High U.S. Healthcare Costs: What Might Congress Do?

High U.S. Healthcare Costs: What Might Congress Do?


MICHELLE WILLIAMS:
Welcome to the forum live streamed worldwide
from the Leadership Studio at the Harvard TH Chan
School of Public Health. I’m Dean Michelle Williams. The forum is a collaboration
between the Harvard Chan School and independent news media. Each program features
a panel of experts addressing some of today’s most
pressing public health issues. The forum is one way
the school advances the frontiers of
public health and makes scientific insights accessible
to policymakers and the public. I hope you find this program
engaging and informative. Thank you for joining us. [MUSIC PLAYING] JOANNE KENEN: Welcome everybody. Thank you for joining us. My name is Joanne Kenen,
and I’m the executive editor for health care at
Politico, and I’m moderating today’s discussion. We have four panelists
today, and starting on my immediate
right, Bob Blendon, professor of health policy
and political analysis at the Harvard TH Chan School
of Public Health and the Harvard Kennedy School, and
my friend and mentor. He’s taught me a lot of
what I know about what we’re going to talk about today. Doug Elmendorf is a dean and
Professor of public policy at the Harvard Kennedy School. And joining us remotely
are Kate Baicker, dean of the University of
Chicago Harris School of Public Policy, and Stuart Altman,
professor of national health policy at the Heller School for
Social Policy and Management at Brandeis University. The event is being presented
jointly today with Politico. We’re streaming live on
the website of the forum, and Politico, and also
on Facebook, and YouTube. You can find us everywhere. We will include a
brief Q&A, and you can email questions
to the forum one word, [email protected] And you can participate in
the live chat that’s happening on the forum site right now. So we’re going to talk
about health care costs. We spend more in the
United States per capita than any other developed
country and probably more than any other
undeveloped country. That much, we know. ROBERT BLENDON: You’re safe. [LAUGHTER] JOANNE KENEN: But, you
know, it’s not so clear, or maybe it is clear. We’re not necessarily
getting our money’s worth. We do not have the best
health care in the world. Consistently across the
board, we do great things, but we also do some things
that aren’t so great. So what do we do about it? This is a problem that’s
not a new problem. We have solutions. We’re not very good
at agreeing on how to go forward with
them, which is what we’ll be talking about today. Democrats and
Republicans in Washington have very different plans
for dealing with health care spending. But mostly, they’re
shifting costs around rather than really getting
at the fundamental root problem of how much we
as a nation, individuals and government, are
spending on health care. It’s cost shifting. It’s not cost reduction,
other than some shifting around the margins. And there’s also a
disconnect between how the public sees
health care, how we think about our
out-of-pocket spending. Policymakers think about
the GDP and how much the nation is spending. And how do we know this? Well, they’ve been
researching it for years, but Bob and I can also tell
you that we’ve been doing polls for, I think, three years now. And the last two have
really looked a lot at public attitude
toward health care. We have one it’s up on
the website that came out just a few weeks ago, and
that’s, in part, a background for today’s discussion. But we’re all going to
talk about solutions, what some of our
power panelists think could address both the
out-of-pocket burden that we as consumers/patients feel. I remember when they
were called patients, and as well as the total cost
the national expenditures, which is, no matter what your
political priorities are, health care’s squeezing out
something that you care about. So one result of our poll
was that Americans blame high prices by drug companies. That’s been a finding for
about three years now, and not just our poll. Other polls have found
out the American public is really mad at
the drug companies, but it is actually
broader than that. It’s not just the
drug companies. It’s not just drug prices. Our poll found out that
the American public is mad at just about
everybody except themselves. [LAUGHTER] So let’s set the stage by
taking a look at a video from Families USA about how drug
costs are affecting one woman, and her hope that
Congress will help. CATHERINE: Hi. My name is Catherine, and
I’m from Wheeling, Illinois, just outside of Chicago. I am on a fixed income due to
multiple medical conditions, including a lifesaving
lung transplant, and I am on Social
Security disability. My annual income
is $22,000 a year and my outlay for
medication is $11,000 per year, which is obviously
50% of my total income. One of my biggest struggles
is my prescription drug deductible, which I meet
in January of every year. This causes a significant
financial burden. The next thing is when
I hit the donut hole. When this happens,
my co-pays go up, and that directly impacts
my monthly cash outlays. I am hoping that
Congress will vote on a plan that reduces drug
prices, because if this doesn’t change, I’m headed for
financial bankruptcy and possible homelessness. And right now I don’t
see any way out. Thank you. JOANNE KENEN: So Bob,
tell us about our poll. ROBERT BLENDON: So first,
the important thing is this session occurs
before something moves to the top of the
national agenda. So what we see on polling is
that for the last few years, drug prices was the only
cost issue in anybody’s mind. In the recent polling,
when you give people lists for priorities,
you suddenly discover overall costs
are below drug costs, but they’re moving up. So somewhere over the
next three or four years dealing with something
that the panelists have dealt with their
whole careers is going to be back on the agenda. So there are just
a couple points, and then we can look at this
very, very, very briefly. In other past debates, we
suffered from this problem that the best views of experts
and average people driving the issue are not
always the same, and that just is the problem. So what you’ll see in a moment,
we gave people 17 reasons that costs could be high in
the United States, every one that the experts
ever come up with. And you’ll see in
a moment of the 17, the answer was simple–
price, price, price, price, and it’s everybody’s prices. They didn’t stop
at pharmaceuticals. The hospitals like
to say, I’m innocent, but it turned out
not to be true. Before that, what they
didn’t see as guilty– and we’ll look at
this very quickly– is either their own overuse
of care with their physicians. Absolutely, I’m innocent. And two, we’re getting older. They don’t buy that argument. We’re getting sicker. They don’t buy that
argument it’s really prices. So why don’t we just
look at the first slide? So this is of 17. So the public was afraid that
Doug would feel forgotten, so they listed the government,
federal government contributing this as well. [LAUGHTER] They didn’t want him to think
that he was off the hook from his earlier life. So you could see this. It’s prices, prices,
prices for it. And so then you just switch. We made it simple to
make the second point, if you show the slides. So is it prices or is it we’re
using too much health care? And they just wanted you
to know, no for that. It’s not, I’m getting too many
surgeries, too many tests. It’s the price charged at issue. So we’re having one
level discussion here with the others. So then we gave
them seven choices that the policy
