DAVID MORGAN: Good morning, and welcome to the forum at the Harvard School of Public Health. My name’s David Morgan. I am a health care policy correspondent with Reuters news agency in Washington. And it’s my distinct pleasure to be your moderator today for a panel discussion on the roll out of the US health care reform law.
The question that we’re going to delve into today is, where do we stand? Which is a monster question given what’s been going on lately. Fortunately, we just happen to have a panel of Harvard experts to help us work through it. I’ll be introducing them in a moment.
But first I want to say, welcome to our wonderful studio audience and to our audience online, which we believe stretches across the country and around the world.
Now, the way this will work today is that each of the panelists will give opening remarks, and then we’ll have a 10-minute discussion up here about where things are with the Affordable Care Act and where things appear to be going. And after that we’ll throw it open for questions from the audience, from you guys and from you guys in cyberspace.
And so, I wanted to point out before we go further, that this is a very special forum because the Harvard School of Public Health is celebrating its centennial this year. It’s also a collaboration between the School and Reuters. So Reuters is live streaming it and live blogging it even as I speak.
And with that, let me turn to introductions. To my right is David Cutler. He is a Professor of Applied Economics at Harvard University. He has also played an important role in health care policy here in Massachusetts and elsewhere. And he has served as an adviser to the Obama campaign.
Next to David is Katherine Baicker, Professor of Health Economics in the Department of Health Policy and Management at the Harvard School of Public Health. She was a member of the President’s Council of Economic Advisers under George W Bush.
To Katherine’s left is Robert Blendon, Professor of Health Policy and Political Analysis at the Harvard School of Public Health. He is a leading expert on health care policy, politics, and public opinion.
And last, but not least, is John McDonough, Professor of Public Health Practice at the Harvard School of Public Health and Director of the School’s Center for Public Health Leadership. Between 2008 and 2010, John also served as senior adviser on national health care reform for the US Senate Committee on Health, Education, Labor, and Pensions.
So, welcome, everybody. To begin with– to sort of set the tone for the discussion– we will hear from President Obama himself, talking about the roll out of the Affordable Care Act, which is, keep in mind, his signature domestic health policy.
-Right now, everybody is properly focused on us not doing a good job on the roll out. And that’s legitimate, and I get it. There have been times where I thought we were– got, you know, slapped around a little bit unjustly. This one’s deserved. It’s on us.
But we can’t lose sight of the fact that the status quo before the Affordable Care Act was not working at all. If the health care system had been working fine, and everybody had high quality health insurance at affordable prices, I wouldn’t have made it a priority. We wouldn’t have been fighting this hard to get it done.
Which is why when I see sometimes folks up on Capitol Hill and– Republicans, in particular– who have been suggesting, you know, repeal. Repeal. Let’s get rid of this thing. I keep on asking, what is it that you want to do? Are you suggesting that the status quo was working? Because it wasn’t. And everybody knows it.
It wasn’t working in the individual market, and it certainly wasn’t working for the 41 million people who didn’t have health insurance.
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DAVID MORGAN: Now David Cutler, you, I believe, warned the administration, early on, that it could face problems with its roll out. Could you talk about that and tell us whether your worst fears have been realized?
DAVID CUTLER: David, thank you. I think. And, thank you to the forum for having me here. I did try to warn the administration about management issues. I say sometimes that, it is the worst I have ever felt being right in my entire life. But let me frame this in a somewhat bigger context, if I can.
The Affordable Care Act is really two laws rolled into one. The first is a law to cover people. So set up insurance exchanges like what was done in Massachusetts, give people subsidies, make insurance affordable so they can go get covered. People thought that was the easy part.
And it turned out the administration did not do well on what people thought was the easy part. The second part, which was believed to be much harder, was a bill to transform the nature of medical care from a system that costs a lot and is insufficiently attentive to what consumers need and insufficiently attentive to quality and to turn that around and make it a system that is cheaper and higher-quality.
And every expert believes that’s technically possible. And the question is, would it get to that? And the amazing thing about that is that was seen as a much harder goal than the covering part, and yet it’s actually going much better than the covering part. So the health care cost increases are at their lowest rate in about 50 years.
Not all of that is a result of the Affordable Care Act, but at least part of it is a result of the Affordable Care Act. The changes in Medicare that came in under that part of the Act have had their intended effect and have spurred a lot of follow-on things.
So what’s somewhat surprising is that the act has been very successful at what people thought would be very difficult, and its had more than its share of troubles on the things that were supposed to have been easier to do. So the administration put itself in a hole because it didn’t manage the roll out of the exchanges well.
And a lot of the problems that are happening are a result of the exchanges. So people couldn’t see the policies they were supposed to receive. People got cancellation notices. It was thought that the cancellation notices wouldn’t be bad because a lot of people would get coverage on the exchange with plans that were higher-quality, cheaper, particularly once you had the subsidies in place.
But of course, if you can’t go on the exchange to see that, you’re never going to believe that that’s going to happen. So the net effect was a lot of, as the president said, a lot of deserved anger. And so the president backed away from this sort of– everyone will be in the exchange.
It’s not over. This is not the worst that could happen. It’s bad. There’s no question that what happened is very bad. And I’m not just talking in a politics sense. It is very bad for people to face a situation where they don’t know where they’re going to get health insurance. But it’s also not irreversible.
What the administration did is basically say, we’re going to punt on 2014– on getting it right in 2014. So let people opt out. We’ll let the insurers– if the state insurance commissioners let them and if they want to– keep covering people off the exchanges. But we’re going to promise to come back and fix that for 2015.
