Kojo speaks with "Speak No Evil" novelist and D.C. native Uzodinma Iweala about his second novel and how his local upbringing affects his storytelling.
Members of the new Republican House majority say they want to “repeal and replace” last year’s sweeping health care legislation. The Obama administration says the roll out will continue. But the future of the Patient Protection and Affordable Care Act (PPACA) will be determined in state legislatures and federal courts across the country. We find out why the next year could dramatically affect the way health legislation is implemented.
- Stuart Butler Director, Center for Policy Innovation, The Heritage Foundation
- Jacob Hacker Resident Fellow, Institution for Social and Policy Studies; and Professor of Political Science, Yale University
- Alan Weil Executive Director, The National Academy for State Health Policy (NASHP)
MR. KOJO NNAMDIFrom WAMU 88.5 at American University in Washington welcome to "The Kojo Nnamdi Show," connecting your neighborhood with the world. Tomorrow, the new Congress will convene for the first time and one of the first orders of business for the new Republican majority will be old business, a likely vote to repeal last year's health care law. The repeal likely won't go any further than the House, with Democrats in control of the Senate and White House. But away from the capital, 2011 may well be a make or break year for the health care law.
MR. KOJO NNAMDIStates are beginning to expand their safety nets and construct so-called health exchanges, even as some states challenge the law in federal court. Some observers even believe the so-called public option once thought dead will come back to life in the not-so-distant future. Last year, one senator called the new law a starter home that would need significant renovations in the years ahead.
MR. KOJO NNAMDIThis hour we'll explore what those renovations are likely to look like. Joining us in studio is Stuart Butler, director of the Center for Policy Innovation at The Heritage Foundation. Thank you for joining us.
MR. STUART BUTLERMy pleasure.
NNAMDIAlso with us in studio is Alan Weil, executive director of The National Academy for State Health Policy. That's an organization that's helping states implement the health care law. Alan Weil, thank you for joining us.
MR. ALAN WEILNice to be here.
NNAMDIAnd joining us from studios at Yale University is Jacob Hacker, resident fellow at the Institution for Social and Policy Studies and a professor of political science at Yale. Jacob Hacker, thank you for joining us.
MR. JACOB HACKERThank you for having me.
NNAMDIGood to hear from you again. Jacob, let me start with you. This is complex territory and we're going to get into the many different moving parts over the course of the next hour, but we should probably begin with the Patient Protection and Affordable Care Act also known as the Affordable Care Act, Health Care Reform or Obama Care depending on who is talking. Could you talk a little bit about the three basic pillars of this legislation?
HACKERWell, the bill is basically constructed on three foundation stones. The first is an expansion of Medicaid coverage. And this is the program that is run by the states, but financed jointly by the states and the federal government that provides coverage to both older Americans who are in nursing homes, which isn't affected by this legislation or/and those who have limited means and who are provided coverage either because they are poor or because they are in other categories that are covered by Medicaid.
HACKERThe second and third pillars are basically the creation of the State Health Insurance Exchanges. The states would be creating these market places where people could shop among private insurance plans. Some states might even allow them, those who are going into the exchanges, to choose a public insurance plan.
HACKERAnd then, finally, the third pillar of the law, the pillar that we forget about because it's basically the system we have today, is voluntary subsidized regulated private health insurance through employers. And even with this reform, most Americans after reform will be getting their coverage through their place of work. But unlike in the old system where employers essentially could do what they wanted, in this new world, those plans will be regulated under the terms of the law and there will be additional help for some employers to provide those benefits and direct assistance for those receiving those benefits in some cases.
HACKERAnd finally, there will be a requirement on larger employers to offer those benefits that will no longer be wholly voluntary.
NNAMDIAlan, while much of the heavy lifting for this legislation will have to be done at the state level, can you give us a sense of the challenge facing states as they begin implementing this bill?
WEILWell, that's right, if you think of all three of the pillars that Jacob described. There's a major state role. As noted, states already run the Medicaid program. They're going to see on average about a 50 percent increase in enrollment due to increased eligibility standards. They are going to simplify the eligibility standards, which is a good thing, but it means a major effort to redesign eligibility systems.
WEILThe insurance exchanges are set up by the state. These are market places where states are going to have to select plans that will provide coverage to people. And they'll have to draw people into those plans to provide them with coverage and the entire health insurance system, the platform of regulation for that is at the state level. There are many aspects of it that the federal government has a hand in, but the first line of insurance regulation is at the state level. So all three of those areas are guided primarily by state activity.
NNAMDISome states are talking about pulling out of Medicaid altogether, while others, like Connecticut, are moving toward creating their own version of the public option.
