Talking Shop: Abundance and Health Policy, with Nick Bagley
Artificial scarcity, entrenched incumbents, insurance expansion, Medicaid cuts, and bending the cost curve
This week, we’re bringing you a conversation with Nick Bagley, the Thomas G. Long Professor of Law at the University of Michigan and a former advisor to Michigan Governor Gretchen Whitmer. Nick is an expert in administrative law and health law, and in addition to his academic work, he has been a frequent contributor to public debates about related policy questions. Here, we discuss the abundance movement, the role courts could play in advancing its goals, how health policy could be more abundant, the Affordable Care Act, and forward-looking health policy goals, among other topics.
Briefing Book: Let’s start with Abundance. I think if you asked 10 different people what abundance was, you would probably get at least 8 different definitions. As a starting point, if you could give your definition of what abundance is as a policy agenda, we can go from there.
Nick Bagley: I think you’re right that abundance is a big political tent, or at least it aims to be. But those who are connected to the abundance movement share some things in common. The most important thing they share is a commitment to the view that American society today is marred by artificial scarcity. Things that matter a lot to well-being are undersupplied, whether that is housing or public infrastructure, cheap energy, good education.
One of the reasons we can’t seem to get what we want is because of real problems with the government’s capacity to achieve collective goals. State capacity in the United States has been eroded, in particular, by an overemphasis on procedures. We are much too heavily lawyered and rule-bound in a way that makes it very difficult or impossible to get big things done.
A second reason behind artificial scarcity is that entrenched incumbents systematically wield too much power across a range of policy domains and have perverted the law in order to maintain their advantages.
So, abundance is committed to improving supply of things that people really need, to breaking the back of incumbent rackets, and to improving state capacity. But consistent with all of those goals is a wide range of political commitments. You could imagine drawing very different trade-offs between environmental protection and housing construction. You could have very different goals for what cities look like. You could care a lot about renewables, or you could take a more all-of-the-above approach to energy abundance. There are lots of different ways to be an abundance type. But I don’t think it is an empty vessel.
Briefing Book: You mentioned a couple of areas that you hear a lot about in public discourse related to abundance, housing and infrastructure. Are there any other sectors, interests, or places, or any other kind of constituencies that you think stand to gain substantially from a shift toward a more abundance-like approach to policy? And conversely, are there any that you think are exposed to meaningful downside should we take that path?
Nick Bagley: I think that the abundance critique can be leveled across a lot of different parts of the economy. Right now, concerns about both housing and energy infrastructure are especially salient, and I think that the problems that the abundance movement identifies are quite literally visible, they’re tangible. You can go to another developed country, and you can see that they have infrastructure that’s far better than ours. Go to another developed country, and you can see that their housing prices are not through the roof to the same degree ours are. So I think it’s vivid and salient, but I don’t think that critique is limited to public infrastructure or the built world.
One example where abundance might make a big difference would be in the education space. Right now, we are doing quite poorly on providing a quality education for many kids across the country. Why can’t we get more abundant, higher quality schools? And some of the same criticisms that emerge in connection with housing and infrastructure re-emerge in the education space. We know that charter schools, properly overseen and regulated, can improve outcomes for children, especially lower-income kids. We know that parents like those options. Why don’t we see more of them? Well, it’s because of entrenched power of public sector unions. It’s because of a lack of confidence in our ability to oversee that kind of system, in some cases, a well-earned lack of confidence.
When you scratch the surface of almost any policy area, I think a lot of these concerns emerge, and that’s because the basic criticism here is cross-cutting. It’s that entrenched players are able to use the complexity of the system to twist it to their advantage. And that’s going to be the case whenever complexity exists, and of course, we live in a very complicated world. So I think it’s a criticism that has a lot of force across a range of domains. I don’t want to say it has equal force everywhere, or that it offers a set of off-the-shelf solutions, because I don’t think it does. Just saying a process is excessive doesn’t tell you much about which processes specifically are excessive. But it does orient you to a set of concerns and attune you to a set of solutions that I think are important.
Briefing Book: Within education, and probably also a few other sectors, too, a big part of providing the service is labor. In some cases, these may be sectors that are subject to some cost disease. You mentioned before that there’s a state capacity element, and then there are artificial constraint on supply. Which of those do you see as more important with respect to education? And do you see the importance of labor in the provision of the service, and the potential relevance of cost disease driving higher cost as interacting with either of those?