They better do that, or else you really have trouble. So you can have a one year delay. You can have people out for a year. But if you’re permanently going to have healthy people outside of the exchanges and less healthy people inside of the exchanges, you are permanently going to have problems.
Because some of the insurers will go bankrupt in the exchanges. People will be switching back and forth whenever they become healthy or a family member becomes ill. Many of the benefits about being able to keep your policy and stay with your policy will disappear. So that’s a problem that they’ve now put themselves into.
What they have to do is, number one, they have to change the management, because this is symptomatic of a management structure that did not work well, that was not working well. So they need to completely redo that. And then they have to build confidence.
And I don’t mean just with the public, but particularly with the insurers, who are feeling very burned and are thinking, maybe we should just abandon the exchange business, if that’s not going to be where the people we need to insure are. And they need to come to them and say, no, we made a mistake. But we are fixing this.
And it’s going to be better for next year. And there really is a deadline associated with that, because the insurers have to put out their rates for 2015 in the late spring of 2014. So the administration has about four or five or six months to fix this. And if they do, then it’ll be hopefully a hiccup and things will go on fine.
And if they can’t do that, it’s really going to get to be bad, because then you’re looking at a very prolonged period of time where you’re running separate policies and the thing doesn’t make sense. So they put themselves in a box. They have a few months to get out of it. On that part, I hope that they have learned their lessons. And that they can do that.
I also hope that we continue seeing the good signs on the other part of the bill. But there’s no question that they really have their work cut out for them on this one.
DAVID MORGAN: Katherine, how do you see things unfolding?
KATHERINE BAICKER: I think David’s framing of the twin goals of the policy is really helpful, thinking about expanding coverage and slowing the growth of health care spending. My perception is, perhaps, that the relative success on those two goals is the reverse of what your perception was. And it’s an interesting topic for us all to discuss.
I agree that the coverage hiccups are important, large, but temporary. And that I think the goal of covering more people under Medicaid and under health insurance exchanges is quite achievable and in the process of being achieved. And a lot of focus has been placed on the exchanges because of the enormous problems with enrollment.
Less discussed is the return to Medicaid coverage for people who are covered under states that are expanding. And we know that’s a state option. So evidence on the costs and benefits of that expansion is really important. It seems clear to me, from the body of evidence, that Medicaid dramatically improves the well-being of the people who are enrolled but costs money. People consume more health care.
And that means that it’s even more important to get health care spending growth under control. Because you need to be able to afford the newly covered, as well as the currently covered, with premiums that people can afford with subsidies or without subsidies if they’re above that income range. The import of people not being able to sign up in the current website model could have really a long tail, for a couple of reasons that David hit on.
First, if people now have an option to stay in their old policies that were supposed to go away under current law but that are now allowed to be offered under a new policy, that may be differentially attractive, to some people, perhaps healthy people, perhaps sick people. But it’s going to be differentially attractive based on people’s expectations about their health costs.
And that means the people who are left to enroll in the exchange are also not an average slice of the population. They’ll be differentially healthy or sick in a way that complements the people who are sticking with their old policies. And that means that the insurers set premiums that aren’t quite right for that population.
They will have to deal with whatever differential enrollment they get. But that means there might be really big premium changes in 2015 as they re-price based on who’s enrolled in their plans. And that volatility in premiums, I think, could be further disruptive to risk-pooling. So that threatens enrollment in 2015 as well.
So I think that’s important for insuring that the insurance market works well, not just to provide coverage, but to pool risk. So that premiums can subsidize people who have a bad year and are sick with the premiums of people who have a good year and are healthy. It also has implications for future spending on health care.
The goal of these exchanges is to have competition between plans drive people into higher-value coverage, where they’re choosing plans that provide the best benefits for them at the lowest price. And the private market is supposed to do a better job at that than a monolithic, centralized government plan would. That only works if people are shopping around and able to choose plans that provide higher value.
Temporarily, that’s not working so well. The sooner that gets up and running, the more there’s hope that that competition will actually drive people into higher-value plans and make health insurance more affordable. That’s, again, particularly important because I don’t think that the subsidies in any way save money.
They cost money to give low-income people valuable health care but they lead to a pretty big federal price tag. Eventually Medicaid will have a state price tag but mostly it’s falling on the federal government now. So that’s another reason that it’s really important that total spending on health care moderate a little bit, to make the whole program affordable.
Where I’m a little less optimistic is that the slowdown we’ve seen recently in health care spending can be attributed to anything that’s in the Affordable Care Act. It’s hard to know for sure, because it’s only been a couple of years post-recession.
I think a big chunk of the slowdown is due to economic circumstances, which suggests that when the economy picks up, health care spending will pick up. I think some of it is not due to economic circumstances and is due to changes, I think, mostly on the provider side. If you look at reorganization of delivery systems and focus on coordination of care and better hand-offs, I think that may have had a positive effect on health care spending growth and that that may persist.
It may indirectly come from the Affordable Care Act insofar as providers see that in the future their health care spending is going to have to be reigned in. And they’d rather act in advance of any cudgel in the law. So it may have had that indirect effect, but I’m concerned that perhaps the majority of the slowdown is attributable to economic circumstances that are likely, we hope, to revert in the coming years.
And that it’s going to be all the more important to dial up cost containment measures.
I can’t help but think that there’s a political element to all of this. Maybe Bob–
KATHERINE BAICKER: I don’t why you would say that.