WEILYes, withdrawing from Medicaid is appealing if you just look at your budget. It's not very appealing if you actually look at the implications for the people in the state. And once you start having a serious conversation about withdrawing from Medicaid, you'll find that the provider community, particularly hospitals who get a lot of their revenue by serving people who are on Medicaid and the doctors will start explaining to you that without the federal funds associated with that program, they're going to have a hard time keeping their doors open.
NNAMDIStuart Butler, this law was sweeping. It has a lot of stuff that the left and the right both dislike. It also has some things that both sides like a lot. Some ideas have been taken from innovative proposals, but fought by one Stuart Butler and The Heritage Foundation. But the political posturing on this is pretty absolute and often simplistic. What is your assessment of where we are now and what lies ahead?
BUTLERWell, I think you can look at what you call the political posturing at sort of two levels. One is the traditional politics that surrounds any issue. But then there's a much deeper level, I think, where the question is, where do you think this legislation will end up? The history of health legislation, like a lot of other areas, is that you put something into place and it has its own dynamic. And over time, it transitions, it grows or it diminishes or it changes directions in some way. So a lot of the debate now is really about what the people think this is going to look like, you know, five or ten years from now.
BUTLERAnd people on the left and the right are both looking in that way. Some people on the left think that with what you said, the opportunity in some states like Connecticut that have set up their own version of a single -- of a public option with some other opportunities, that might be in the legislation. And some people on the left think that 10 or 15 years from now, this will really migrate much more towards a centralized sort of single payer type system.
BUTLEROther people think it will go in a very other -- in another direction and that's what this deeper argument is right now. Where are things likely to go? And then, secondly, where should they go and how do you push or repeal or change the legislation to get it in the direction that you actually want it to go in?
NNAMDIJacob Hacker, same question.
HACKERWell, I think that the current political debate shouldn't be diminished. I mean, the fact is that this legislation is far more controversial than almost any new piece of social legislation in American history. Medicare was implemented in a single year and had substantial bipartisan support when it was passed. Social security was also supported by bipartisan majorities and it took many years to implement, but that was partly because the legislation envisioned a very long time span.
HACKERIt was controversial at the outset and it was called a cruel hoax by the Republican candidate in the 36th presidential election. But very quickly it ceased to be the kind of cruel hoax and became a sacred cow of American politics. Now, it didn't expand much in the initial years. I recently wrote a piece on where this bill will go, thinking about these long term issues that Stuart Butler was talking about. And I think we should recognize that social security really started out small and expanded over time in part because of some deficiencies in the bill.
HACKERAnd like that quote that you had up front about this being a starter home, I think there is a lot of open questions about how it will be developed over time, but I do think that we should recognize that this current fight is quite important. There will be decisions made over the next few years that have consequences for how the bill will actually operate in practice. And so we're not just forecasting the future, we're actually shaping it in these coming debates.
NNAMDILet's bring our audience into the conversation. You can call us at 800-433-8850. How do you think that this health care reform bill and the debate that is going to go on over it is likely to affect the quality and cost of your care? 800-433-8850. Or how it is likely to affect the quality and cost of health care generally? 800-433-8850 or go to our website, make a comment, ask a question, that is kojoshow.org Alan Weil, when will we as taxpayers and patients begin to actually see changes?
WEILWell, changes have already begun. Some happened within 90 days within the signing of the law. And as of the beginning of this year, the early activities were mostly around insurance regulation, creation of a place that people with pre-existing conditions could obtain coverage if they'd been excluded before. There's been a fair amount of attention to dependents up to the age of 26 being able to be covered under their parents' plans. The elimination of pre-existing condition exclusions for children, there are a series of insurance provisions. The major coverage expansions that bring the number of uninsured down don't take place until January 1st, 2014.
WEILSo there's a lot of building that has to happen over the next couple of years and I think, just to follow on to where Stuart and Jacob were going, we do have a debate going on, but it is very much based on assumptions or projections or ideological predispositions about what this is going to look like in five years and actually, in the next year or two, as states start to build these structures and make decisions and as the private sector responds to them. This is not going to be a theoretical debate about whether this is a takeover or not. It's going to be an actual set of changes that people will be able to evaluate. Some will like them, some won't. But it's going to have a very different texture in the debate once people notice the consequences instead of just hear about them.
NNAMDIJacob, as we've brought up twice already when this Affordable Care Act passed, Tom Harkin, the Democratic senator from Iowa, compared it to a starter home, something that would need to be renovated at a later date. Extending that metaphor, you say that right now the home hasn't been built yet and the construction zone is in the path of a hurricane. What do you mean by that?