committee has been talking about for a
large number of years. Next slide. We asked two questions that
we’re turning out later. Do you think that these
things would work? And luckily, for
school public health, actually believe if you
invest that in preventing future diseases, it actually
has a payoff for that. But in the middle of
great debates nationally between competition
and regulation, the public thinks
both sound great. They have no particular view. Buying into Medicare
sounds good, and about half think Medicare for all
might reduce costs. And then we did something
that’s quite unusual. We actually asked if you thought
it would save a lot of money. And there is incredible
cynicism across the country. That is, people don’t
believe anything, including living
healthier lives is going to save a lot of money. It’ll save a little
bit of money. So what you have is
these are the priorities and the majority
of people do not believe whatever your
support for Medicare, for all opposition, that it’s
going to save a lot of money for that. And so before we go– and the colleagues
will talk about this– where you see the
biggest philosophical, ideological party divide
is the next slide. And so at the end
of the day, who would do a better job
controlling health care costs, private insurance
companies or the government? And I don’t think
you need a computer to figure out the
Democrats say government, if you want to watch the
primaries, and Republicans say, let’s stick with private
health insurance industry. So as this issue’s
emerging, that’s sort of the public background. It surely has no
answers, but it shows there is going to be
a very big focus on, does the price of a
hospital stay go down, or the drug go down,
and my doctor’s fees? And less of a focus in
this public world about is spending going
from 3.2% to 2.8%? That’s what you get
from interviewing across the country. JOANNE KENEN: OK so we know
what the public thinks, which is that it’s all prices. Doug, how did we get to where we
are today, spending between 17% and 18% of GDP is health care? DOUGLAS ELMENDORF:
Well, I think people are right to be unhappy
about how much they spend on health care personally. And if they understood how
much the country spends on health care, they’d be
rightly unhappy about that. And as you said, Joanne, it’s
not just a matter of how much we spend, but how little
health we get for it. We are less healthy as a
population than the population of many countries
around the world that spend much less than we do. And this has arisen through
a combination of increases in prices and increases in
the quantities of health care services that we consume. It’s not so much days in the
hospital or number of visits to the doctors as the
intensity of the treatment that we get when we go there. Changing this trajectory
in a significant way is a very big challenge, or we
would have done these changes already. But I want to highlight
two particular obstacles that I see. One is that we have
basically wasted almost a decade of health
policy tension and energy through Republicans’
confused attempts to repeal the
Affordable Care Act. I use the word
“confused” careful here. I was director of the
Congressional Budget Office during the passage of
the Affordable Care Act. In 2009 and ’10, there
was a serious debate about what health
policy the country should take going forward. But since 2010, the Republicans
have focused on the proposition that there is some alternative
to the Affordable Care Act that would maintain high levels
of insurance coverage, but at much lower government
cost, and personal cost, and fewer government
regulations. And that’s a core
proposition that is false. Neither logic nor evidence
support that proposition, but that has been the core
proposition of Republicans’ attempts to legislate, and
campaign, and give speeches. So we’ve just spent a
decade chasing a mirage that can’t be there,
and we should have spent that decade
working on the things that we’re going to
talk more about today. The second obstacle
I would highlight is that in general in
this country, the way that we control spending
on some good or service, the way we get value for
our money in some area is that we use competition
and market forces. And I am a longtime
and current believer that we should strengthen
competition in US health care, strengthen the role
of market forces. But I do not think
that will be enough. That’s true for some old
reasons and some new reasons. The old reasons are
that health care is not a service like any
other kind of service. Consumers, patients,
don’t know what they’re getting it’s very
hard to make those choices. They’re going to have insurance
against expensive care. Information is not so
available, so there’s a set of reasons
why it was always going to be hard to strengthen
competition in health care in the way we do many other
aspects of our economy. But there are also
some new reasons. One is that just one way one
could strengthen competition is in Medicare. And Republicans’ attacks on
these insurance exchanges for people under 65 have
hardly paved the way for creating a similar sort
of competitive exchange environment for
people over age 65. This was the premium
support model. But also what we’ve seen in
the last decade in particular is greater concentration,
mergers, acquisitions among providers of health care
and among health insurers. So the conditions
for competition, a lot of competing providers and
competing insurance insurers, those conditions aren’t
really there anymore. So what was always an uphill
road to make competition strong enough to really constrain
health care spending is now a much steeper road, and I think
that means we need to devote more attention to
less market-oriented– I would do those
market things anyway, but devote more attention
to less market-oriented, more regulatory approaches. JOANNE KENEN: Kate, you have
studied where our health care dollars are going. Do you think we’re getting good
value for what we’re spending? KATHERINE BAICKER:
I agree with you that there is ample
evidence that we should be getting a lot more
health for all the money that we’re spending. And, of course, spending
is price times quantity. And I agree with Doug
and the general public that there’s lots of evidence
that market forces are far from sufficient to drive
us towards high-value use of our health resources. But I want to be sure we
don’t ignore quantities. We are surely spending too much
on some areas of health care and too little on others. And getting the prices right
is not just about paying less, but about aligning incentives
for physicians, and hospitals, and manufacturers, and patients
to allocate health care dollars where they’re
actually improving health as much as they could. I would love to see
market forces alone work. I agree that’s not likely to
happen, particularly in markets where there’s a lot of
consolidation of insurers, or a lot of consolidation
of providers, or no competition for
sole-source drugs. So introducing competition
is surely a force for good in driving us
towards higher value. Unlikely to be
sufficient, and I’d want to think really
carefully about how any interventions
in regulating prices would affect not only the
quantity of health care that we use to drive us
towards higher-value uses, reduce the use of stuff
that’s not improving health, maybe increase the use of some
underutilized preventive care or highly effective primary
care, and also the effect on innovation in the long term. What are the treatments, and
strategies, and medicines available in the future? JOANNE KENEN: OK. Stuart, you also