DAVID MORGAN: –can enlighten us
ROBERT BLENDON: First, I’d like to apologize to the audience, before I begin. The politics of this is so far from the policy, at times I wonder if I should be on the same stage. So let me explain the politics, short-term. And then, for those from other countries, I have to give you two quick cases about why this bill is having so much trouble. Because it actually is not as much the substance
So here is where we are– we have an election in 11 months. Actually both houses are in play. If the Democrats were to win we would implement this bill, crippled as is like an Aflac duck. It would be implemented, and they would put more money into the data systems support. If Republicans win, they cannot repeal the bill, but they can defund really significant parts of it. They can really make it look very, very different.
So where are we in it? First of all, there are three separate issues. It’s one of the or– top two issues in 11 months. One issue is, as the movie, we call it “failure to launch.” Which, if this thing ever gets running, it will disappear from people’s minds in about 90 days.
But the next one, and Time put it on their front page, and I just want to do it– called “Broken Promise.” And this is where politics and policy is very different. The president made two promises and– not once, 100 times. You’ll see the clips and the ads. One is, you can keep your insurance plan if you want it.
And the second, which has started now on front pages in newspapers right today, you can keep your doctor. And it’ll turn out, they can’t keep their doctor. Lots of people are going to lose their doctors. People who have insurance today think this is a moral issue. It’s not a policy issue. It doesn’t matter if it’s 3% or 5%. They actually feel the president lied to them.
And so if you actually look at his current honesty and integrity, it’s the lowest of this term. And it’s less than 50%. What does that mean is just on the front page today. He’s going to go out and re-sell the bill. Take my word, that’s not the right salesperson. He has lost something in that.
The third issue is, for better or for worse, middle-income Americans with insurance remain worried that this bill’s going to hurt them. And it hasn’t changed much since the bill. And they are voters. They turn out. These are the three issues. What are the brief numbers? So the plan has an approval rating of 38%. I’m going to go back to this. Basically, Americans don’t want to repeal it.
They want to roll it back. The biggest thing they want to roll back, which is really the hard thing to acknowledge policy is, they hate the individual mandate. They’re scared of this bill. So the majority want it going away. And 70% want to at least postpone for two years. So guess what the Republicans are going to run on? Hmm. I bet you I can think about that.
So this is going to be the issue. But I need to explain why. Students from abroad just stop me and say they can’t take this anymore. Why does this go on? So the United States has a particular phenomenon. And I can do this with two cases. So, quickly, Medicare. 1965, and the story’s often not accurately told.
The bill is passed and one half of the Republicans in the House vote for it. One fourth of the Republicans in the Senate vote for it. And there are Republican co-sponsors. Public support is at 60%. OK? Let’s go forward to the Massachusetts model, because I’ll cut the two together.
Massachusetts is the model for the bill but not for the politics. A Republican governor, a Democratic legislature overwhelmingly get together. Republicans in the legislature vote for the bill. 61% of the state support the bill. So, both cases, they have real trouble the first year. Only policy individuals know about it. It’s not a big deal. No vote for repeal.
Public opinion in Massachusetts at the end of the website not working was 67% support. There was no opposition. Nobody wanted to repeal it. Because it passed with two phenomena. Now here’s the ACA. Not a single Republican votes for it, not a single Republican co-sponsor. And public support is at 40%. So I just told you, we’re going into the election. It’s at 38. I think the president can get it up to 41.
But the reason why this has become a pinata in American politics is, we don’t do well in this country with bills that either have public support or bipartisanship. So the minority can’t control themselves. Just go out and smack it. And so there’ll be three other issues. And so we are stuck with the fact– the administration is going to have to drag this through, hope they can keep the majorities in two elections. They get the bill, but the politics is not going to be good here.
The underlying feeling is, the minority party has no reason to help. And the public is unbelievably ambivalent. Don’t repeal the good stuff.
And I’ll close with an example about the gap between the policy and the public. We just discussed all the things this bill might be doing. Gallup came out today and said 9% of Americans believe this bill helped them. So we have a huge gap between what voters are going to think about this bill and where they are. And my apologies for bringing this to your attention.
DAVID MORGAN: Whatever the political prospects are for the law, it will fully come into effect on January 1. And I believe John has some observations to make about that.
JOHN MCDONOUGH: So, well, thank you for being here and thank you for having me. So I’ve been involved in health reform since about 1985, state and federal, many different episodes.
Every one of those episodes seems to me like you’re in a bus barreling down a mountain, on a dirt road– overcrowded bus, with no guard rails, and you’re constantly this close to falling off the edge. And sometimes it actually happens, like with the Clinton health reform plan. So you kind of get used to it, and so we are in the midst of the fracas. And this is business as normal in terms of health reform in the United States.
But I think it’s important to step back a little bit because we’re at a point right now where the long term is also the short term. In 28 days, we will see the most fundamental transformation in the US health care system, perhaps ever. We have four major building blocks of reform that are no longer three and a half years off. They are 28 days off.
Number one, the ability of health insurance companies to discriminate against American citizens and consumers, based upon their medical history and their health status, is ended. The ability of insurance companies to impose lifetime benefit caps is completely gone. Health insurance policies in the United States must contain a set of minimum essential benefits that provide a set of very important services and meet very important needs. So that’s number one.
Number two, the coverage that people are now signing up for through the exchanges actually starts on January 1. There is coverage for people who were otherwise unable to get insurance or unable to get quality insurance. Third, the people who are now signing up for Medicaid– the coverage actually starts on January 1 in the states that adopt the expansion. And that’s because of the Supreme Court ruling.
But right now it’s about 26 states, and more are going to join. I will make a prediction– within five years, I think all states will be part of this Medicaid expansion. And finally, there is the piece that Bob mentioned, the fourth piece, which is the individual responsibility provision, or the individual mandate. Which is absolutely the most contentious.