HACKERWell, the home hasn't been built and as Alan was saying, there are some important decisions that have been made, but many of the key pieces of the home, if you will, are going to be constructed at the state level. That was one of the legacies of the decision to lodge responsibility for the creation of these exchanges at the state level, something that I was concerned about. Some states will do very well at that. Others will do less well. There's obviously controversy at the state level about this.
HACKERAnd then, let's just be clear. The hurricane is there. It's already whipping through Washington. Now it can't -- this hurricane of conservative opposition to the legislation isn't the only storm that's raging. The other one is the growth and cost that has, I think, is really the weakest aspect of the legislation, as it may not do enough to bring down costs to sort of lessen the pressure on the federal government and make the promise of long term health security a reality for the millions of Americans who will be brought coverage under the legislation. So those two big storms are brewing and it's a difficult challenge for those who are seeking to make this bill a reality and to make it deliver on its promise.
HACKERBut to my mind, you know, this is a challenge that can be met and indeed I would argue that if we don't recognize both the real strengths of the legislation and some of its weaknesses, we're not going to face up to the challenges that have to be addressed if it's going to succeed both politically and in terms of policy. So saying that this is a great achievement, which it is both politically and economically, is not to deny that there are major steps that are going to be needed to put it into place, to solidify against those coming storms.
NNAMDIStuart Butler, I'll start with you on this one, but I'll ask everybody to jump in eventually. We know that several Republican Attorneys General and one Democratic Attorney General are challenging the individual mandate in federal court. When these challenges were first suggested, a lot of analysts on the left and right dismissed the likelihood of their success. Now, everyone doesn't seem so sure.
BUTLERWell, there seem to be -- there were, first of all, a lot of states that have joined in this legal dispute. I'm not an attorney so I can't really talk about the likelihood of the Supreme Court, assuming it eventually goes there or what they will say. But I think the very scale of the lawsuit itself has taken a lot of people by surprise. And the determination of states. And there's a lot at stake, of course, in this. This is not just only a constitutional question, which, of course, is important in itself.
BUTLERBut it's also an issue about how will, in fact, this shape the starter home. If people are required by law to buy a certain package of health insurance that is going to be determined somewhere by the federal government, in particular, which has the -- under the legislation, has a right to tell you what has to be in the (word?) and if there's a concern about whether costs are actually going to be controlled in the future, then individuals are understandably alarmed that they may have a legal requirement to buy something which includes things they may or may not want, in addition to what they do want.
BUTLERThey may have a price tag associated with that which is very high. They may well have some subsidies, but what if the subsidies are not sufficient? So you may have a situation shaping up here. Not the standing -- the lawsuit itself of a situation where we require Americans to buy something and yet they are actually, many of them, either not able to, despite subsidies we give them. Or they feel that it is well beyond their means. Or we try to subsidize them sufficiently to be able to pay whatever the insurance companies and the healthcare system provides. In which case, the costs of this legislation could become even far larger than it is now and that worries many people. So mandate issues we (unintelligible) ...
NNAMDIWe have a caller on the line who'd like to address that issue. But we'll have to take a short break. So hold that thought for a second, Allison, and we'll get right back with you. You, too, can call at 800-433-8850 with your questions or comments about how healthcare reform is likely to proceed in practice or go to our website, kojoshow.org, ask a question or make a comment there. I'm Kojo Nnamdi.
NNAMDIWe're talking about the implementation of healthcare reform and the next battles over it with Jacob Hacker, resident fellow at the Institution for Social and Policy Studies and a professor of political science at Yale University. Stuart Butler is director of the center for policy innovation at the Heritage Foundation. And Alan Weil is executive director of the National Academy for State Health Policy, which is helping states implement the healthcare law.
NNAMDITo the telephones with Allison in Washington, D.C. Allison, you're on the air. Go ahead, please.
ALLISONIt's my understanding that each individual is required to buy health insurance similar to when you buy a car, you're required to have health insurance. And I just wanted to point out that I have a choice to buy a car and when I choose to buy a car, I make the agreement that I'm going to buy car insurance. However, I don't choose to be born and that's really my issue. And I really would like to see a public option and I don't think it's fair that I be required to buy from the healthcare industry, which is proven itself to be distrustful and not have the interests of long term health in mind. And that's just what I wanted to bring up.
NNAMDIWait a minute, Allison, allow me to be clear about what you're saying. You're saying that since you are born, since you exist, you are due proper healthcare, but you don't want it from a private insurer?
ALLISONYes. Well, not necessarily just from a private insurer, that I want to be able to have a choice from private insurer or from the public option. I just -- I don't think that's fair that...