have been studying this for many years, maybe
more than anyone else here. STUART ALTMAN: All right. JOANNE KENEN: What’s driving it? STUART ALTMAN: Permit me to
take a little different tack. I don’t argue against the idea
that we’re not getting enough in quality. I don’t think that’s
really where you’re going to get at this issue. When all gets said and done,
what you’re dealing with is not cost, but it’s spending. And if you look and
compare the United States to other countries,
what really separates us from these other countries
is that they function under some form of a budget,
and they force their health care system to live within a
constrained set of revenues. This idea of worrying about
prices in and of itself isn’t the issue. Yes, it ultimately
comes down to that. But if you don’t
figure out a way to slow the growth
in spending, you will never get out of the right. And the second
issue, sure, you can argue that we should
be getting more value. But I don’t think
other countries get that much more value
in their health care system than we do. What they do do, which is
we’re finding more and more, is the idea that there’s a lot
of non-health care services that affect our health
in a positive way. We call them social
determinants. There’s no question we need
to be spending more there. But let me emphasize this. We have to figure out a way to
slow the growth in spending, and the only way to do that
is to slow the growth in [INAUDIBLE]. And you can either do that
through some form of government constraint on the flow
of dollars, or something like which [INAUDIBLE]
in Massachusetts, by putting the system
under a benchmark and forcing all the
components of the system to try to live within a
constrained environment. And you know what? It’s working. It’s not working fantastically,
but Massachusetts over the past eight
years has managed to slow its growth rate. The used to be the
most expensive state in the world, which is the
most expensive state in the US. We’ve now turned
that over to Alaska. We’re now number two. Not only that– our growth
rate is the fourth lowest in the country. So I’ll stop here. But if we don’t
focus on the revenue, you will never be
able to seriously deal with prices or the cost. And yes, we should do it
in a way that improves quality and gets more value. We need to get at [INAUDIBLE]. JOANNE KENEN: Now
you know why we invited Stuart to
be part of this, because he’s the only person
who could get “Massachusetts” and “Alaska” and “health
care costs” in one sentence. [LAUGHTER] OK. We now have laid out the issues. We’re going to go into this
a little bit more deeply. Before we do that,
we are going to talk about what we can do about these
problems a little bit more. But first, we’re
going to watch a clip about Medicare, which is really
a big part of the discussion. Medicare for all is a new and
bigger part of the discussion. This particular clip
we’re about to see features a self-employed woman
named Sue [? Lancelotta, ?] and it comes courtesy of HHS. [MUSIC PLAYING] SUE: Since I was 14, I’ve
been working, and drawing a paycheck, and contributing. I was self-employed. I had to pay for any insurance. It was very, very expensive. And now, I’ve been on
Medicare for six years, and it just adds a
lot of peace of mind. RACHAEL HORVATH: When
my mom got covered, I felt like it would take a big
burden off of her financially. SUE: 12 weeks ago, I
ruptured a tendon in my foot and found out that
I needed surgery. Medicare is giving
me the opportunity to get everything I need
to make a full recovery. RACHAEL HORVATH: I am extremely
excited about her getting healthy again without
having to take on additional financial burdens. JOANNE KENEN: I do want to come
back and talk about Medicare for all, but I think I want
to talk about the ACA first, because the national
conversation, which had been going very
much in a Medicare for all direction– that’s what we
thought we were going to spend the next two years
writing about– lo and behold, we’re back
to repealing and replacing Obamacare. And that is what’s on the
table in the short run. I mean, we will come
back to Medicare for all, but Medicare for all’s not going
to pass in the next two years, right? I mean, forget about
20– post 2020, we don’t know what the
world will look like. Medicare for all
probably won’t even come up for a vote this year. If it were to pass the House,
which is not all that likely, no way it would get
past the Senate, which is in Republican hands. So before we come back
to that, the ACA is back. I didn’t get a lot of sleep
in the last two weeks. Can we fix it? Is that really our
starting point? You helped keep it on the
straight and narrow fiscally, Dog, in the early days. What do we do now? DOUGLAS ELMENDORF:
Well, I keep thinking that we’ve seen the last
spasm of anti-ACA fervor. JOANNE KENEN: Yeah, so do I. DOUGLAS ELMENDORF: And we’ll
soon move to a focus on ways that one can legitimately
improve and refine any program we have in place. I think maybe we have. I mean, you’ve seen the reaction
to President Trump’s proposal, or non-proposal, but intention,
and everybody ran from that. And today in The New
York Times, there was a very interesting column by
two leading conservative health policy analysts laying
out what they viewed as an agenda for
Republican policymakers, and the arguments fell into
basically two categories. One was putting back into
the Affordable Care Act into law aspects of
the Affordable Care Act that have been pushed out
by Republican pressure over the last nine years. And the other was additional
government engagement in the health insurance
and health care markets. So they were clearly
turning the page, and I think more and more
conservative health policy analysts have turned the page. I think the policymakers
haven’t quite caught up to that, but they will. The Affordable Care Act, I
think, is the right structure. It’s complicated, befitting the
complicated health care system and health insurance
system that we have at this point in this country. But it’s increased the number of
Americans with health insurance by 20 million or more. That’s a tremendous
accomplishment. But the fixes people
have in mind vary a lot. Some people want more
choice for themselves. But the nature of insurance
is that to give me more choice may mean giving you less choice. It would give me a
chance to opt out of paying for a condition
I know I don’t have. And if you have that
condition, you’re suddenly finding it’s costing
you more to be insured. So there’s no easy way out
of the to give everybody more choice, in a sense. We could lower deductibles
and could lower premiums through more
government subsidies. That raises worrying
budgetary issues, maybe good in some cases. I think we should enroll more
people through broader Medicaid expansions, that we
should make sure we have good risk adjustment
reinsurance systems in place. We should actively
encourage people to sign up for insurance exchanges. I view those as sort
of small refinements on current law or
current practice. But mostly, we need to move on. We need to recognize that
health care spending per patient has risen at about the same
rate in private health insurance plans and government plans
over the last several decades, government plans
actually a little less than in private
plans, by estimates of people like the
Congressional Budget Office. But mostly, because
we’re all going to some of the same doctors,
and hospitals, and so on, costs are rising for everybody. It’s a system-wide problem. That’s why Stuart’s pointing to
the value of having everybody in a health care system