And is, I think– health policy people understand– is central to the structure of the law. I believe that once we get past January 1, there are absolutely the possibilities– and almost the certainty– of continued political mischief and fighting and all different kinds of problems.
But fundamentally, after January 1, we are on the other side of the fence in terms of moving to a different place, in terms of our health care system. And, while we’re dealing with all of these daily fights and controversies and problems, I think it’s important to understand that we are four weeks away from achieving the fundamental promise of what this law was about in the first place and why we started going down this road.
DAVID MORGAN: Terrific. Now, I think everybody will agree that, despite the policy issues, despite the politics, health care really boils down to human beings and whether or not they can get the health care that they need. So we’re now going to see a video clip of a family from Mississippi trying to arrange for health insurance for their ailing daughter and discussing some of the challenges that they’ve met with so far.
-We have no insurance. Mackenzie’s not been on– she’s been uninsured since June, 2012. Because of her improvement in her scoliosis, she doesn’t qualify for the Disabled Child At Home. And we make too much money for standard Medicaid.
-Tell me a little bit about Mackenzie.
-She was born with spina bifida, a form of spina bifida metamyelia. She’s had 10 major surgeries in basically 10 years. She has rods in her spine, club foot, hip dysplasia. She’s needing some additional surgeries now. She’s been treated in Louisiana, Oklahoma, Alabama, Georgia, all by specialists.
-It’s going to be very hard for me to go to college and to get a job and all that, because I don’t have the equipment to make that physically possible. And as soon as I was off my insurance and I had to stop going to therapy, my muscles weren’t as strong. It was hard for me walk farther distances.
-She was on regular Medicaid for several years. And then we found out about the Disabled Child At Home program, which is not based on income. It’s based on her health issues. So we’ve been on that program for about five years. We had to reapply every year, but that’s the program she was eligible for.
And the last year that we applied, which was 2012, They said that she no longer qualified. She had a major surgery that corrected her scoliosis. And so then she no longer qualified for the Disabled Child At Home program through Medicaid.
-And at this point, we’re still fighting to get her on Medicaid. But being self-employed, if I gross a certain amount of money per month, then they kick her off of the program. We made $23,000, $24,000 last year. That was all we cleared.
-So we’ve applied for the pre-existing condition, was told it was out of funds. The program–
-Under Obamacare. That they weren’t taking any new applications and that a Medicaid denial letter was not proof of pre-existing condition denial. That she wouldn’t qualify under that program, because they don’t accept Medicaid denial letters as proof of– you can’t get insurance because of a pre-existing condition. So we’re back to square one.
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DAVID MORGAN: We don’t know where things stand with the Johnson family today, but, as Mr. Johnson said, they make for that household, somewhere between $23,000 and $24,000 a year. They also have a son, in addition to the daughter, so it’s a family of four.
What that means is, because the federal poverty level for a family of four in the United States is $23,550 a year, if they make $23,000 a year, they get nothing. Because they live in a state that has not expanded Medicaid, and under the Affordable Care Act, you can qualify for subsidies in the exchange only if your income is at the federal poverty level or above.
And there are millions of people across the country in the same boat. Which brings up a question I’d like to start our discussion off with, which is, how many people are not going to be helped by the Affordable Care Act? Even if all of the reforms go well. Even if healthcare.gov gets up and running. Even if they correct the back end of the IT system as well as can be done. I mean, what can be done for these people?
KATHERINE BAICKER: This is clearly a terrible gap. The population that’s under 100% of poverty that was intended to be eligible for Medicaid and, therefore, not eligible for subsidies, but now falls through the cracks in states that choose not to expand up to 100%.
It is surprising to a simple economist who lacks the insight of a political scientist or public policy– public perception analyst– that more states aren’t expanding, given that the resources are coming exclusively from the federal government for several years.
And then almost exclusively from the federal government. In essence, the residents of those states that don’t expand are paying federal taxes just like everywhere else, but they’re not getting the benefit for their residents of expanded Medicaid.
It seems clear to me that Medicaid costs money, that it doesn’t save money. But it also seems clear to me that it is vital to the health and well-being of populations who are on the program. So it’s hard for me to explain not expanding using any kind of cost-benefit analysis. And it really is a tragic gap for that type of family.
JOHN MCDONOUGH: When we were working in the Senate on writing and passing the law, we heard so many times accusations that we were engaging in health care rationing that it kind of started to just bounce off you. And you just didn’t absorb it anymore. But the way the law was written, this family would have been helped. And this family would be eligible for Medicaid beginning on January 1.
And it didn’t, because of the Supreme Court decision. And so we face the ironic situation that beginning on January 1, the only population of American citizens who doesn’t have some guaranteed access to affordable care will be low-income adults in households that have incomes below the poverty line.
People will die because of that policy failure. And it is, to me, the most insidious form of rationing anyone could ever envision– that only poor people are kept out of the benefits of this law. And that is what we’re facing.
And ultimately that is why I believe that when we get over the furor, the political furor of Obamacare, as some of the governors who’ve taken such a hard stance against it begin to leave office and are replaced by others of either party, that’ll be the opportunity for states to say, OK. Let’s take a fresh look at this. Let’s see what’s going on in other states.
And I do believe we will get there. And I don’t think it’s going to take that many years.
DAVID MORGAN: David, you said that the administration has as many as six months to try to get things straightened out. But that it needs a new leadership team. Is it time to replace the leadership team now?