NNAMDIStuart Butler, sure, fine. Stuart Butler, what is the likelihood that we'll be seeing the public option appear again somewhere along the line?
BUTLERWell, it's going to be a good question. As we mentioned earlier, that you do have one state, Connecticut, that has already set up a public option choice at the state level. And one question will be, will the administration encourage that discourage it? What will the congress do? Will they try to block funds that go to that option? Another state, Vermont, has made it very clear that it would like to see the whole legislation evolve towards a single payer system with no insurance companies down the road.
BUTLERAnd there is a proposal that's been introduced by Senator Wyden and Senator Brown that at least on the face of it, might permit the state, like, Vermont under certain circumstances to really substantially change the legislation to move in the direction that it wants. Maybe another state would like to use that legislation to go in a different direction so then the question arises, will the administration permit that? So this issue that Allison brought up, in terms of whether she could have what she wants down the road, I think is a very open question, reinforced by the fact that she is required or she will be required to buy insurance. The level of insurance she gets will be determined, the ingredients of that insurance will be determined and we don't know exactly what that will be. She doesn't know what she will be required to buy as yet because it's not been determined.
NNAMDIAlan Weil, Stuart pointed out earlier that he is not an attorney. You are an attorney in addition to which you are working with states to help implement the healthcare law. I'd like to hear your response to the same question, the likelihood of the reappearance of a public option.
WEILWell, I don't know that being an attorney qualifies me to talk about the public option. But...
NNAMDIOr whether or not it's likely to go before the Supreme Court?
WEILRight. I mean, I'll take up two parts of this. I mean, with respect to the court, I'm not a constitutional lawyer. I think Stuart captures nicely that -- the inner play between the political question here and the legal question, which is the mandate -- the individual mandate is a puzzle piece within a broader puzzle where it only makes sense to have a mandate if you have subsidies and people can afford coverage. But people don't know yet whether or not they're going to be able to afford coverage so you would naturally be nervous about a mandate or as Allison says, she's not sure she's going to like the options available to her.
WEILSo she would be nervous. I think that's completely appropriate for a state like Massachusetts, that has gone ahead with the mandate. They very clearly made it a part of a broad effort to make sure that coverage was affordable to people. And people saw what the affordability standards were, what the products were and it's a very different dynamic than a message coming out from Washington, trust us, in four years these products will be affordable and we'll force you to buy one whether you want to or not. So we need this to evolve, I guess, is what I'm saying.
WEILFor people to be able to draw any conclusions about it. And similarly, with respect to the public option, I think Stuart shows one of the strengths of the law, which is that different states will approach the options available to people within their states differently. You're not going to have a serious consideration of a single payer option that they're discussing in Vermont in many other states.
WEILAnd that reflects the politics and it also reflects the structure of the law. So there's actually a good deal of room here for different states to express their values in how particularly they set up the insurance exchange embodied in the law as written.
NNAMDIJacob Hacker, you were a proponent of the public option in the overall national legislation. How do you see it playing out?
HACKERWell, I agree that it's going to vary from state to state. There will also be a national debate that will take place and not an immediate future because of the republican control of congress and the emphasis at the moment on other priorities but I think over the long term there will be debate over whether or not there should be some greater national action to create an alternative to the private insurance model. After all, in about -- in 20 -- 24 of 43 states, the largest private insurer has a 70 percent or more of the private market.
HACKERSo we're talking about many states where there is a pretty close to a single payer but it just happens to be a private insurance plan rather than the government. I mean, Allison's point is an important one that -- and the polling showed this. The public option was relatively popular and in particular people seemed to be more receptive to an individual requirement if they knew that they would have some kind of public spirited, public insurance plan that would be there alongside private plans.
HACKERAnd that was, I think, missed to some extent during the debate, that the individual requirement to have coverage is acceptable to people only if they feel like they have some guarantees. Now, as Stuart pointed out, those guarantees go beyond just having the choice of a set of private plans or the choice between a set of private plans and a public option but also some guarantee that cost will be controlled over the long term. And to my mind that's really where the debate will ultimately move.
HACKERBecause the only way in which the promise of the Accountable Care Act can be achieved is if there is real efforts to slow the rate of increase of premiums so that employers continue to provide coverage so that states can afford to provide Medicaid to more Americans and so that the premiums within these new exchanges will be affordable for consumers and for the federal government, which will be subsidizing them. One last thing I would say is, we shouldn’t lose sight of the fact that even while there is a huge debate taking place about the constitutionality in individual requirement and the state -- many states are involved in lawsuits.