Nick Bagley: Some things are just going to get more expensive over time, and that’s fine in the sense that I don’t think it’s a problem of state capacity or incumbent interests pulling down more dollars to line their pockets. It’s just relative prices. So I don’t think you could identify an abundance-oriented problem by simply pointing to escalating costs. You’d have to ask why those costs are going up.
The reason that I think education is a good place to offer another way of thinking about the abundance frame is because we have some pretty concrete results. We can see that our kids aren’t learning nearly to the same degree and extent that we think they ought to be. And then you might ask, why? Well, is it about state capacity, or is it about incumbent protection? And I think the answer is obviously both, and they’re related.
In a lot of places, local school boards will wield a great deal of control over school districts, and that’s often lauded as local control. There are a lot of virtues to local control, but school boards, when they’re independently elected, people are not participating in those elections in large numbers, they don’t know a lot about the candidates. So the people who run and the people who are supported are those who can get support from organized interest groups, and those interest groups at the school board level tend to be teachers’ unions, which means their voices matter most in conversations about how to improve schools.
And it’s no slam on teachers. I was a schoolteacher; I think the world of teachers. It’s no slam on teachers to say that teachers’ unions are not designed primarily to benefit students. That’s just not their job. So if you give them an outsized voice in the process, you’re going to generate some subpar results, and so the lack of state capacity, the inability to teach effectively, is related to the political problems that underlie the education sector. And the way to overcome that is, frankly, through attention, organizing, bringing people in and giving them a way to understand that this isn’t inevitable, we don’t have to do it this way. There are ways to make sure that parental voices matter, that kids matter more, that some of what the teachers want is tempered by what the community needs. Again, I personally think we should pay teachers more than we do in order to attract higher quality teachers, but it’s very difficult to make that sale if the quality of education on offer today is so poor.
Briefing Book: Are there non-legislative legal tools you think are potentially valuable for building state capacity or for combating artificial supply constraints?
Nick Bagley: One of the key culprits that I see in the abundance narrative is the role of courts, and in particular, the way that courts have become much more enmeshed in day-to-day policymaking in the United States over the past 60 to 70 years. My own perspective is that the courts could help a lot simply by doing less, getting out of the way, hearing fewer cases, being more deferential to the government when those cases are brought, and being more humble about their ability to manage and oversee complicated bureaucracies.
Now, could the courts get out of the way on their own? To some degree, yes. The laws that govern administrative law are open-ended, they leave a lot of room for interpretation, and courts that were willing to take their foot off the brake would be able to go some distance in relieving some pressure on government agencies. I think that would be healthy, I think they should definitely do so. There are a bunch of doctrines. that I would like to see changed, that the courts are perfectly capable of changing on their own.
But it probably isn’t the case that the courts can do this on their own. If you want a massive reboot of the kinds of procedures that agencies are held to and how courts go about overseeing compliance with those procedures, you probably do need some kind of legislative steering. And I wouldn’t want to suggest that you could get a Supreme Court decision or two, and these problems are just solved. They’re not, but I do think there’s room for every actor in the ecosystem to take steps to put us on a more abundant path.
Briefing Book: As a non-lawyer, it seems like one of the things the Supreme Court has done recently is to meaningfully constrain the actions agencies can take on their own. Do you think that that has been helpful or harmful in terms of how we might see agencies act in a more abundant way going forward?
Nick Bagley: Yeah, the Supreme Court’s a real problem here. The conservative legal movement has had, as its chief goal, the restraining of the administrative state. The basic premise of a lot of what they’re up to is that green-eye-shade bureaucrats are making lots of decisions that snarl businesses in red tape, that hold back the economy, that insert their values into places where they ought not intrude, and where they try to remake American society without getting Congress’s stamp of approval first.
As a result, the conservative legal movement has sought to cut the administrative state down to size, and to do so by increasing procedural burdens, by limiting its range of motion, its freedom of action, by reviewing what it does with a more jaundiced eye. And so you put all that together, and agencies are more nervous, more skittish, more scared, and frankly, more incompetent.