DAVID CUTLER: They do need to make some changes. I don’t know about replacing or not. I care less about who goes than about what happens, and who comes. And the issue for the administration on this is that they’re, in essence, running a startup business. And they don’t have experience. They don’t have anyone who’s run a startup business before.
And so that creates a problem. And, in that circumstance, something will go wrong. You don’t know what it is. But something will go wrong. I think, just the other day, they released a report on what happened with– Jeffrey Zients released a report on what went wrong with the website. And the answer was it was sort of a very clear management failure.
That is, all the things you think about doing to make sure things go right, they just didn’t do. And so they need to bring in people who know how to do that. It’s not that there aren’t such people. It’s just that was not the way they chose to go. So I think, if you listen to the tone of the president, he’s very clear that that’s what he needs to do.
And you need to get this working. Because the model that they have– just to come back to what Blendon was saying– the model that folks are working with, I think, is that the law is too complicated to explain to people. What you have to do is have it work well. And then people will understand that it’s benefiting them.
And then, they may not understand exactly which provision or why. But, therefore, they will feel good about it. But the problem with that is the thing really better be working good or else you’re never going to get to that circumstance. So if you’re going to follow that model, that’s the way that you have to go.
DAVID MORGAN: And so, how long before we know whether or not healthcare.gov is working well?
DAVID CUTLER: Healthcare.gov is getting– certainly on the front end has gotten better. So on the end where the people interact with it, has gotten better. And you sort of see, I think, the news reports are that, in the last two days, a million people a day have gone on to healthcare.gov, truly enormous numbers of people.
Almost nobody made it on the federal site in the first month, but if you actually look at the state sites that were functioning well, about a quarter of all the people who they thought they were going to ultimately sign up were signing up on the state sites. A quarter in the first month is an enormous number of people. So it’s clear there’s incredible–
DAVID MORGAN: Tremendous demand.
DAVID CUTLER: There is incredible demand for it. So the front end seems to be working well. What they have to do now is translate it on the back end. And the thing that I worry about, immediately on January 1 the vast bulk of people will clearly, hopefully, go through smoothly.
But there will– as their inevitably are– people who think they signed up but the insurance company doesn’t have a record of that. People who signed up for a policy and then try to make an appointment with the doctor, but the doctor won’t be able to confirm that.
Or they’ll have signed up for a policy, as Bob was saying, that doesn’t cover a particular doctor who they had wanted to see or they were seeing. Because it wasn’t clear in the insurance forms. And they’ll go to that doctor, and they’ll be stuck with an out-of-network bill. There will be some of those people.
That happens every single time. It happened with the Medicare Part D program. happens every time people sign up in an employer, you know– they choose a plan. They then realize, only two or three months later, that that plan doesn’t cover the doctor who they were seeing. That’s what benefits offices do at big employers is they deal with things like that.
So that is going to be an issue. Hopefully, the site is working smoothly enough that that is a sort of minor bump. And that gets taken care of. And, you know, you say, look, you didn’t understand that, so we’ll switch over. And do all the usual things that happen there.
That can be either a minor issue or it can be a major issue, if they really can’t get the information to the people and to the insurers and so on. And you could see another round on January 1.
KATHERINE BAICKER: I share the concern that this could be a substantial problem that then affects insurers’ willingness to participate in the market, going forward, their negotiations with providers. There’s a scale of this that could create long-term problems. And I don’t know what that tipping point is.
There are clearly going to be some people who face these problems. And that’s unavoidable. But if it’s a big enough chunk of the market, that could be very destabilizing. And I’m not sure how big a hit the insurers are willing to take for a year or for two years before they say, no, thanks.
DAVID MORGAN: And if the premiums go up, they’ll go up around the time of the November election in 2014. Which makes it full of hazards for Democrats who voted for the law, correct? Is there anything the administration can do aside from addressing the problems with healthcare.gov that can improve its public image?
ROBERT BLENDON: So– again, I’m not in the advisory business for the administration for this. But if I were they, the picture of this bill would be the state of California. I would not have the president on the road, I would have the governor of California. They appear to be moving ahead. Because it’s a state-run program, quite effectively. They’ve got people on the ground, enrolling.
You’re talking about 10% of the population. They have 20% uninsured. By November, if anybody in the United States looks good, it’ll be the state of California. So I would have him vacation in Sacramento. Lying on the beach, while people are enrolling.
Because, basically, he’s not credible. And I don’t want to get in the numbers game, but what was estimated will not be enrolled by November for that. Plus, all the stories about somebody who can’t get Medicaid will be somebody from Mississippi who had a private insurance policy, and now has nothing.
And the problem is, in politics, I don’t need percents. I do in my classes, but I don’t in politics. I just need seven people who are really hurt, awfully. And people feel worse about people who lost something than got something. That’s just the psychology, if you remember that from college. So I would take particularly California, and I would do everything to show that things could work.
I’d be interviewing people outside, but I would reduce the president’s schedule of giving these dramatic speeches. In economics– and I’m going to borrow– there’s something called marginal utility. He’s way over the margin utility of speech-making. He really is. He’s given probably 54 “major” speeches. On this, it’s time to move on and have other voices.
And I don’t think it’s going to be a new Cabinet member. I think they’ve got to get a few states and make them visible.
DAVID MORGAN: OK. I think you guys have heard enough from us. Now maybe we should hear from you. So let’s start it out with Q and A, and we would like to actually begin with our often-neglected online audience. Lisa, do you have any questions?
LISA MIROWITZ: Yes, thank you, David. We do have some questions coming in. This is from Paul Doogans. “Although I concur that this revolutionary act sets the stage for a completely new and beneficial health care landscape in the US, I am concerned that some of the provisions will be underfunded or not receive funding as the roll out continues. What can be done about that problem?”
