Transforming Health Care: Understanding the Affordable Care Act and What Might Come Next


[SIDE CONVERSATION] There’s a line. Let me wait so a few more
people can [INAUDIBLE]. [SIDE CONVERSATION] Good afternoon [INAUDIBLE]. We’re going to get started,
even though we have people who are still coming in. [INAUDIBLE] do have to stop on. The last question
will be at 11:50. [INAUDIBLE] scheduling needs. So I wanted to introduce myself
for those who don’t know me. I’m [INAUDIBLE]. I’m the associate dean
for communications and external relations at
Harvard Medical School. And I am delighted to welcome
all of you to today’s Talk at 12. Though in addition to
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transforming health care, understanding the Affordable
Care Act, and what might come next will
generate similar interest, given the public discourse
and the many contrary views of how it should evolve. The Affordable
Care Act, the ACA, was signed into law by
President Barack Obama, as you may know, in 2010. The intention of the ACA
was to provide millions of uninsured, low, and
middle income Americans with some level of affordable
health care insurance. It was designed to
extend care to the most vulnerable, the young,
the elderly, and those with preexisting conditions. The ACA continues to be
a highly debated issue. There are those who
believe health care should be accessible to all, but many
don’t agree on this basic fact. There are those who agree,
but disagree on the methods on how to best
achieve this goal. Some feel the most recent
bill defeated in March did not go far enough to
lower insurance costs. Others favored a more
open market for insurers. A new bill is slated
to be presented soon, perhaps even this week. As consumers, we’re trying
to make sense of all of this. And that’s why we’re delighted
to have two of Harvard Medical School’s health
care policy experts talk us through
the complexities. They’ll try to anticipate
what is in store for us. After the discussion, I
hope you’ll ask questions. We really want this to
be more of a conversation and an exchange. And for those of you who are
watching through Twitter, please send us your questions
through our Twitter feed. Now today’s two
distinguished guests, Michael Chernew is a Leonard
D. Schaeffer professor of health care policy and the
director of the health care markets and regulation lab in
the Department of Health Care Policy at HMS. Dr. Chernew’s research
focuses, most notably, on the causes and consequences
of growth and health expenditures, payment
reform, and value based insurance design. Dr. Chernew is a member of the
Congressional Budget Office panel of health care
advisors and of the Institute of Medicine Committee
of National Statistics. He is the former vice chair of
the Medicare Payment Advisory Committee. And in April 2015, Massachusetts
governor Charlie Baker appointed Dr. Chernew to the
Massachusetts Health Connector Board of Directors. And he was elected
to the Institute of Medicine of the National
Academy of Sciences. Joseph P. Newhouse is the
John D. MacArthur professor of Health Care Policy
and Management at Harvard University and director of
the Interfaculty Initiative in Health Care Policy. He is a faculty member of
Harvard Medical School, the Harvard Kennedy
School, the Harvard TH Chan School of Public Health,
and the Harvard faculty of Arts and Sciences. He is also a faculty research
associate of the National Bureau of Economic Research. In 1981, he became the
founding editor of the Journal of Health Economics, which
he edited for 30 years. He is a member of the
National Academy of Medicine and has served on the Board
of Health Care Advisors, the Committee on National
Statistics, the Science Technology and Economic Policy
Board of the National Research Council, and was regent of the
National Library of Medicine. He has won the Victor R.
Fuchs Lifetime Achievement Award from the American
Society of Health Economists, as well as numerous other awards
and prizes for his research. We’re delighted to have such
esteemed members of our faculty talk to us today. Thank you both. [APPLAUSE] I thought I would
start by telling you how I think about the
Affordable Care Act or the ACA. It’s inevitable to talk
in acronyms when you’re dealing with health policy. So I’ll say ACA. I think the first thing to
say is the ACA has 10 titles and only two of them are
really relevant to what you’re reading about in the
newspapers almost every day. So, for example, there is
a title approving pathways for biosimilars or biologics. There’s a title on health
workforce provisions. Those haven’t really
attracted much attention. And I think if there were a
modification of the ACA to come out of the Congress–
which I’m skeptical about– I think those titles
would remain in place. So the titles that
are really at issue are those around the Medicaid
expansion and around the health insurance exchanges. It was helpful to me in
thinking about those two titles to divide the
population into four different groups of people. And I’ll talk
about them in turn, because the ACA really affects,
mainly, two of the four groups. So the first group is probably
the bucket that most of you fall into. It’s the bucket Mike
and I fall into, which is those with middle and
large size group insurance. And for talking
purposes, let’s define that as people that work for
employers of more than 50 who provide health insurance. So probably most of
you, like the two of us, get our insurance
through Harvard. For the most part, the
ACA left that group alone. The one thing it
did of note was it imposed a tax on employer
plans with high premiums called Cadillac tax. The tax was unpopular,
even at the time. So it was put off to go
into effect until 2018. That was later deferred to 2020. I have my doubts that it
will ever go into effect. But you probably
haven’t noticed much of a change in your benefits
here because of the ACA. And that’s true, actually,
at most large employers. A little bit of, perhaps,
anticipatory behavior for the Cadillac
tax, but not a lot. So the second group are
Medicare beneficiaries. This group, also, was
relatively unaffected, compared to the other two groups
I’ll describe in a minute. There was in the drug benefit
part D of Medicare, or is, something called a donut
hole gap of no coverage. The amount where that starts and
stops varies from year to year. It goes up with inflation. And it applied to generic
drugs and brand drugs. There was no coverage
for this gap in coverage. And the ACA is closing that
gap over a 10 year period. So it’ll be fully
closed by 2020. Other than that, the ACA, again,
mostly left Medicare alone. But it did cut reimbursement
to hospitals and physicians. So for the physicians
in the room, that was– I’m sorry, not