I think this is the real mistake of the conservative legal movement. There was a thought that if you made government slower or less effective, that would somehow unleash the productive capacities of the United States. But the fact is, business depends on effective government. You can’t do much of anything in the United States without getting business licenses and permits and all sorts of government approvals, often for very good reason.
If you make government unfit for purpose, what you get are bottlenecks that are created by government incapacity. The beneficiaries of that government capacity are incumbents, who, of course, like the world they’re in. But the costs are often invisible. They’re the competitors that never get a chance to start. They’re the people with new business plans that never get off the ground. And that’s where I think the conservative legal movement has really lost the plot, and where the justices today are actively doing harm to not only government effectiveness, but also the broader economy.
My preference would be for the justices to realize, and to take more seriously, the narrowness of the role that they occupy. That doesn’t mean that every single decision that the Supreme Court has issued uniformly cuts in an anti-abundance direction. You can point to decisions where you see the kind of difference and light-touch review that I think is encouraging. But the attitude overall is one of deep skepticism about government power, and while I understand that skepticism, it has made government unfit for purpose, and I think we need to stop thinking about how best we can cripple government because we’re so afraid of it, and start thinking about how we can make government effective, and once it is effective, keep it in proper bounds.
Briefing Book: A lot of the initial discussion of abundance, especially right after the book came out, and especially on the left and center-left, sometimes felt like it was at least as much about who else’s ideas were being displaced. and who was going to go on to form the basis of the next Democratic administration, as it was about the underlying merits. Are there ideas out there now that you think it is actually good to be pushing aside in favor of more abundance-like thinking? Are there any other ideas out there that you wouldn’t want to throw out with the bathwater?
Nick Bagley: I think the backlash against abundance had a lot to do with internal struggles within the Democratic Party over the future of the party. And the heaviest criticism tended to come from folks who are associated with the Neo-Brandeisen antitrust movement, where they see bigness, and in particular the bigness of the tech companies, as an existential threat to the United States, the theory being that these big organizations can use their wealth and their influence and the monopoly position to corrupt the government and bend it to its will. I don’t actually think that the abundance agenda has a lot to say about the Neo-Brandeisians. I think the Abundance Agenda’s concerns are broader, and actually quite consistent with the concern that entrenched incumbents are going to exploit government and make it impossible to provide broadly shared benefits. On the policy merits, it’s not clear to me that there’s any deep tension.
What abundance advocates dislike are ideas that don’t work. I think a lot of abundance types are not terribly ideological. I certainly don’t feel that I am. I’d like to get more housing built because I think that’s the way we’re going to make it possible for people to live flourishing lives, especially people who are at the lower end of the income distribution. If you told me that the best way to build housing was massive amounts of public spending on public housing, sure, fine. It just doesn’t seem to work like that in the real world, nor do I think there’s any particular reason that it needs to. I don’t live in a public house, you probably don’t live in a public house, most of us don’t live in public housing, and there’s nothing wrong about that. There’s nothing especially right about it, either. It’s just that the market effectively produced the thing that I needed.
Abundance-types are perhaps more market-friendly than others on the left, but not because of any kind of deep ideological commitment to markets as virtuous. It’s because they tend to be effective. So what you might see pressure on are pie-in-the-sky ideas that don’t actually achieve the results that they’re billed to achieve. I think you see this most clearly in Zohran Mamdani’s mayoral race. You see him starting as a DSA socialist who is suspicious of private housing developers, who is suspicious of the market. Now that he’s won his election in New York City, and as he’s had to confront the scope and scale of the challenges, and really put meat on the bones of his proposals, I think he’s starting to appreciate that, actually, the market and private developers need to be a big part of the solution here. I think that’s an abundance move. I think it’s asking, “what would it take to be effective?”
Briefing Book: Are there examples of past federal administrations or state-level leaders who you think have done abundance well? Maybe partially because of the prominence of infrastructure in this conversation, abundance has a little bit of an FDR vibe, but are there concrete examples of people doing this well that come to mind for you?
Nick Bagley: Abundance does conjure a kind of wartime and post-wartime swagger, FDR to Truman to Eisenhower, a sort of optimism and confidence that led to an extraordinary burst of American infrastructure construction. I don’t think anybody wants to go back to that era, right? It’s also an era characterized by Jim Crow, massive environmental degradation, you name it. But there was something to admire in that kind of confidence, and I think abundance types would like to get back some of that swagger.
