Business
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 luxury shopping center in Pacific Palisades will reopen next month after more than $100 million in renovations forced by the January 2025 wildfire that devastated the Los Angeles neighborhood.
Palisades Village will reopen Aug. 15, owner Rick Caruso announced Wednesday. The outdoor center survived the blaze that destroyed homes and other businesses but needed refurbishment to eliminate contaminants that the fire could have spread.
Crews are putting finishing touches on mall buildings after tearing them down to the studs, treating the wood and rebuilding the walls, Caruso said.
“Everybody’s working, and stores are moving their products in,” he said. “It’s a really cool feeling that people have really locked arms and are working together.”
An electrician installs lighting for a restaurant at Rick Caruso’s Palisades Village on Thursday. The shopping center is scheduled to reopen mid-August.
(Myung J. Chun / Los Angeles Times)
Pacific Palisades resident Allison Polhill, who is rebuilding the home of 30 years that her family lost in the blaze, said she is “thrilled” at the prospect of returning to the mall she used to frequent. Its comeback is a boost for the community, she said.
“Every single step that we make to reopen our commercial corridors is going to bring more people back into the Palisades,” said Polhill, who expects to move back into her home at the end of August.
A total of 6,822 structures were destroyed in the Palisades fire, including more than 5,500 residences and 100 commercial businesses, according to the California Department of Forestry and Fire Protection.
Caruso previously attributed the mall’s survival to the hard work of private firefighters and the fire-resistant materials used in the mall’s construction.
The $200-million shopping and dining center opened in 2018 with a movie theater and a roster of upmarket tenants, including Erewhon, which may be the only grocer in the heart of the fire-ravaged neighborhood when it opens.
Caruso’s company was able to fill the mall with tenants despite the long shutdown.
Palisades Village is 99% leased, with the majority of tenants returning, said Jackie Levy, chief financial and revenue officer. Nearly one-third of the shops and restaurants are new to the property.
A firefighter carries a hose back to his rig while walking through a destroyed home from the Palisades fire in Pacific Palisades on Jan. 7, 2025.
(Genaro Molina / Los Angeles Times)
Last year, Pacific Palisades-based fashion designer Elyse Walker said she would reopen her eponymous store in Palisades Village after losing her 25-year flagship location on Antioch Street to the inferno.
Other neighborhood shops destroyed in the fire that are reopening at the mall include K Bakery and Loomey’s Toys, which caters to children up to age 12 and used to be across the street from Palisades Elementary Charter School.
“It’s been a journey and I’m excited because I wasn’t sure that there was going to be a place to come back to,” said toy store owner Amanda Rastegar. “Hopefully we can bring some of that magic back.”
Rastegar’s home in the Palisades survived but was damaged by the fire. The family returned about eight weeks ago. Her last memory of the fire was a burning supermarket.
“I just couldn’t wrap my brain around what was happening,” she said. “By the time I left, Gelson’s was on fire.”
Among the returning tenants is Angelini Ristorante & Bar. Well-known Los Angeles chef Gino Angelini said he will be in the kitchen next month for a return of the Italian restaurant.
“We won’t do a big celebrity open,” he said. “We want to have a very soft opening and see our customers come back.”
Construction takes place at Rick Caruso’s Palisades Village on Thursday. The shopping center is scheduled to reopen mid-August.
(Myung J. Chun / Los Angeles Times)
An elaborate celebration would not feel “correct for me,” Angelini said, because the devastation has been “very sad” for so many.
Other new tenants include local chef Nancy Silverton, who has agreed to move in with a new Italian steakhouse called Spacca Tutto. Women’s activewear retailer LESET will open its first West Coast location.
Caruso said he is optimistic that customers will return to the center, even though many Pacific Palisades residents are still dispersed. One tracking system estimated that about 30% of the Village’s customer base was impacted by the fire, he said.
“That means 70% did not get impacted, so there’s a lot of customers still left out there,” Caruso said. Historically, the center drew customers from as far away as Beverly Hills and Calabasas, as well as Malibu, Brentwood and Santa Monica.