not distinguished by the payor or what
kind of provider, but everybody in
Massachusetts say can be so powerful,
because the problems are common ones across
elements of the system much more than
they’re idiosyncratic. JOANNE KENEN: Health
care spending, as much as we all
four panelists agree, we still have a huge health
care spending problem. But it is growing more slowly
than it had been before at certain times in our history. How much of that is
because of the ACA? DOUGLAS ELMENDORF:
Well, I don’t know, and I don’t think we
know as a profession. The Affordable Care Act
put in place in Medicare, for example, a
number of policies and then a mechanism for
experimenting and then applying the successful experiments. That, I think, is slowing
the growth of health care spending in the country. But it’s also true
if you look back over the last several
decades, the rate of growth of health
care spending has risen and fallen
at different times for a variety of reasons. So you wouldn’t want to point
to any particular timing and say, therefore, that
one thing we know happened is the cause. When CBO went back and
looked at Medicare spending, we saw a pronounced slowdown
starting before the Affordable Care Act was passed. I think there are different
kinds of factors at work. JOANNE KENEN: I want to
come to Stuart in a second to talk about some of the
things that states are doing. But first, Kate, build on
what Doug was talking about. If we do have the ACA, which
as John Boehner famously said in 2012, slow
motion ending his career, it’s the law of
the land, and it’s been a law of the land
for nearly a decade now. What are the opportunities? What are the missed
opportunities? What could we do to
build on this system to use it as a cost value
vehicle while also continuing to– well, we build coverage up. It has slipped, but
it hasn’t plummeted. It has not imploded, although
we keep hearing it’s about to. Those of you who’ve
heard me speak before, I call it
muddling through, and we are in a
muddling through stage. How do you get it
less muddled and more what it’s supposed to do? KATHERINE BAICKER:
Well, if you think of the goals of health
system reform as twofold– first, to increase
coverage and access to health care, and second,
to slow health care spending growth or improve the value
we get out of the system, in some ways we’ve made
much bigger strides towards the first goal
than the second, I think. The millions of people who
are insured either because of Medicaid expansions
or on the exchanges are much, much
better off than they were when they were uninsured. They have better access to care. They have care of
higher quality. On multiple but
not all dimensions, their health improved. So it’s much better to be
insured than to be uninsured, but it’s expensive. When people get insured, they
use a lot more health care. And that is part of
the goal of expanding insurance is to increase
access to needed care. We need to have a real
discussion about balancing the benefits to beneficiaries
against the cost to taxpayers. And expanding
insurance on its own is not going to slow
health care spending. It’s going to increase
the number of people using services. And as Doug points out, that’s
a system-level cost burden. Whenever anybody is
insured, that person uses more services
in a system that has a lot of common features
across Medicare, Medicaid, commercial insurance,
health insurance exchanges. So there have, I think,
been missed opportunities to slow health care spending. Patient payment levers
are really important. We need patient cost sharing
to line up with value. But I think even more powerful
are the levers on the payer side of the equation. The way we buy
health care very much drives the health
care that we use, and what we invest
in new technologies, in expensive treatments versus
higher-value, low-intensity treatments. So thinking about
novel payment systems like bundled payments, capitated
systems, pay for outcomes rather than pay
for volume, we’ve dabbled in that through
commercial insurance, through Medicare,
through the ACA, but I don’t think
that we’ve taken this serious experimentation
needed to really understand which of those levers
is going to work, and our current system
clearly doesn’t line up resources with value. JOANNE KENEN: So this
debate that the economists are constantly having,
which is, how much is prices and how much is delivery
incentives systemic? And that pendulum swings. I think it’s swung a lot
back toward prices recently. You’re saying, don’t
lose track of the fact that we still have a
huge value problem, and we’re not delivering
things very well, and this course we’re on through
CMI and other innovations, we need to try harder,
do it more aggressively, and stick with it? KATHERINE BAICKER: Well, like
a typical weaselly two-handed economist, I’m unwilling to
say that it is all prices or all quantities. It’s surely some of those. JOANNE KENEN: You’re
not weasly, though. KATHERINE BAICKER:
Oh, thank you. So I think the perception
that it’s all prices, to me, is somewhat misleading. Because it’s very hard to
compare apples to apples when we’re not very good at
measuring quality or intensity. Saying, you know, as
Doug Elmendorf laid out in the beginning, saying
one night in the hospital here equals one night
in the hospital there. And really it can’t
be about the number of nights in the hospital,
because those look pretty similar in different systems. I think that that’s
unduly simplistic. Because a night in the hospital
can mean very different things in a system that delivers
much more intensive care than a system that
delivers less intensive care. And comparing the price of one
hospital night in those two systems is going to make it
look like it’s all prices, when really it’s a combination
of prices and intensity or quality. So we need better measures to be
able to do that disentanglement in a more sophisticated way. But fundamentally, I feel
that there’s a lot of evidence that it is both
prices and quantities. And that lining up
prices with value would have a beneficial effect
on the quantity side as well. Stewart, in addition
to being an academic, you’re working on the
Massachusetts Cost Containment program, commission. Massachusetts did its
universal coverage law before the country. And you really sort of
did it in two stages. Just politically in
DC, they had to do– partly because of the CBO– they had to do
cost and coverage. Or at least attempt
to do cost coverage. Massachusetts did it a
little more sequentially, where you made
the coverage push. And then you followed
up with a cost push. I’m oversimplifying
a little bit. But for the purpose of
this conversation, talk about what has worked
in Massachusetts and what other states
either are doing, without going through all 50,
we don’t have that much time. But some of the things
that states are beginning to try that have promise. Or some of the really
obvious things that, no matter whether it’s
a red or a blue state, they should be thinking about. STUART ALTMAN: First of all, let
me re-emphasize what you just said. Since I’ve been doing this
since the early 1970s, a lot of the
experts said we need to focus on both cost and
access at the same time. Economically, it makes sense. Theoretically, it made sense. Politically, it was the worst
thing you could possibly do. And one of the things
the Affordable Care Act learned, which they
learned from Massachusetts, and they learned from what
happened during the Clinton administration, you try to
control costs and control access at the same
time, and everybody– all the major
actors in the plan– says, there must