JOHN MCDONOUGH: Not a lot, unless there’s a change in the attitude of Congress. I’ll just give one example. Title V of the law deals with the health care workforce. It has a really innovative provision right at the start creating a National Workforce Commission. It’s surprising to people that we’ve never had one. We didn’t. We still don’t.
But the comptroller general named the members of this Workforce Commission in September of 2010, to do comprehensive workforce planning. Because everybody agrees we have a workforce problem, crisis– use whatever term you want– we’ve got to address this issue.
Three years later now– more than three years. The Commission has yet to sit down for its first meeting, because the House of Representatives refuses to appropriate the $2 million needed so that it can work. These folks are legally prohibited from even talking to each other.
So there are many of these examples, and they’re really unfortunate that everything has become a victim of the political polarization and paralysis around this law, unfortunately. And there are many examples. And I think Paul is absolutely correct.
And I think we need to focus on these kinds of things and raise many, many more voices, in terms of talking about the common sense things that both parties actually agree but that Republicans have not wanted to touch because it’s under, quote unquote, “Obamacare.”
LISA MIROWITZ: Thank you.
DAVID MORGAN: Good. So let’s see if our studio audience has any questions. We have a microphone. The only thing we ask is that you identify yourselves. Over here.
AUDIENCE: My name is Larry–
DAVID MORGAN: Wait for the mike, please.
AUDIENCE: Yes, it’s still Larry Rand.
AUDIENCE: You know, in this group here, you could not separate politics from policy. You’ve also pointed out that this is a highly complex piece of legislation. Agreed on all of it. Full disclosure, I am not a resident of Massachusetts and, therefore, I have not had the opportunity to participate in the market that works here.
I am a New Yorker and no market works there except Wall Street in my world. I agree, from a communications point of view, our salesman-in-chief cannot do it. But being post-political– Ronald Reagan’s not here. Lyndon Johnson’s not here. Walter Cronkite is not here.
I do agree that Jerry Brown has done a great job. But he is not post-political. He’s a seated Democratic governor of our largest state. I would like your view, who is our next Walter Cronkite that we send out, since Cronkite was, at one time, the most credible man in the United States of America?
ROBERT BLENDON: I’m stuck doing that. The Kennedy School actually has the Cronkite desk. And go there and you touch it. It’s a wonderful experience. We don’t own a Walter Cronkite. If we were talking about the media, what has changed, in my term, is much of media now has an edge.
They have a particular view. It doesn’t capture the same thing. My view of going to California is not spending time with Jerry Brown. It’s spending time with people signing up. Small business people who actually– they are offering it on the exchange. They’re actually going in and people– at least they were interviewing today– business people are saying, I’m not paying 40% more or 50%.
AUDIENCE: You need a salesperson.
ROBERT BLENDON: We do. I might find myself a Senator. I don’t want to get into endorsing people. But it would be someone who is not currently in Washington. But the coverage– I would create events where real live people talk about experience. And you have a base. That it’s not just a few people you pick out.
Because, if I’m a news station that doesn’t like this bill, I have my four people who lost their jobs somewhere or other. But I think that you need some real-life experiences to reassure people from different walks of life. And let me just take you back to Massachusetts because I spoke at the Business– equivalent– Roundtable dinner, one night.
And I had the oddity– I thanked them for people in the state. And they said, why did you do that? I said, because if you had opposed it, I think this would have died. And you took a lot of heat and came to the table. But we never had the voice in Massachusetts. We have this bill, you lose your job. That is an awful voice.
And they signed on board and we never had that. And we need some business people in California, if this is true, to say it’s working out for them. And that has to be the face. We have to get out of political. I wish we had– with the exception of Reuters– one place that we could go. But we can’t media-wise any more.
DAVID MORGAN: Did you want to say something here?
DAVID CUTLER: I was told that in talking to patients about– you should sign up for insurance. You should definitely do all of this. The voice that individuals trust the most is nurses. More so than doctors, more so than TV ads of politicians, and so on. But that if the nurse says, you know, this is a really good thing for you. You really ought to take advantage of this, you will get people to sign up.
And so that suggests that the way to do this may be through the medical profession more than it is through politicians who people have learned to distrust, anyway. Or even news broadcasters who people think are affiliated with one team or the other and not altogether impartial.
KATHERINE BAICKER: That highlights the importance– I did that to you again– that highlights the importance of smoothing the enrollment process on the back end so that insurers are paying providers and that providers are not unsure about who’s covered, who’s not covered, having so much trouble that they lose support.
JOHN MCDONOUGH: I’ll tell you one group I’m watching and talking about, and those are those 10 gutsy Republican governors who endorsed the Medicaid expansion. In particular, my heroine is Jan Brewer. The governor of Arizona, in the middle of the government shutdown in October, when they were talking about defunding Obamacare, she got up in a press conference and she said, if you defund Obamacare that will be a budget catastrophe for the state of Arizona.
DAVID MORGAN: Lisa, do we have another question from our online audience?
LISA MIROWITZ: We do. We have a pretty active live chat. So I’m going to try to represent those folks a bit. “Will you address the issue of reaching a critical mass of young and healthy people signing up for coverage that will make it economically feasible for insurers to offer quality care with affordable rates?”
KATHERINE BAICKER: I think that’s a great question because it’s clearly crucial that you have good risk-pooling among healthy and sick, among young and old. And there is limited risk-rating allowed based on age. Older people pay a higher premium but that– than younger people but that differential is limited.
