic didn’t immediately respond to a request for comment.
Anthropic announced a two-year agreement with the Department of Defense in July to “prototype frontier AI capabilities that advance U.S. national security.”
The company has an AI chatbot called Claude, but it also built a custom AI system for U.S. national security customers.
On Thursday, Amodei signaled the company wouldn’t cave to the Department of Defense’s demands to loosen safety restrictions on its AI models.
The government has emphasized in negotiations that it wants to use Anthropic’s technology only for legal purposes, and the safeguards Anthropic wants are already covered by the law.
Still, Amodei was worried about Washington’s commitment.
“We have never raised objections to particular military operations nor attempted to limit use of our technology in an ad hoc manner,” he said in a blog post. “However, in a narrow set of cases, we believe AI can undermine, rather than defend, democratic values.”
Tech workers have backed Anthropic’s stance.
Unions and worker groups representing 700,000 employees at Amazon, Google and Microsoft said this week in a joint statement that they’re urging their employers to reject these demands as well if they have additional contracts with the Pentagon.
“Our employers are already complicit in providing their technologies to power mass atrocities and war crimes; capitulating to the Pentagon’s intimidation will only further implicate our labor in violence and repression,” the statement said.
Anthropic’s standoff with the U.S. government could benefit its competitors, such as Elon Musk’s xAI or OpenAI.
Sam Altman, chief executive of OpenAI, the company behind ChatGPT and one of Anthropic’s biggest competitors, told CNBC in an interview that he trusts Anthropic.
“I think they really do care about safety, and I’ve been happy that they’ve been supporting our war fighters,” he said. “I’m not sure where this is going to go.”
Anthropic has distinguished itself from its rivals by touting its concern about AI safety.
The company, valued at roughly $380 billion, is legally required to balance making money with advancing the company’s public benefit of “responsible development and maintenance of advanced AI for the long-term benefit of humanity.”
Developers, businesses, government agencies and other organizations use Anthropic’s tools. Its chatbot can generate code, write text and perform other tasks. Anthropic also offers an AI assistant for consumers and makes money from paid subscriptions as well as contracts. Unlike OpenAI, which is testing ads in ChatGPT, Anthropic has pledged not to show ads in its chatbot Claude.
The company has roughly 2,000 employees and has revenue equivalent to about $14 billion a year.
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