be a better way. Because you begin to attack
the health care system. So the idea of what
Massachusetts did, which is exactly the same thing
the Affordable Care Act did, it said, we’ll deal
with access first. Play around with the
[INAUDIBLE] on cost. And then we’ll deal
with cost second. What separates Massachusetts
from the rest of the country, they actually honored
that, and went to focus on costs after
passing the law in 2007. So let me go back to
Doug’s comment, which is very important. We deal with one system. We have different spigots
of money that flow. Government, private,
Medicaid, out of pocket. But the reality is, we
have one delivery system. [INAUDIBLE] I wish you would
show this slide. Government is
protecting its spending by really reeling down hard
on what it’s paying for care. The fact that it’s been going
up the same as commercial is totally because we
have more people being covered under Medicare. And we have more people
being covered on Medicaid. If you look at the prices
that Medicare is now paying for hospital
care or physician care, it’s being almost
no growth at all. Where we used to be able to
have Medicare, on average, pay at hospitals their costs, now
they’re paying negative 12%. On physicians, the same thing. So what Massachusetts
said and is doing– and I think every country need–
and every state needs to do the same thing– they’re saying, we’re going
to focus on total spending. We’re not just going to focus
on our Medicaid program. The federal government has
only been focusing on Medicare. I chaired ProPack for 12 years. MedPack has done the same thing. CBO has done the same thing. They focus primarily on
what government is spending. You can’t keep
doing that anymore. We have one system out there. So what Massachusetts
is doing, is saying we’re concerned
about total spending. And remember, when
you deal with prices, it’s one thing to focus
on a specific item. The biggest price
is your insurance. And insurance premiums,
on the private side, have been going up much faster. Why? Because we’re shifting
huge amounts of spending from the government side
to the private side. So what we did in Massachusetts,
and now more states are going to do it. This is to say we can
look at total spending. So Massachusetts
has a benchmark, which says we don’t want
spending in the state to grow by more than our state
income, which is about, now, 3.1 percent growth. So with other states, Delaware,
Connecticut, New Mexico, Oregon, California. And more and more states
are coming to us and saying, what are you doing? And we’re working [INAUDIBLE]
to establish mechanisms, non– semi-regulatory. They’re not regulatory. They’re not controlling
individual prices. They’re focusing on
the flow of dollars. Yes, they’re trying
to make the system higher quality and better. More efficient. But the essence of
it is, how do you slow the amount on the total? If all you do is
focus on government, whether it’s Medicare or
Medicaid, what you’re seeing, it’s popping up on
the private side. So these other
states, recognizing that the federal
government is not focusing on anything useful. Doug is absolutely right. They’ve wasted 10 years
focusing on the wrong thing. So states are beginning to
act, to try to slow the growth and make this system
more efficient. And I’m not saying that it’s
better to have states do it, but if the only option is
for the states to do it, they’re going to [INAUDIBLE]. JOANNE KENEN: Doug, how about– you talked about, you
believe in market forces. But we’re at a point– we’re not in a textbook, we’re
in a complicated real world. So what do you– when you said
market forces aren’t enough, you’re not someone who wants to
micromanage every single price of everything. You know, this is
what two stitches for this cost, and this is
what three for that cost. Where’s your intervention? Where’s your version of
acceptable price setting? DOUGLAS ELMENDORF: Well,
that’s a good question, and a hard one. And I don’t have a
simple answer to it. I am watching from afar
what Stuart and others are doing in various states. And I don’t– I’m not an expert at that work. But I’m hopeful that
we will glean out of that work in Massachusetts
and elsewhere, some models for what other states can do. I think it is natural in some
ways to be at the state level. It’s not just paralysis
at the federal level. It is also that there are
very different health care systems in different
parts of the country. And you actually don’t want to
apply some simple set of rules everywhere. What will work in
Massachusetts will probably be quite different
than what would work in Minnesota or other states. I do think that you need
to impose some discipline. All right, the
starting point for this is the point that
other countries do a variety of things in
their health care systems. But they all have some mechanism
for limiting total spending. Because without
that mechanism, you end up where we are, which is
spending a tremendous amount and not getting much mileage. I think one thing that the
government can usefully do is to use the size of the
market in which it is involved. So Medicare is a very large
payer for physician services. And the prices
that Medicare sets for what it will pay
physicians and other providers affect not just the spending
for that part of the system. I think they also kind of
affect spending elsewhere in the system. So I’m not a proponent
of Medicare for all. But would I let more people
closer to Medicare age buy into Medicare? I would. And I think that is not
just giving them access, although that’s an
important thing. It is also moving a little more
of the payments for providers to Medicare rates from
private sector rates. JOANNE KENEN: Which is why
the industry doesn’t like it. But that’s the
perfect– before we go to audience questions,
that’s the perfect transition to Medicare for all. Bob, what does the
public think about it? ROBERT BLENDON: You got– a lot about what? They think about
a lot of things. JOANNE KENEN: Medicare for all. ROBERT BLENDON: So– JOANNE KENEN: If you just
say Medicare for all, what do they think it means? And do they like it? Before you get into
the not-so-small print. ROBERT BLENDON: A
quick little lessons from talking to
people for 20 years. Americans go through two stages. The first stage
is whether or not they believe in a principle. You’re talking about something. They think it’s the
right thing to do. The second stage is,
you have a proposal that actually affects their life. Their taxes, their
doctors, their insurance. And then they make a
second-stage decision. At the moment, particularly
if you’re a Democrat, as a principle, the idea
of moving in this direction is popular. That’s why Doug and I
may slightly disagree. I don’t believe the Civil
War over the ACA is over. I think the other side has
just started another battle until the election. But what happens, and that’s
why in the polling communities a lot of cynicism
about this issue, is that before, when
plans introduced taxes or limiting choices,
support fell like a stone. And so, in my world,
you’re through this. Of course, we want free
college for everybody. I can show you poll after poll. We want free college. JOANNE KENEN: I
have an 18-year-old. ROBERT BLENDON: Yes. And you will want it too. And if you just
remove the line about, and how much taxes you
would pay so everybody could go to college, it goes. But at the moment,
it’s very important. People make a principle. Particularly in this election,
there’s a lot of anger. People want to say, I believe
that’s where America should go. The bulk of Democrats want
something more than the ACA. So that’s why they’re not