HACKERThe states are nonetheless moving ahead, even in states where their leaders have lodged suits against the federal government. The states recognize that they need to start gearing up to implement the law. So a lot will hinge obviously on how exactly these cases are resolved. And rather than handicapping them, I think we should recognize that even where the outcome that conservatives most want, even if the individual mandate were taken out, many aspects of the law would still survive and there would still be a very important steps that would have to be taken by the states. This is not a debate over the constitutionality of the act is not a debate over repeal.
NNAMDIStuart, you wanted to say.
BUTLERYes. I just think this issue about the states moving in the direction they want under the law, I think we need to clarify that a little bit. I think both Alan and Jacob kind of maybe implied that the states will have a very broad opportunity to go the direction they want to, construct this starter home in a way that fits their particular goals and so on. And that really the states with different perspectives will be able, in a sense, to freely to go within the constraints of the law, down the direction they want.
BUTLERI think it's very important to recognize that states can do things, providing they are doing it in compliance with the way the administration really feels they ought to be able to go. It's a two-way operation. The states will ask for, will put in for waivers, will try to move down certain directions and the federal government, the administration, can either make that easy or it can make it hard. And that's why, I think, there's a lot of concern that while there's broad support for the idea of states taking the initiative, and I strongly support that, that in reality, we may see states being pushed in one direction rather than another.
BUTLERAnd then, when you look at the issue of the public option, if it turns out that the administration gives real encouragement to a state like Connecticut to set up a public option, but strongly discourages another state that wants to go in a somewhat different direction, it could be pushing the states down a direction that really was explicitly denied in the legislation itself, which specifically said that a public option would not be in the legislation.
NNAMDIHow about states who have leaders who are not motivated to implement? We got this e-mail from Brian in Alexandria. "How can the administration really expect Governor McDonald to implement a law he opposes? It occurs to me that a commonwealth like Virginia, which already has a relatively weak safety net -- I don't think he's quite as ideological as our attorney general, but it seems to stretch the bounds of plausibility to think that he would give full effort to make the major effort necessary to make health exchanges work." What do you think, Alan Weil?
WEILWell, it may stretch the bounds of credibility, but it's happening. There are task forces already meeting, have made recommendations to the governor. Implementation is fully underway in the Commonwealth of Virginia, despite opposition by the governor. And the reason is, that there is bipartisan and was bipartisan view prior to enactment of the law that the system we have had is not working effectively. It's inefficient. It's too expensive. Governor McDonald is very concerned about economic competitiveness. Healthcare costs are a major driver of costs of business in Virginia as other states.
WEILAnd he's looking for ways to use the law to address the cost issues that Stuart and Jacob have -- and you have raised, Kojo. And it is certainly the case that he will think about and set priorities and may emphasis certain aspects and go certain directions with a law that are different from what will happen just in Maryland or in the District. But implementation is fully underway in the Commonwealth.
NNAMDIHow about Maryland and the District?
NNAMDIOn to the telephone because J.C. in Washington raises another issue that we intended to raise. J.C., you're on the air. Go ahead, please.
J.C.Yes. If not everyone is insured, what do we do with the uninsured when they get sick or are in an accident? I think, fine, you don't want to buy insurance, you don't have insurance, you die. You know, because we're paying for those people to show up in emergency rooms with no medical insurance when they get treated. I think part of the law should be if you don't join to buy insurance, you will have no medical care whatsoever. And that was my comment, thank you.
NNAMDIStates are being asked to figure out how to extend coverage to more and more people and get the most bang for the buck, but this debate has been so divisive because it's really about bigger questions, like the one that J.C. raises. And that is not only what role should the government play in our economy, but is healthcare a human right or just an economic good? I'd like to hear from you first, Stuart Butler, about how you would respond to J.C.'s issue?
BUTLERI think it's a very complex issue for any society. What do you do with somebody who fails to take steps to protect themselves from some eventuality? What we actually have just to clarify for J.C., we do have legislation on the books right now that says if you are knocked down in the street and taken in ambulance to a hospital, if that hospital has any money at all for Medicare, which is pretty well every hospital around, then that hospital must stabilize you.
BUTLERMust deal with you. And if you don't have the means, it's still got to do it. And that's what a lot of uncompensated care, as we call it in the hospital area, is about. So what do you do? Well, one approach would be to say -- in principal, would be to say, everybody must buy insurance. We do do that in the area of automobiles for at least damage to another car. Then the issue is, well, how much? To draw the analogy with cars, we require people to buy insurance, not for their own car, but for the damage that they do to other people.
BUTLERThe analogy or the analog in the case of healthcare would be to say, yeah, you have to buy insurance, but only so called catastrophic insurance that protects the rest of us if you get knocked down, not to pay for your routine care or for care which is discretionally or anything like that. That's not what this legislation does. This legislation says not only that, but where we think that certain kinds of care, what you need and should have, way above what is necessary for you to live and that's what causes so much concern with people.