There are options for states to provide more bare-bones policies for younger enrollees to try to get the “young invincibles” to sign up. There are subsidies available if they are low-income. It seems crucial to message that in a way that highlights the value of insurance protection.
And that’s one thing that’s a little frustrating in the debate about whose premiums are going up and not, and what policies that meet minimum requirements look like versus not. A feature of insurance is that it protects you against something catastrophic and unanticipated.
That’s the central feature of insurance is that it’s supposed to be there to provide you with resources when you need a lot of health care and you wouldn’t otherwise have the money to be able to procure that care. That’s going to do you a ton of good.
The nature of that commitment from an insurance product means that most people don’t ever use it and don’t ever see it. You go through a whole year, and you’re not sick. And you think, was that premium worth anything? I just threw that money away.
But you didn’t. You had protection. And it’s a good thing when you’re not sick, and you don’t need your insurance. I don’t think at the end of the year, man, I bought this homeowner’s insurance and my house didn’t even burn down. You know?
I’m really glad about that, but that’s harder to see for health insurance. And so I think it becomes harder to persuade people who are likely to be healthy that their premiums are worthwhile, even if they don’t end up using the health care.
And by the same token, it’s hard for people to perceive the increased insurance value of a plan that does not have a lifetime maximum, does not have an annual maximum, that will renew if they get sick, if they’re healthy in that year. So you have a premium that you think is affordable and, suddenly, the premium goes up.
And it’s because, if you got really sick, you wouldn’t have a lifetime maximum anymore. But you’re not really sick. You’ve never experienced a lifetime maximum. So the benefit is really diffuse and hard to perceive. The increase in the premium is very tangible and very immediate.
So that, I think, is really challenging. And it’s important to draw in people to get that financial protection not just so that markets function well, but so that they’re protected from bankruptcy, from bad credit, from all the things that happen when you have high health expenses and no financial protection.
DAVID MORGAN: Does the administration have a harder sell now? Because of the problems with healthcare.gov and trying to persuade young people to come back to and try and consider health insurance?
JOHN MCDONOUGH: I think there’s one interesting piece of news which is that there’s an estimate of about five to seven million young adults who actually can go online and buy a bronze plan and have actually no premium, at all. So it’s actually less than the cost of paying the individual mandate penalty.
Now I’d rather those folks go silver or gold or something better and not expose themselves. But still, that’s a pretty attractive offer. If the word on that gets out to people that you go on get coverage for nothing and avoid paying the penalty.
ROBERT BLENDON: So that’s the short-term/long-term issue. So Gallup’s been surveying uninsured young people. At least a third of them say absolutely they’re not going to do this. What was amazing in today’s release is that Republican young people are much more likely not to want to buy the insurance.
They’re making a political statement for it. But most people didn’t know there was a website. They didn’t even know how to enroll. So this is a long-term issue. You can get these people enrolled, if you do this. But in the short-term, they are not going to be revving in with their motorbikes to do this.
You don’t sell products to people who aren’t aware they exist. That just generally is where we are today. But a year or two years from now, of course, you can go get them. But if we’re making November this big decision-making point, a lot of young people are not going to be there, who are not clearly aware of what John was talking about.
DAVID CUTLER: We were talking about possible horror scenarios. And one of the ones we discussed is, what happens if someone tries to get the coverage or thinks they have it, and they don’t have it and so on? And then, Kate was rightly saying, that has implications for the premiums, and so on.
Just to play out what Kate said one minute, because it’s very important. If you look at the prices in the exchanges, as John said, they’re much cheaper than people thought. And there was a study that McKinsey did very recently that showed that the reason why they were cheaper is because new insurers entered.
And it’s those new insurers who are coming in at very low price points. The difficulty is that those insurers are not outside of the exchanges. They’ve been created by the Affordable Care Act and they’re inside the exchanges. So if you can’t get them a good mix of folks, they’re not well capitalized.
So they may go under. And so you may lose the sort of low-price segment of the insurance exchange. The big insurers will be fine, because whatever they don’t sell on the exchange, they’ll sell to people off the exchange. And the whole thing will work out just fine. But I worry that there’s some danger to the most innovative segment, and the cheapest segment, of the insurance industry. And that could be problematic if it turns out that way.
DAVID MORGAN: Well, let’s see if we have any more questions here in our studio audience. This gentleman.
AUDIENCE: I’m Dr. Larry Cohn. I am a cardiac surgeon at a local community hospital called Brigham and Women’s Hospital, which is around the corner.
DAVID MORGAN: We’ve heard of it.
AUDIENCE: Thank you. My colleagues and myself feel one of the best things about this Affordable Care Act is the fact that people with pre-existing conditions will be paid for. I think it’s a travesty that hasn’t been paid for. I think it’s a tremendously good thing.
Now having said that, to decrease costs, why didn’t– and I’ll ask this very distinguished panel– why didn’t the government, at this time, figure out what they should pay for and what they shouldn’t pay for? And there’s some private insurance plans– like Kaiser, I think, has some stipulations. And I’ve told this before in this forum.
I operated on a patient about two years ago that had had ten coronary stents placed in one artery. And that was ridiculous. And I had about an inch left that I could put a bypass on the artery. Because the patient still had symptoms. They shouldn’t have paid for anything more than two stents.
Why didn’t the government at this time assemble experts in the various fields– orthopedics, cardiac, cancer– and say, we’re going to pay for this. But we shouldn’t– based on guidelines, experience, and the world’s literature, we should not pay for this.
DAVID MORGAN: Would anybody like to– David.
DAVID CUTLER: I believe that the technical term for that is a death panel.
