The economist who offered a fix for health care
Victor Fuchs awakened Americans to just how inefficient their healthcare system was. The Stanford University economist was one of the first to apply a cost-benefit analysis to health care, an approach considered radical—and his findings were equally provocative. By his calculations, Americans were paying up to twice as much as people in other advanced countries to achieve comparable health outcomes. Fuchs blamed the excess cost on high administrative fees, soaring drug prices, the growing popularity of specialist care, and, most of all, the fee-for-service system of hospital billing that incentivizes ever more tests and procedures. These findings were presented in his seminal
1975 book Who Shall Live? Health, Economics, and Social Choice. Read by generations of policymakers and doctors, the book remains painfully relevant even today. “We are reaching a crisis,” he said in 2012, “and the only thing that will solve it is enormous change.”
Fuchs was born in New York City to “Jewish immigrants from Austria,” said The New York Times. After serving in the Army during World War II, he attended New York University and went to work for his father’s fur company. Soon he “decided on a new career” and enrolled in the doctoral economics program at Columbia University. Backed by the Ford Foundation, said The Washington Post, Fuchs commissioned an article in 1963 on risk aversion in health care that “helped elevate health economics into a major field.” He made that field his focus at the nonprofit National Bureau of Economic Research before joining Stanford University full-time in 1978.
“Critical of one-off solutions,” Fuchs favored a radical overhaul of the whole system, said the Stanford Institute for Economic Policy Research, with “universal health care” as the starting point. He was disappointed in both the Clinton administration’s failed attempt at passing health reform and the Obama administration’s Affordable Care Act, calling the ACA mere “cost shifting” that failed to tackle root issues. He favored providing universal coverage while giving individuals the option of paying extra beyond a basic plan. Unless the U.S. reins in the cost of care, he argued, the national debt will continue to balloon. “If we solve our health-care spending, practically all of our fiscal problems go away,” Fuchs said, adding that if we don’t, “then almost anything else we do will not solve our fiscal problems.”