BUTLERIf you look at polling people, absolutely Americans almost to -- I think to a 100 percent, say if somebody is knocked down in the street, we ought to look after that person and get them basic care. If they're an illegal immigrant, they say that or if they're a citizen. It's when you start trying to put requirements beyond that that real issues start to arise. And who makes that decision? We know in practice it's going to be a lot of providers and insurance companies that lobby congress and say, you know, add our service into what's required.
BUTLERThat's what's been going on. It's been happening at the state level as well, so called mandates. So this issue that J.C. brought up, when you get it down to the basics of life or death, there isn't really a big discussion. When you get beyond that, that's when the debate really gets a major debate.
NNAMDIJacob Hacker, same question.
HACKERWell, I think it's absolutely the case. That this is more than about dollars and sense, although the dollars and sense are -- add up very quickly, and we shouldn't lose sight of the fact that as we're discussing our long-term budget deficit that the biggest driver of the long-term budget problem that we face is rising health care costs. But it's more than a dollars and cents issue.
HACKERIt's a life or death issue. It's an issue about America's values. And I actually think that there is broad agreement, as Stuart was suggesting, on some basic principles. Most Americans, not as high a majority as Stuart was mentioning for -- for lifesaving interventions, but a very high -- large majority think that it is the responsibility of the government to ensure that all Americans have coverage.
HACKERIt's really -- when it comes down to how would we achieve that goal, that we start to have more disputes. But we shouldn't forget -- I think Alan was really -- made a valuable point. We shouldn't remember -- forget that there is broad agreement that the current system is fundamentally broken, and that the attacks that are taking place against the legislation, some of them are reflective of sincere distrust of government or policy disagreements.
HACKERAnd some are based on real falsehoods and on a willingness to tolerate some really unsavory and unsustainable aspects of our present system. And so as we're -- as we're looking forward and thinking about these -- these value issues, I would mention two things that are crucial. One is that the current legislation is not designed, and will not, at least according to the estimates, to cover everyone.
HACKERSo there are going to be people who are uninsured by design under this legislation. And so, until we move toward a system where we can guarantee virtually universal coverage, we're going to have to have measures to help those who don't have coverage. I think the other thing is that with the obligation -- with the responsibility on individuals to have coverage, there is an obligation to try to make it easier for people to get that coverage and to make that coverage affordable.
HACKERAnd to my mind, the most important thing that the states could do, and that will need to be considered in the future with regard to coverage, is how to get more people automatically enrolled. After all, if you're getting good coverage from your employer, it's relative straight forward. But if you work for a small employer, or you're self-employed, or you're one of the one out of three non-elderly Americans who go without coverage at some point every couple of years, then it's much harder to get that coverage.
HACKERAnd the current law, I think is a little bit of a hodge-podge of different ways of providing that coverage. Getting more seamless coverage is crucial, and once we have people in the system, then I think it's in some ways a separate question of what we demand of them in terms of contributions individually or tax funds. Getting them in the system is crucial for all the reasons we've talked about, because those costs will be borne by us if people aren't covered.
HACKERBecause it makes sure that they have that -- at least that basic health security. And the only way we're going to control costs over the long term, is if we have virtually all Americans in the system.
NNAMDIWe're going to take a short break. When we come back, we will talk about what's known as the 80/20 rule. But you can still call us, 800-433-8850, with your questions and comments about how you think the debate over health care reform is likely to go in the new Congress, or anything else about health care reform on your mind. 800-433-8850, or send us a tweet @kojoshow. I'm Kojo Nnamdi.
NNAMDIWe're discussing the next battles over health care legislation and implementation with Stuart Butler, director of the Center for Policy Innovation at the Heritage Foundation; Jacob Hacker, resident fellow at the Institution for Social and Policy Studies, and professor of political science at Yale University; and Alan Weil, executive director of the National Academy for State Health Policy, which is helping states implement the health care law.
NNAMDIAlan, this week marked the beginning of one of the major rules affecting health care providers, the so-called medical loss ratio rule, also known to some as 80/20. What is it?
WEILIt's a requirement that 80 percent of the dollars that insurance companies collect in premiums are paid out for health care services, leaving only 20 percent or less for administrative costs, overhead, premium marketing, and all of the other expenses associated with running an insurance plan.
NNAMDIGood. I'm glad we're talking economics here, because Jacob Hacker, if you ask an economist what is wrong with the American Health Care System, one of the things he or she will tell you is that the laws of supply and demand don't seem to work properly here. In the perfect world, prices are held down by competition, patients demand a certain product or service, health care companies provide it, the price reflects the point at which the two meet.