going to make the peace until this election’s over. But then there will
really be a debate about what it means for me. At the moment, they’re
skeptical it’s really going to save a lot
of health care costs. But the second-phase
debate will occur. So it’s very important when
you see this, those of you– none of us, were,
I believe there. Harry Truman’s plan
had 62% support when he first introduced it. Half the nation
had no insurance. He had Medicare for all. By the time it was
over, there was a small club that came to say
goodbye to Harry Truman’s plan. So these battles
change over time. You have to be very careful
early on making a decision. But at the moment, on
the Democratic side, this is a principle
that’s important. That’s why they’re not
going to solve the ACA problem in the next year. They’re really not going
to sit around the table and fix the exchanges. They have a dream
about something else. JOANNE KENEN: I think Doug was
saying we wish they would– DOUGLAS ELMENDORF:
I agree with that. JOANNE KENEN: Not that
he expects them to. ROBERT BLENDON: But it doesn’t
mean they won’t get there. But this year is the dream. We’ll have to see
after the election. JOANNE KENEN: Well,
I think one thing it’s important to
distinguish in the Medicare, for all conversation. There’s the Medicare
buy-ins kind of schemes that Doug was talking about. And I’m going to
ask the other two panelists about in a minute– and that’s buying
into current Medicare or some minor variation
of turning Medicare into a public option but
it’s Medicare as we know it. The Medicare for all
legislation that’s currently pending in the House, it’s
not actually Medicare the way Medicare today exists. It’s a whole new
health care system for absolutely everybody
in the country that gets rid of current Medicare. Gets rid of– I
mean, we heard a lot about getting rid of
private insurance. But it is not the same. It would resemble, but it is not
the same as today’s Medicare. It gets rid of Medicaid. It gets rid of CHIP. I think it gets rid of the VA. I’m not sure about that. I don’t know I don’t
want to be wrong. DOUGLAS ELMENDORF:
Start a rumor. JOANNE KENEN: No, I’m not sure. I’ve been reading the
actual legislation. I’m not quite finished. But it is a new system to be
put together in a two-year– over two years. Kate, is that– is the
buy-in the way to start? Would you accept–
I mean, we’re not going to get Medicare for
all, whatever it turns out to look like, in the
next two or three years. Is Medicare buy-in for
a 50, or a 55, or 60. Whatever age they end up in. Is that something that you
think makes economic sense. KATHERINE BAICKER:
I think there are a lot of structural problems
with the idea of Medicare for all that are
masked by the slogan. And Bob makes the
excellent point that it sounds like a great
principle, especially when you don’t say that it
costs anything. But as soon as you start
to dig beneath the surface to say, what do we mean
by Medicare for all? What’s the role of
government setting prices and constraining the quantity
of care that you can get? Which services,
which people can get? What’s the role of the
private sector and competition in driving innovation? As soon as you start to
pull back those layers, I think there is
much less agreement among the general public. And one of the challenges
is that we live in a world of scarce resources. There are budget constraints. And that’s like same reason that
people would like the answer to be, our health care
spending is high solely because of prices. And prices are just too high. If we could all get exactly
the same amount of care that we’re getting now, and
pay less, that sounds lovely. We would all live
equally long and have more money for other things. But I think that that’s not
really feasible without having a serious conversation
about restricting who gets access to what care. And Medicare for
all surely involves someone deciding
what list of services are folks eligible for. And what list are they not. And as soon as you bring
that to the surface, I think it becomes much
less palatable for people JOANNE KENEN:
Stuart, you’ve lived through a number of
Medicare-for-all debates over the years, going
back to the 70s, If you want to do
global budgeting, if you want to do some
kind of sort of rule, sort of some kind of sort of
framework for controlling costs that’s not a
micromanagement, is it easier to have everybody
in the same system? Is it easier not to have
20 different insurance plans and three
different big government plans and that much variation? STUART ALTMAN: The answer
is, it’s much simpler, and it’s more efficient. But what Kate said is
absolutely correct. And that is, the
discussion about Medicare for all masks what would happen. If you just lower the amount of
money– understand something. People need to understand. Right now, you have the
private side, private insurance and private payments,
paying 100 percent more for the same services
that Medicare is paying. If all of a sudden, you
pulled out that private money and poofed it all
down to government– and government’s not going to
increase their amount of money they’re paying– you’re going to take a
half a trillion dollars out of the American
health care system. And if you think
there’s not going to be a cut services
as a result of that– what Kate is saying
is absolutely correct. Everyone would
say, look, if I can get everything I’m getting
now, and it is just going to be less. I love it. Why should you
not be against it? The problem is, if
all of a sudden you do that, it’s going to be chaos. But what separates this
debate from what anything I’ve ever seen– Medicare for all has
never reached the fever. And I think Bob
would support this. We’ve always had a segment of
the population, as he said, going back to Harry Truman. I think you can go back to the
beginning of the 19th century, and we had a group. It is a bigger group today,
no question about it. The problems are more serious. And it is true that if you
have one budget, it’s easier. But there were other
countries, like Germany and the Netherlands
and Switzerland, that maintain private
insurance, but do it within some constraint
on spending. I think you heard
from Doug and you heard from Kate, and from me. You need some form of a budget. But it does not have to be
all coming out of one spigot. If you go to– the German
system is something worth spending time on. It’s maintains
private coverage, half paid for by employers,
half by employees. But it has a budget. And it allows the system to
constrain the total spending but not having to use the tax
system as a way of funding the whole thing. So you can do it. It’s more complicated. It’s not as efficient,
but it’s probably much closer to the American
way than doing Medicare for all, which as
Bob pointed out, it’s not really on the horizon. But by focusing on
that, you’re not getting at what
Doug talked about. We need to do serious structural
reform of the Affordable Care Act. And we need to get at the things
that Kate are talking about and I’m talking about. And if we just focus on
discussing Medicare for all, we’re going to do nothing. JOANNE KENEN: I think that
this point Stuart made– and I’m going to go to
some questions here– is the conversation in
Washington has really changed. I mean, Medicare for
all is a serious part of the conversation. It’s not happening tomorrow. But it has changed
about how we’re talking about health
care in Washington, and presumably the
state capitals. But I think there’s
also some confusion that we’re using universal
coverage, single payer, and Medicare for