DAVID CUTLER: Which, I confess, I always wanted to be on one of the death panels, particularly for some areas of the country.
DAVID CUTLER: But I–
ROBERT BLENDON: No comment.
DAVID CUTLER: But I suspect those areas weren’t so thrilled to have contemplated me being on it. The legislation didn’t go anywhere near there for that reason. It did very small steps, like a patient-centered outcome research initiative, and so on. But the truth is that people are not willing to confront that now.
And, I think, just to give a good side to what people are saying, I think what people are saying is, before you go talking about whether you should pay for that stent or not, get the waste out of the system. Don’t come tell me that I have to make that choice now.
Because I believe the system is so broken that you can get– people will regularly tell you how much money pharmaceutical companies make in profits– they’ll overestimate it by a factor of 10– and insurance companies make in profits. They’ll overestimate that by a factor 20. And, you know, how much pure waste there is.
And that’s actually not a terrible view to say, look, before we go trying to do that, let’s try and drive out just this obvious stuff that’s doing no good at all.
DAVID MORGAN: Do we have another online question?
LISA MIROWITZ: We do. And I think we have time just for one more. We do have a lot coming in. “For the states that have not expanded Medicaid, do the panelists see any opportunities for compromise wherein states can gradually wean themselves from federal funding and use expansion money to develop more state-specific sustainable systems. Health care has traditionally been left to the states. Many states do not feel the incentives are properly aligned in the ACA and fear further dependence on a federal government in debt.
JOHN MCDONOUGH: Sure. So, there are a number of states right now– Arkansas, Kentucky, Michigan, Ohio– who are looking at, how can we do the Medicaid expansion, and not just do it kind of the standard, old-fashioned way? And I think the Obama administration has been very receptive to that, as long as they maintain access and affordability for the people who would get enrolled.
The other piece is, beginning in 2017, the federal government will be able to give statewide waivers to states that want to come up with an entirely different kind of a model, as long as, at least the same number of people get covered and it won’t cost the federal government any more.
So, for example, Vermont is very much considering moving toward some kind of a single payer system path. And it is that 2017 waiver provision that they are counting on as the gateway to enable them to do that. We’ll see if they get that far. But that’s very much there. So there’s a lot more flexibility and opportunity for trying out different things than I think most people appreciate. Because it’s such a big, complicated law.
LISA MIROWITZ: Thank you.
DAVID MORGAN: David, did you–
DAVID CUTLER: Yeah, if you look not at the Medicaid side, where there’s a clear blue/red division between states that are expanding Medicaid and not, but if you look at the other side of the law, which is, what are you going to do to make the health system work better? What the ACA started is now being taken up by a number of states.
You have any number of states saying, we’re going to change payments. We’re going to do our Medicaid programs this way. We’re going to encourage private insurers to do this way, and so on. If you draw a map of which states are doing innovative things on that margin, you would not be able to tell which states were red and which states were blue.
So it is the single most interesting policy that’s happening since the Affordable Care Act is, what are states doing? And if you look at what’s going on, you know, first off, they’re all taking money from the federal government to figure out what to do. And the reason why it’s happening is they’ve slashed Medicaid already. They can’t slash it anymore.
They can’t run deficits like the federal government can. And the businesses are going to the governor and saying, look, if you keep slashing Medicaid and raising my premiums, because of the cost shift, then I’m just going to move somewhere else.
So they’re saying, OK, how do we lower the total cost of medical care so that our businesses stay here, the state government can afford it, people can afford it? And that’s actually a bipartisan issue. And it’s really, really interesting what things are being driven by that. And I would pay as much attention to that– I would pay more attention to that than any bill going through Congress, at the moment. Because there’s just no hope of much there.
ROBERT BLENDON: But also– tying into Larry’s question– when Medicare was enacted– if you go back and read the original bill– Lyndon Johnson promised nothing would change in medicine. It’s in the first preamble. For those in medicine, that’s not correct. He didn’t honor the treaty over 50 years.
But they were very careful to deal with individual issues, like states are. And they dealt with the Medicare on mostly a bipartisan basis. So I think if this bill survives a couple years, a lot of the issues being discussed will be dealt with less in this passion for it.
And as John said, the worst policy– and I can’t sleep at night either– is that the people who wanted the mandate turned down by the Supreme Court lost so they kept people from getting Medicaid in their state.
It’s the equivalent– you have to study foreign policy– in a trade agreement where they’re not going to allow you in the US to import their computers. So you say, I’ll teach a lesson, we won’t take your food. It just is an odd thing they did that. But that was the only thing left to do.
I think, over time, that’ll quickly, as John says, I think it’ll be a different flavor. And over time people will say, we’re not going to let that show run over, even though other issues may remain contentious. But a lot of the fix the health care things will be bipartisan in the future. They really will.
DAVID MORGAN: I think that’s a very good point to end on. And I also think that we actually were able to gain some insights into our opening questions. So I would just like to say that this discussion continues online at forumhsph.org and at reuters.com and on Twitter. So don’t be shy. And other than that, I’d like to thank the audience, and I’d like to thank the panel.
Health plan enrollment failures in the federal insurance marketplace have resulted in mounting fallout for policymakers. Some Americans have reported receiving cancellation notices and subsequently having difficulties signing up for new plans due to poorly functioning enrollment websites. Others have reported dismay at increased premiums. Yet the vision for the historic healthcare law perseveres — providing affordable, quality coverage. Supporters have pointed out the vast complexities of implementing such an enormous set of health reforms. After weeks of debate and a Presidential mea culpa, this
Forum event assessed where the U.S. stands in the healthcare law rollout and the resulting health policy implications.