NNAMDIRight now, pretty much everyone agrees that is not the case. The right has traditionally favored things like health savings accounts arguing that those would make us more price conscious. What do you think about that, Jacob Hacker?
HACKERWell, I think that we've seen a big increase in the amount of costs that are being born directly by consumers, and costs have continued to rise dramatically. And we spend vastly more per person than many other nations that have much more comprehensive coverage than we do. So while I think that there is certainly an argument for having price sensitivity at the individual level, that there clearly are other very important things that the public and private sectors can do to bring down costs.
HACKERAnd I'll just mention two. One is the tried and true method that many countries use of bargaining for lower prices. This is sometimes called all payer rate setting. It was embodied in my idea for the public option in the sense that the public option would operate somewhat like Medicare does today in creating some kind of formula for the provision of care for reimbursements for care and bargaining with providers to bring down rates.
HACKERThat idea of, you know, of getting lower rates is consistent with, you know, providing care in an integrated setting, and perhaps providing those payments on the basis of episodes of care rather than individual services, and Medicare is actually moving to try to implement some of those ideas within the Medicare program. After all, a big part of this policy that I didn't mention is that it would actually reduce the rate of increase of Medicare spending substantially.
HACKERAnd hopefully we'll learn from that a lot about how to do this through a public insurance program. The other side of this really is innovations that the private sector has already started, but which need far more impetus to try to find more evidence-based cost-effective care, and to change the way in which care is delivered.
HACKERWe have a very intensive system of care where we provide very, very costly services that are very cost -- not just very costly for individuals, but very costly for the system as a whole. And there is -- there is certainly lots of room for finding ways in which to reduce the intensity of services to make sure that people are getting services up front that prevent more costly services at the back end, and to give provider more ability to work together to provide people with the kinds of services they need over a period of years rather than at any particular moment.
HACKERSo to my mind, that's really -- we have to recognize that, as you said, the market for health insurance and health services doesn't work like other markets, and it's going to require some combination of public policy changes and private initiative to create the kind of economies that we've seen in other parts of our economy.
HACKERIt isn't just going to happen through deregulation or freeing up the market, or giving -- or putting more consumer skin in the same, because that's going to create insecurity as well as vast dislocations.
NNAMDIStart Butler, health savings accounts, they may help us to better manage our health care, but Jacob Hacker makes the argument that they won't bring down the systemic cost of healthcare.
BUTLERWell, I think health saving accounts really apply more to the routine aspects of health care. A lot of people today actually have much more insurance than they need in the sense that when you go and get some fairly minor office visit, you file an insurance claim for something that's maybe $60 or $70. You wouldn't do that if you were, you know, if your car needed a $70 repair. You wouldn't file an insurance claim.
BUTLERSo I think we're all agreed that the current market is badly designed and is distorted in various ways, particularly because of the way the tax treatment encourages us to over insure and to have health care through our place of work only. I think when you look at the long-term cost issue, you've really got two directions you can go into, really as Jacob eluded to.
BUTLEROne is the regulatory approach to say we will just keep trying to ratchet down costs in direct ways. We'll put requirements on insurance companies, we'll put -- in the case of the legislation, one of its elements is to say we will slow down -- we will essentially freeze what doctors can obtain in the Medicare program, except that Congress keeps on reversing that.
BUTLEROr we could try to open up much greater competition for insurance and have real choice. The exchange is one area where there is broad agreement that that -- that in concept exchanges are a good idea, in the sense that it allows people to buy -- would allow people to buy insurance through a range of different choices, through one place rather than through their employer.
BUTLERAnd I'm all in favor of encouraging that. We've got to -- we've got to stimulate true competition. That's the way to get insurance plans to really compete and get costs down.
NNAMDIAlan Weil, are there any states that seem to have it right? Three or four years ago, former Republican governor, Mitt Romney got pointed the example of Massachusetts and its reforms as an example of innovative thinking on health care. Now he seems to be distancing himself from that achievement. I ask again, any states getting it right?
WEILYou know, no one has it all right. But I'm struck as I listen to this how different the discussion is at the state level where it's not a debate about markets versus regulation. It is a -- it's the invisible story that's playing out in health reform that actually precedes the enactment of the law, is people who actually deliver care, and purchasers, payers for care sitting down together, saying we know that the system has waste and inefficiencies all throughout it.
WEILWe want to offer a higher quality product at a lower cost. We have started to make as a nation tremendous investments in information technology that enables us to measure quality and outcomes and tabulate costs in ways that we couldn't just five years ago. And we're going to sit down and we're going to set some priorities, some objectives at the community, or at the state level, to reduce the burden of disease, to improve the functioning of the system, to put a greater emphasis on primary care.