all as synonyms. And they’re actually
related but not the same. But anyway, that’s a
whole other webcast. Let’s take a few questions. This is sort of a– quickly. Why are we still
fighting about the ACA? And Bob, because you
know what I would say, because you’ve taught me. Is it about the ACA? Is it about health care? ROBERT BLENDON: So
there are deep divisions in this country about what
the role of government should play about health
care, health insurance. And you have three groups. The federal government is way
too involved, which the ACA is. The federal government
should be much more involved, which is Medicare for all. And then people in the middle. But we’re 10 years
down the line with ACA. And at Harvard,
it’s not a success when you get a 50% grade. And that’s what it is. A 50% grade. So a lot of people on
one side or the other say this is not good enough. We’re not going to go back,
but we’re not going to do it. So this debate in some
form is going to continue. But it’s really who you want
to make Stuart’s decisions. Or if you want him
to make it at all. But the people on one
side or the other– so we’re not going
to get the ACA, because people who
want Medicare for all think it’s an anemic answer
to American health care. And the others,
on the other side, believe President Trump’s right. In 2021, if they have
every seat in the house, they’re not quitting. So the ACA is a
middle compromise, which just doesn’t get
the blood pressure up. I know we shouldn’t
be doing that. [LAUGHTER] JOANNE KENEN: It would raise
our health care prices. Or there’s probably a
generic now for that. Somebody asked, you know,
is cost shifting just another way of saying,
consumers are always going to pay more out of pocket? Is that what it means? Or is there other
kinds of cost shifting? Kate, you want to– KATHERINE BAICKER:
I’m glad you’re bringing that up, because it’s
really important to distinguish between cost shifting and
changing fundamental resource allocation. The way we buy health care
is so far from transparent for most people,
and particularly for patients in the system. I think the connection between
health insurance premiums and cost sharing is
really obscure to people. Usually when cost sharing
goes up, premiums go down. And there’s a trade off there. And part of the reason that
insurers introduce more cost sharing is to change
the way that people consume health care. To get them to buy
less health care, because they’re paying
more out of pocket. So the total spending goes down. Now in the long run, for
employees, all of that feeds back into
their compensation. When health insurance
premiums, go up, their wages go down
or grow less quickly. So thinking about the total
package is really important. And it’s just not the
way we buy things. Of course, that’s
not one for one. When your cost sharing
goes up this year, you may not have
the resources to be able to consume the health
care that you really need. So it’s not to say
that we shouldn’t be thinking about access to care. It’s really important. But it’s important to
consider the whole package. Not just the cost
sharing, but also the premiums that are also
coming out of people’s pockets. JOANNE KENEN: What
about cost share– I mean, some of the ideas
about improving the ACA, are they shifting the
cost to the taxpayer? ROBERT BLENDON: Yes. Yes, absolutely. I mean, we’d all rather have our
own health care be inexpensive and have somebody else pay. JOANNE KENEN: And it
might be more equitable. ROBERT BLENDON: And
that’s a natural reaction. I think part what you
see in the country now, though, is there are a
lot of Americans who have not benefited very much from the
overall growth of our economy over the last few decades. People in the top 20%,
certainly people in the top 1%, have had a terrific run
for the last 34 years. But people in much of
the income distribution have seen only very small gains
in their standards of living. And when you say to them, well,
the solution to our problem is, we all have to
sacrifice a little bit. We need a shared sacrifice. Their answer is,
hey, wait a second. I’ve already given I’m not
interested in sacrificing now. That’s always going to be true
to some extent for people. It’s a natural human reaction. But I think it is
particularly acute now, given the developments we’ve
seen in the overall economy over the last few decades. And I think that
makes many Americans skeptical of government, and
whether government is really helping them. But also skeptical
of big businesses. And so skeptical of big
insurance companies. Skeptical of big drug makers. Skeptical of, maybe,
local hospitals. So they may think,
at some point, It’s where they’re going to
get treated, and that’s good. But if hospital is a public– essentially becoming a
public utility in that area– they want it handled like
other utilities are handled. And so I think we
should recognize that the Medicare for all
has some particular roots. But I think it partly comes
out of a general frustration that our system is not serving
a lot of people very well. And health care is one very
important example of that. JOANNE KENEN: And it’s one of
the ways, I think, whether– you get into the details
and you ask people about sort of the specifics
of Medicare for all, and how to pay for it, and
some of the consequences, the support goes down. But I think one reason it
appeals, is there’s a basic, we’d all get the same thing. There’s a basic
message of fairness. DOUGLAS ELMENDORF: Yes. JOANNE KENEN: Which gets to
this sort of economic inequality issue that we have
in this country. That’s also been one reason
that Medicaid has– you know, Medicaid expansion– the people just above
that level are resentful. There’s a very good
question of transparency, and I’m going
throw it to Stuart, partly because I want to
know how Massachusetts s cost containment. What the role of
transparency has been? The Trump administration
has floated the idea of requiring
hospitals to disclose the prices they negotiate for
services with health insurers. Is that a good idea? Why? And how much is this
concept of consumers knowing what you’re going to
pay and being able to shop. I mean, we are all sophisticated
health care consumers, and none of us can do it, right? So Stuart, is transparency
going to solve things? Is it– STUART ALTMAN: No. So first of all, no
economist could ever be against transparency and
making prices available. But much of it is– this is all rhetoric
and pure nonsense. If you don’t face– if you’re a consumer,
if you’re a consumer, and you have insurance, and the
fact that the hospital price– As a matter of fact, you might
say, the higher the price, the more I want to go there. Because that must
be better quality. And somebody else
is paying the bill. Transparency by itself is a
nice thing, but it’s useless. You need to link transparency
into the fact that the con– a, that they understand it. But more importantly that
they have some ability. That if they choose the
higher price institution, they’re going to
have to pay more. And they know there’s a
good quality institution someplace else. So most of this discussion
about transparency, particularly the
Trump plan, it’s not– I don’t want to say it’s
useless, but it’s useless. [LAUGHTER] JOANNE KENEN: Kate, if
we’re going to have value– STUART ALTMAN: And by the
way, it’s not only Trump. I hear it all the time. You know, and we even
hear it in Massachusetts. What you need– yes, you
need people to understand what the prices are. But they– and Kate
talked a little bit– they have to have some ability
to sort of face the difference. And we are seeing that. With these [? imminent ?]