It’s possible to point to politicians today who put abundance at the center of their political rhetoric, and who have made it a big part of what they are trying to achieve on the ground. I think of Michigan Governor Whitmer, who ran on a “Build the Damn Roads” slogan, who has been a proponent of more housing construction, just came out swinging in favor of the building of a big data center not far from where I live, who has been working to attract business to the state, including semiconductor facilities and new EV battery facilities. To an extent, she’s constrained, as are any politicians that put abundance at the center, by the broader legal culture that makes it so hard to get things done. When I worked for her, one of my colleagues used to refer to it as pulling an elephant through mud. The goal of the Abundance Movement is to clear away some of that mud to make it possible to pull the elephant a little bit faster. It’s never going to be easy, but it should be easier than it is.
But I almost want to resist your question. To some extent, the problem is not so much which politician here, which politician there, but the broader legal culture. The state that is crushing the rest of the country when it comes to the rollout of green energy is, of course, Texas. It’s not because Texas has a lot of climate activists, it’s because it’s got its own grid. It doesn’t have hardly any federal land, so it doesn’t have to ask the federal government for permission for much of anything, and it has a get-to-yes mentality when it comes to new energy infrastructure. And that means, in a world where solar is out-competing other forms of energy production, that they’re just going gangbusters. I don’t know that I could point to a particular politician and say that was because they were abundance-minded. I think it was because of a bunch of factors coming together over an extended period to enable Texas to take the lead on that front. I think it’s that systematic consideration of obstacles that we’re gonna need if we’re gonna try to get abundance in states that are tangled in procedural nets.
Briefing Book: To change direction a little bit and connect abundance to another area you’ve worked in, healthcare: Is there an important way in which you think abundance should influence how we think about health policy going forward?
Nick Bagley: Yeah, healthcare’s a funny example because it’s a little bit weird to talk about a lack of healthcare in the United States when it consumes 17.4% of our economy, when it is the biggest line item on the federal budget after Social Security, you’ve got Medicare and Medicaid, where they’re the biggest drivers of state budgets, and where we know that Americans get lots of low-value medical care. There’s an argument that what we have in many parts of healthcare is an overabundance of healthcare.
That said, there are lots of distortions in the healthcare system that arise because of the same kinds of artificial supply constraints that you see in other domains. I’ll offer a couple. Probably the biggest one is licensing rules that make it impossible for trained professionals to work up to the limits of their training, rules that make it hard for nurses with advanced degrees to participate in medical care, or that make them subject to supervision by doctors, which may make it more difficult for them to provide that care. You want to ask hard questions about when those rules are strictly necessary, and in many cases, they just are not. They are simply protectionist measures. We also make it hard to transfer licenses across state lines. We should make that a whole lot easier. That’s one.
Another are certificate of need laws that exist in about half the states. They basically allow incumbent providers to veto construction of new medical facilities whenever they can persuade government decision-makers that there’s no need for them. That strikes me as a pretty classic case of incumbent capture.
The third that I’d point to is just how we train and encourage doctors. By that, I mean we subsidize residencies here in the United States, and those residency slots are, for complicated reasons, basically capped by the amount of money that the federal government’s willing to plow into it. And then once residents are trained, they decide what they want to do, and a lot of them don’t go into primary care where we have the greatest needs but instead go into specialty care, mostly because of how we pay providers.
There are lots of reasons that we end up paying specialists so much more than we do primary care physicians, but a lot of it has to do with choices that the government has made under the Medicare program about how to set prices. We could change that and make it more attractive for people to go into primary care than we do. All of that would be addressing some of the artificial supply constraints that make it hard to get the kind of high-value, relatively lower-intensity care that we’re bad at in comparison to some of our peer countries. We’re really good at the high-end, fancy care. We’re much worse at routine care, and I think you could imagine a healthcare system where we eliminated some of these supply constraints, and I think some of those challenges, the difficulty of getting an appointment, of seeing a doctor, of having a doctor spend a lot of time with you, I think those challenges could be eased somewhat.