WEILPick your choice, and then we're going to engage all sectors of the system. It's not regulatory versus market. It's the sector coming together acknowledging its weaknesses, and jointly developing a plan to improve. This is happening around the country at the community level. It's happening with state leadership in more than a dozen states, and I think will increasingly occur as part of the implementation of the law.
WEILSo it's just not this black and white ideological choice. When you take it to a locality, you're talking about real people, real hospitals, real doctors, real nurses, real patients, real businesses that are struggling to pay the bills, and they're trying to figure out how to build a better health care system.
NNAMDIWe got this posting from a listener on our website. "I am confused as to why everyone I hear speak of the federal public option assumes it cannot co-exist with private insurance companies. I live in Spain, which is one of many countries that has free health care for all its citizens. On top of this free coverage, Spain also has a thriving private health insurance industry that capitalizes on its ability to bypass the largest problem with free health care. Long wait times."
NNAMDIJacob Hacker, the U.S. spends much more money on health care than other countries like Canada or the U.K. or for that matter, Spain, and those that spend more don't necessarily always get more bang for the buck. In short, we know it's complicated, but how would you respond to that posting on our website I just read?
HACKERWell, I agree. And I agree with what Alan said as well. That this is really not a debate about the place of markets versus the place of government, and there aren't two mutually exclusive alternatives relying on regulation or public policy changes on the one hand, or having private sector initiatives on the other. In fact, the two will necessarily and should and must go hand in hand, and that's true of the public option.
HACKERIf there is a national public option as I've long argued there should be, it's not going to be an alternative to private insurance only. It will be a means of creating a competitive benchmark for private plans, and can encourage them to offer better services at a better price. And I think if you look across advanced industrial countries, you see a remarkable degree of diversity in the role of the public and private sectors, but you do see two basic commitments in these countries that seems to go hand in hand with both lower costs and better outcomes.
HACKEROne is covering everyone, and the other is having some systemic measures to control costs. These can be -- can run that full range from regulatory and bargaining measures at the national level to individual, you know, private responses to the terms of insurance at the other extreme. But what is crucial is that it is a national priority. It is a public priority to make sure everyone is covered and that the coverage that they have is affordable.
HACKERAnd so to my mind, the public option will come back onto the agenda precisely because it is one of the ways that we can create that kind of competitive tension between the public and private sectors that will -- will help bring costs down over the long term.
NNAMDIStuart Butler, coming out of this debate, can we expect at some point to see systemic measures that, according to Jacob Hacker, control costs, or is that too much of, in the view of some, an interference with the free market economy?
BUTLERWell, I think it's really this. And let me just say with regard to the public option, the issue in the debate over the public option was who would be the umpire between the public option and the private option? If the government was both running a plan, and the umpire, we know how the game is going to end up and who's going to win. As far as systemic change, I think we absolutely need that to get costs under control over the long term.
BUTLERAs I said, you can do it through regulation with all the effects that that has, or you could for example say there's going to be a limited budget on what the government contributes to your healthcare, and to the healthcare of others. Some kind of fixed budget which is either allocated as the left would want it, through grants to hospitals and states and so on, and let the providers use that money.
BUTLEROr as people on the right argue, let people essentially have that money in the form of some kind of contribution to their health insurance, or to their Medicare. Some people call that a voucher. In both cases, you put a limit on the amount of money that society is going to contribute. If you as an individual want to pay more than that, that's up to you. But you guarantee a base. We don't do that today at all.
NNAMDIAnd I'm afraid that's all the time we have. Stuart Butler is director of the Center for Policy Innovation at the Heritage Foundation. Stuart, thank you for joining us.
NNAMDIAlan Weil is executive director of the National Academy for State Health Policy which is helping states implement the health care law. Alan, thank you for joining us.
NNAMDIJacob Hacker is resident fellow at the Institution for Social and Policy Studies. He's a professor of political science at Yale University. Jacob, good to talk to you.
HACKERWell, thank you. And thank you Alan and Stuart for the civil conversation that we as a nation should be having.
NNAMDI"The Kojo Nnamdi Show" is produced by Brendan Sweeney, Tara Boyle, Michael Martinez and Ingalisa Schrobsdorff with help from Tinbete Armais (sp?), Kathy Goldgeier and Elizabeth Weinstein. Diane Vogel is the managing producer. Our engineer today, Jonathan Charry. Dorie Anisman has been on the phones. Thank you all for listening. I'm Kojo Nnamdi.
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