or tiered networks, we are beginning to see
more and more people facing the idea that if they go
to a more expensive institution for the same service,
they are going to wind up having to pay more. That is having an impact
on where people go. So here in
Massachusetts, if a woman has a baby in a local community
hospital, it costs one thing. It could cost 50%
more if they go to a big downtown with
teaching hospitals. And it is having an effect
on where people have that. Same thing, now
obviously, they’re going to go to the
more expensive ones for expensive care. So transparency is good. But it needs to be built
into something more. It can’t just sitting
there by itself. JOANNE KENEN: Which is a
good question for Kate. Because if you’re talking about
value, which is implicitly also talking about quality,
what transparency piece do you need for the consumer
to help the patient understand? I mean, what is the
transparency component in value? We’re losing her sound. KATHERINE BAICKER: How is that? JOANNE KENEN: Very good. Welcome back. KATHERINE BAICKER: We
call that user error. [LAUGHTER] Of course, patients have to
know what costs they face. There’s no way to
make a good decision if patients don’t know the
prices that they need to pay. And those prices
have to be lined up with where the care is
actually worth getting. So there are a couple
of challenges there. First, it has to come
from a reliable source. When insurers put providers in
different tiers, for example, and say that it’s because
of quality or value, patients may question,
does the insurer want me to go to the
best place or does the insurer want me to
go to the cheapest place. And that’s the point
that Stuart was making. That sometimes
people take a signal of quality from the price
that they’re paying. But second, I also think
we need patients to go to the high-intensity, fancier
hospitals for conditions where there is a health difference
when they go there, versus conditions
where there isn’t. That’s most evident for
more commoditized services, like x-rays. Where if there’s a reference
price, if the insurer says, we’ll pay this much
for an X-ray, which will get it done at a place that
meets these quality standards. Any place else you want
to go that costs more, you have to pay the difference. That’s a potentially
very powerful tool to steering patients
to the places where their dollars
are going the furthest. And having patients
share in the savings– when they go to lower cost but
high-quality sites of care, seems really important. That’s also the principle
in narrow networks, as Stuart was alluding
to, that providers can compete to be included
in insurers’ networks by offering high enough quality
services at low enough prices. And that’s a way for them to
get more patients and a way for insurers to negotiate lower
prices for the same service at the same providers. And all of that works
when those prices are evident to
patients when they’re making their decisions about
which insurers to choose and then which
providers to choose. JOANNE KENEN: So we’re
nearly out of time. I’m going to ask
each of the panelists to give a takeaway or
take-home message on this. And I’m going to end with Bob
about what does the patient, consumer, public, voter,
whatever we’re going to call him or her, think about it? Stuart, the takeaway message. What is the one thing people
should hear from this? STUART ALTMAN: Let
me go back to what you asked in the beginning. One of the things that we’ve
learned in Massachusetts, even though we don’t have a hard and
fixed budget, by sending out a clear message that we don’t
want overall spending to grow by more than our growth
and our state income. And holding every provider
and every payer, in principle. It’s not that we regulate them. But if they exceed
those rates, we make it. We put it out in the newspaper. We call them in. We talk to them. And in fact, they are listening. We need more of that. We need to create, if not a
real budget, quasi or budget that says, we have limits. And then within
that, to try to find reduced delivery system
to provide higher quality, and to get rid of services that
really don’t add that much. But if you don’t
have that budget, the quasi budget, all you
do is switching money from. So we need to do that. And we’re trying to do
that in Massachusetts in a non-regulatory way. And I’d like to see the
federal government began to do more of that itself. JOANNE KENEN: So it’s budget,
value, and public shaming. That seems to be the approach. Kate? STUART ALTMAN: If you’re not– I don’t want to be
a regulator anymore. I did that when I was 25. I’m not doing that at my– JOANNE KENEN: You’re
still 25 now, at heart. OK, Kate? KATHERINE BAICKER: So I think my
takeaway is that prices matter, but quantities matter too. And we don’t live in a fictional
world of unlimited resources, as lovely as that would be. So we need to have a serious
conversation about who’s making the decision about
resource allocation, and set up a system
of pricing that’s consistent with
health care dollars being devoted to the places
where they’re improving health the most, and where there
is access across the income distribution that we find
acceptable as a society JOANNE KENEN: OK. Doug? DOUGLAS ELMENDORF:
My takeaway is that this is a big
problem of health care spending in this country. And ultimately, we will need
to make significant changes. But we should not wait
for some single big bang, perfect solution. This will be an
incremental effort. And when the people you polled,
Bob, said they don’t think this will really do it,
or that will really do it. Well, nothing will do it alone. Nothing that we would find
acceptable as a society. So we need that– but
the lesson of that is not to do none
of those things. It is to do a lot
of those things. That’s where I’ll leave it. JOANNE KENEN: And Bob,
where’s the public? ROBERT BLENDON: So
one contribution here. Lowering the rate of spending
has incredibly little impact on public thinking. And so just two points,
is we cut taxes. Nobody believes their employer
gave it to them in wages. I’m sorry. We have had periods of
high profits in companies. Turns out people don’t believe
the employer gives it to them. So slowing the rate
from 4% to 3% alone. What– people who
really are going to– have to look for wins. Things that are very visible. That this is actually cheaper
for you as a human being. Now, that doesn’t
mean you’re not interested in the aggregate. We have no wins in this. This aggregate number
doesn’t have an impact. And people don’t believe
they get it back. So you have to do this. It was in, like the
2008 economic downturn, you have to show Mr.
president– some of these places don’t close. You have an aggregate. Some of these
places didn’t close. They didn’t lay off 10,000. We need some wins here,
where average people say they actually
contained this thing, and I trust you to do the rest. But we haven’t
had big wins where individuals see this happen. JOANNE KENEN: It’s also– none of us will
ever be unemployed. That’s the beauty of
American health care. OK, thank you all for joining
us at this conversation today. The next forum is called
Battling Natural Disasters, a Governor’s Roundtable. I guess health care was sort
of the unnatural disaster? DOUGLAS ELMENDORF: Yes. [LAUGHTER] JOANNE KENEN: That is on April– ROBERT BLENDON: You
said it, they didn’t. JOANNE KENEN: That
is April– maybe I’m not going to be
invited back now. April 16, 2019, at noon. ForumHSPH.org. That’s the next one. We will be back with
more conversations about public health and
the cost in the future. So hope this was
useful for everybody. Thank you for having me. [APPLAUSE] [MUSIC PLAYING]

Daniel Yohans

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