Briefing Book: The Affordable Care Act passed more than 15 years ago. It still seems to be the central framework for how Democrats think about health policy, at least when they’re thinking in practical terms, rather than campaigning on something like Medicare for All. Even Republicans, at least when it comes to their own constituents, seem to at tacitly acquiesce to the fact that, if they’re going to serve the immediate interest of the people they represent, it probably needs to be through the system as it exists. All that brings us to two questions: First, are there any missed opportunities in the ACA that you see now from an abundance perspective, or is there any low-hanging fruit in that spirit for the next time we undertake a meaningful health policy agenda? And second, are there any important lessons you think we should learn from how the policy implementation, but also the politics around the ACA, have evolved over the last 15 years?
Nick Bagley: I’ll take the first one first. The Affordable Care Act was, to a first approximation, just an insurance expansion. It left many opportunities to try to deal with high healthcare prices on the table. If you think of access as primarily a function of supply, then constrained supply means that prices are going to be higher and access is going to be lower. In the healthcare sector, there definitely is a constrained supply in the sense that there are fewer medical outlets than you might ideally want, but also it’s really hard to comparison shop. That means, as a practical matter, that healthcare prices tend to be higher than they ought to be.
That’s exacerbated by the fact that healthcare is an industry that is characterized by high degrees of concentration, usually provider concentration, such as where there’s a major hospital system or two, and they aren’t competing as vigorously against one another in a particular geographic area as you might hope. There is also concentration on the insurance side, though that varies very much depending on the market.
So you’ve got very high prices, and the Affordable Care Act, to a first approximation, doesn’t address them at all. Instead, what it does is subsidize demand. By bringing more people into the insurance system, it basically adds fuel to that fire. Now that’s not bad, right? Dealing with one problem, which is that people can’t get health insurance, is often going to have knock-on consequences, and those may be worth bearing. I think they definitely were in connection with the Affordable Care Act. But it left undone the project of trying to get a handle on high healthcare prices.
We started the conversation by talking about Baumol’s effect and the possibility that some things were just going to get more expensive over time, and certainly healthcare was one of those things. We have lots of better drugs than we used to, we can treat heart disease much better than we used to, we can treat cancer much better than we used to, and it’s worth spending money, and indeed a lot of money, to get those benefits. They are highly worthwhile. The goal here is not to drive healthcare spending to be a smaller fraction of GDP. The goal instead is to make sure that prices align with value, and on that front, there’s a lot of room to improve.
Dealing with that is going to be a mix of a bunch of different approaches. It’s going to be a mix of antitrust, where you’re either gonna have to break up existing hospitals or prevent further mergers that make it difficult to compete. It may require some regulation and limits on what providers can charge for certain kinds of services, especially when their rates seem completely unmoored from the actual cost of providing those services. It could require changes in how Medicare goes about spending for healthcare, and it could require the same in Medicaid. So it’s a lot of different changes that would all have to come together. I certainly don’t have an entire political program sketched out for you, but I do think that the question of abundance does relate to price, and for much medical care in the United States, the price is too damn high.
Briefing Book: We just had this government shutdown that turned into a mini healthcare fight, though the healthcare part of the fight was pretty one-sided. Do you have a view on what health policy priorities on the Republican side are?
Nick Bagley: Republicans have consistently had a very difficult time with health reform. The chief problem is really simple: healthcare is expensive. It’s really, really expensive. The average cost of a family plan for a family of four in the United States is something like $27,000 per year. Now, if you get insurance from your employer, you don’t see that coming out of your paycheck directly, it just sort of eats into your wage increases over time. But it’s a staggering figure, if you step back and think about it for a minute. Which means that if you want to provide additional coverage to people, it’s going to cost a lot of money, and that was the objection to the adoption of the Affordable Care Act. And it is the objection today to the extension of the subsidies.
Now, what do Republicans want to do? They don’t want to spend more to cover people because they have a commitment to keeping spending low—although how real that commitment is, I don’t know, given the size and scope of the deficit increases they just adopted. But what is clear is that they don’t want to spend more on healthcare, or at least that they’re reluctant to do so. If they’re reluctant to spend more on healthcare, then just as a matter of math, fewer people are going to get health insurance. And you saw that with the slashes to the Medicaid program that the Trump administration did, and you’re going to see it again with the slashes to the exchanges that are going to come starting in January.