He also hopes many will be inspired to visit the revived mall.
“I believe in the goodness of people and I believe that people are going to want to support the Palisades,” he said. “They’re going to want to be there and support the businesses that have had the courage and the heart to reopen.”
Walmart is rapidly expanding its network of electric vehicle chargers designed for customers to use while they shop.
The network could help fill gaps in EV infrastructure in states with greater need for chargers. Walmart, which has more than 5,000 locations in the U.S. and hundreds in California, says more than 90% of Americans live within 10 miles of one of its stores.
The chargers also offer an incentive for customers to choose Walmart — Walmart Plus members will receive a 10% discount off an average price of $0.46 per kilowatt-hour of energy at the company’s chargers.
Walmart chargers are already available at more than 75 locations in 17 states, with Texas boasting the most charging stations, followed by Florida and Arizona.
Matthew Nelson, Walmart’s director of energy policy, said last week on LinkedIn that the network will soon reach 29 states, including California.
“We are delivering on the promise of affordable, reliable and convenient charging,” Nelson said in his post.
According to Walmart’s website, six charging stations are coming to California soon, though the company did not offer a specific timeline.
The chargers will be installed at stores in Antelope, Brea, Fresno, Stockton, Suisun City and Vallejo.
Most charging sites in California will include eight to 16 fast-charging stalls, said Walmart spokesperson Kelsey Bohl.
The company first announced plans in April 2023 to install its own EV chargers at Walmart and Sam’s Club stores, with a goal of installing thousands of chargers by 2030. Partnering with ABB E-Mobility and Alpitronic, it added 25 new charging sites this past May and six more in June.
“Walmart is building a leading retail-integrated EV fast-charging network, focused on delivering an affordable, reliable and convenient charging experience where customers already shop,” Bohl said in an emailed statement. “Customers can charge while they shop, access stations through the Walmart app they already use, and benefit from affordable pricing.”
The charging stations already available include 612 individual charging stalls using 400-kilowatt chargers. Each stall has a dual charging cord with both Combined Charging System and North American Charging Standard connectors. The standard connectors, designed by Tesla, are smaller and lighter than the combined systems.
The primary way to pay for the chargers is through the Walmart app, but the company is also experimenting with built-in credit card readers to allow those without the app to use the stations.
Customers can check charger availability on the Walmart app. The company said the chargers will be available 24 hours a day.
Robotaxis could be turning into robocops.
A self-driving Waymo reported two teens to San Mateo, Calif., police on Monday after they were found drinking alcohol and shooting toy guns in the back of the vehicle.
According to a social media post from the San Mateo Police Department, officers detained two 15-year-olds after the Waymo they were riding in contacted the department and stopped in a parking lot until law enforcement arrived.
“Parents do you know where your teens are?” the San Mateo Police Department wrote on Facebook following the incident. “Waymo does!”
Officers removed both teens from the vehicle and determined they were using toy guns to shoot Orbeez out the windows. Orbeez are small, water-absorbing beads sold at toy stores.
“Toy guns, water guns, and BB guns all pose real dangers, especially to an untrained eye,” the Police Department said. “The simple handling of them can cause fear in [passersby].” “
A video posted on Facebook shows at least five officers and a police dog responding to the scene and approaching the Waymo with their weapons raised.
Waymo did not immediately respond to a request for comment.
Waymo vehicles have internal cameras and microphones that may be used in an emergency or to “promote safety and security,” according to Waymo’s online support page.
The cameras are also used to ensure the vehicles are clean and to help find lost items, according to the support page.
The company said it does not use facial recognition or other biometric identification technologies to identify individuals.
“In more urgent circumstances, support may access live video during a trip,” the Waymo page said.
The San Mateo Police Department’s Facebook post has garnered nearly 60 comments, with one user accusing Waymo of “snitching.”
“At least they got a designated driver?!” one user commented.
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