Increase lower-income workers wages by reducing healthcare costs.
One of the barriers to improving living standards is stagnating wages. Employer healthcare premiums are a major factor in the dismal wage increases for lower-income employees. For instance, in a large 2014 study, for employees earning less than $30k/year, employer premiums went up an average of $800 while wages increased $170/year. Company HR organizations have been advocating about this issue for decades. US healthcare spending is about 16.4% of GDP, compared with an OECD average of 8.9%. And healthcare insurance premiums are projected to go up 22% in 2017.
The main drivers of healthcare spending in the US are the highest paid physicians in the world, overuse of specialists, over-treating, over-testing, fee-for-service incentives, and defensive medicine. The US leads most OECD countries (per 100,000 population) in MRI units, MRI exams, CT scanners, CT exams, tonsillectomies, coronary bypasses, knee replacements, and (per 100 live births) Caesarean sections. (Drug costs, btw, only account for about 5% of the difference in healthcare spending between the US and the more affluent OECD countries like Germany and France – and part of that is our subsidizing their drug deals).
We need more General Practitioners. And they should be gatekeepers to specialized care – just like in Denmark. Some physicians have recommended paying GPs more to encourage medical students to go there. But our GPs are already the highest paid in the developed world. What the US needs to do is mandate the GP’s gatekeeping role so that it’s standard practice across medical providers, increase the supply of GPs via immigration and training channels, eliminate fee-for-service incentives to test and treat more than necessary, and minimize defensive medicine by replacing our current medical malpractice system with something like Denmark’s national compensation program (which is kinda like a non-adversarial workers comp system). And don’t feel sorry for the doctors: they are the biggest occupational group in the 1%.
Insurers don't have much margin. Insurance premiums are pretty much in lock-step with healthcare costs. If the premiums employers pay for healthcare insurance went down, part of the savings would go to wage increases. If our health care costs could get in line with Western Europe's, that would mean a healthy pay raise for millions of American workers.