So that’s just mathematically going to lead to fewer people insured, and all of the solutions that they have to that problem are sort of half-baked efforts to improve choice. And you think to yourself, well, gosh, choice isn’t really the problem here. Prices are the problem. It’s not like there’s some magical healthcare plan out there that costs half the price of another. Healthcare is just expensive. You can have healthcare plans that have higher deductibles, and you can have healthcare plans with lower deductibles, but what you can’t have is a comprehensive health insurance plan that, on average, is going to cost less. Unless you make major reforms to how we pay for medical care, which would require the kind of top-down regulation that, generally, Republicans don’t want.
Sometimes Republicans call for more consumer shopping and consumer-directed healthcare, and I think these arguments are good in the abstract, but they fall apart in the first brush with reality. People don’t call up to comparison shop their medical procedures. You can’t even call to get a price. If you were to call a hospital and ask for a price for your knee replacement, I mean, they’d laugh at you. So, it’s not a market that works especially well, and Republicans are kind of all thumbs dealing with it.
I don’t want to say that Republicans have no good ideas. You have to remember that the healthcare exchanges we’re talking so much about were originally an idea touted by Heritage that were then set up first by Mitt Romney in Massachusetts. It’s a market-friendly approach to extending insurance, one that preserves patient choice without overwhelming them with a bunch of decisions that they can’t possibly make in the market. It’s a pretty good model. It’s just that all of this costs money, and Republicans seem reluctant to spend that money. I don’t know what’s going to happen come January when the crash of the exchanges, combined with the impending wind-down of a big part of the Medicaid expansion.
When those come crashing down, I think the Republicans are going to start seeing lots of their own voters complaining bitterly. I think it’s going to be a very serious electoral liability. I don’t know what they’re going to do. One answer is simply find the money because they don’t care about deficits, and that, in some ways, is the easiest and cleanest solution, and it may be the one that they come around to. But healthcare expansions touch on something very deep, ideologically, on the Republican side. You saw this in the reluctance of Texas and Florida, still, to expand their Medicaid programs, notwithstanding that it’s billions of forgone federal dollars every year. If that ideological commitment holds sway, I think they’re going to have a very difficult time making any changes that actually would expand insurance.
Briefing Book: In the debate and campaign around the ACA when Congress was considering it, it felt like the two big priorities at the time were, first, expanding insurance coverage, as you mentioned, and then, to a lesser extent, both in the public presentation and in practice afterwards, quote-unquote bending the cost curve. What do you think the big priorities should be next time? Does the jurisprudence that sprang from the decade-plus of litigation that followed the ACA shape what you think is feasible or advisable to pursue going forward?
Nick Bagley: I mostly don’t think the litigation tells us very much about health reform going forward. Congress has a lot of room to operate. There were a couple of parts of the Affordable Care Act that were pushing up against constitutional limits, and folks knew that at the time. Now that the constitutionality of the exchanges has been established, you’d have to come up with a whole different constitutional theory for whatever it is that was attempted the next time. It’s possible someone would dream it up, but I wouldn’t count on it. So that’s the first thing.
The second thing I’ll say, on what the priorities ought to be: the first and most important priority is undoing the damage that the Trump administration has caused, and in particular, undoing the damage on the Medicaid side. The biggest and most harmful thing that the administration has done is adopt work requirements for the Medicaid program. These sound good, the idea that you have to work if you’re gonna take advantage of a government benefit. Work requirements poll really well when you ask people about them, but in practice, it turns out that logging your hours every month on an obscure website at the pain of losing your health insurance for the rest of the year is something that predictably squeezes Medicaid beneficiaries off the rolls.
And we’re not talking a couple here and there who just forget to do it. A large majority of the folks who are on the Medicaid expansion and subject to the work requirements are going to struggle with this paperwork, and they’re going to struggle with the paperwork even though the vast majority of them either work or they wouldn’t be required to work under the work requirements, but they still have to flag that they’re exempt. And so you’re talking about pitching a lot of people who are otherwise deserving of Medicaid off the rolls, and undoing those work requirements is going to be the first order of business.
Looking forward, I do think it’s worth having lots of conversations about how we can bend the cost curve and make sure that prices align with value. I think that’s the frame that I prefer. It’s possible that costs will continue to go up, and that may not be a problem. But we know that there are lots of distortions in the healthcare system, and lots of abuses in the healthcare system that we can and should address. I think that would be the place to go.