physicians, just hospitals and other institutional
providers. MACRA, which the
physicians in the room are probably familiar with,
came along subsequently and drastically cut the rate of
increase in physician services from fees from Medicare. But that’s separate
from the ACA. The other thing the ACA did
on the Medicare front that’s of note, is it established
the Center for Medicare and Medicaid Innovation
at CMS, which has been busily conducting
various demonstrations. And Medicare,
actually, started– such as accountable
care organizations– Medicare, as a result, started
to look somewhat different than it did a decade ago. That’s all been something that’s
evolved from the ACA, nothing that was specific in the
ACA, except for establishing the Center. So now, to the two groups
that were definitely affected. The first group is those who are
eligible for Medicaid and those who are uninsured. And the ACA expanded
coverage, Medicaid coverage, to all citizens. In its original intent,
it was to be to people below 138% of the
federal poverty line. And it had a rather
coercive provision that if a state didn’t expand,
and we’re talking mainly about childless adults who
didn’t have coverage prior to the ACA through Medicaid. They weren’t eligible for
the remnant of our law from the English poor laws
of the 19th century that said only, quote,
deserving adults should be eligible for state aid. And if you were childless
and not disabled, you were not in that category. But the ACA expanded
coverage to that category. And, moreover, it said that
if the state didn’t expand, it would lose all
its Medicaid funds. And the Supreme
Court, in a case that did find the ACA mandate to
have insurance constitutional, also declared that that
provision was unconstitutional, ran, quote Justice Roberts,
counter to the nation’s tradition of federalism. And, therefore,
states had the option to expand or not to expand. There’s a lot of money on
the table, federal money on the table, for the states,
the initial three years for the expansion population. And we’re going to
be funded at 100%, tapering down to
90% in steady state. As of today, 31
states have expanded, and the District of Columbia. 19 have not. So the number of people who
are insured through the ACA was not what was
originally forecast. That’s largely
because of the not– all states not expanding,
including Texas and Florida, two of the four largest states. But that was the
Medicaid expansion. There have been
various provisions by the Obama administration to
try to get states to expand, including so-called
private option insurance. I won’t go into that,
unless there questions. Well, that’s Medicaid
and the uninsured. And, finally, there
was the exchanges, which was the individual market
and the small group market, meaning people that worked
for employers under 50. This program, as you know,
has had its problems. But there was– in any
individual insurance market, there’s an incentive
for, if everybody pays the same premium,
for sick people to buy and healthy
people not to buy, which economists call
adverse selection. This happened in the ACA. The instruments that the ACA
had in place to get at this were a mandate, meaning if you
didn’t buy you paid a penalty, and, importantly, subsidies that
were a function of your income. The ACA also divided
the country into states, and then marketplaces
within states. There are several hundred
such local marketplaces. Some of them have not gone well. Some of them have
gone reasonably well. The Connector in Massachusetts,
that Mike sits on, operates the
Massachusetts exchange. I’ll refer questions on the
Massachusetts exchange to Mike. It’s great. [LAUGHTER] And the issue is insurers, a
lot of insurers, lost money initially. Some of that was because of
actions the Congress took. One of the major
issues, at the moment, is whether so-called
cost sharing subsidies, which are subsidies
that lower the cost sharing at the time of use for
people under 250% of poverty, whether those will continue. The president has
threatened that they won’t. The estimate out there is
that if they were removed, premiums on average
would go up 19%. But the cost sharing
would go up considerably for low income population. And undoubtedly, some
of them would pull out. And undoubtedly, they
would be the better risks. So this would exacerbate
this [INAUDIBLE] whether this would– what this would do, however,
is pretty speculative. So let me stop with that. So to summarize, there’s
four groups of people. The people that
worked for employers with more than 50 employees,
ACA has largely unaffect– left them unaffected. The Medicare beneficiaries
closed the donut hole in Part D. Medicaid and the uninsured
expanded Medicaid to childless adults
at the state’s option. And the individual market
and small group market, left to buy through either
the exchange or a small group market, still exists. But it doesn’t
function very well. Either some insurance
among small employers has been declining and,
of course, those people have the option of going to
the exchange to buy insurance if they choose. So let stop and turn
it over to Mike. Great. Well, thanks Joe. And I’m thrilled to be here. Just coming to listen to
Joe’s summary of the ACA is mostly what gets me here. But in any case,
if you came hoping to know what health care is
going to look like in 2020, maybe Joe knows. But, honestly, I don’t. And I don’t know
if anybody does. So I want to talk
about broad issues that the country faces
regarding health care and how that might play out. So let me start with
a very basic point. There’s a certain
amount of money that the country
spends on health care. That money gets financed by
the population, writ large. There’s no magic tooth
fairy that puts $10 thousand under your pillow if
you have a heart attack. There’s no money tree
somewhere or rich Uncle Sam. One way or another,
all the money comes from the population,
goes through a bunch of other hands, insurers,
and others, but ends up– not all of it, necessarily,
but the vast bulk of that– ends up with a delivery system. And so, hopefully, no one
tweeted to the four-year-olds watching us online that
there’s no tooth fairy, but, nevertheless,
one way or another, we have to figure out
what we’re going to do. And it turns out that
if that amount of money that we spend on
health care services grows at the rate which
it has historically grown, there’s no amount of
financing discussion, back and forth taxes
pooling, that’s going to solve that basic problem. We’re getting to a
point where there’s just a fundamental
fiscal problem that stems from the overall amount
of money, and the rate of growth in the amount of money, that
we spend on health care. And so when we think about
the Affordable Care Act or whatever set of letters,
the American Health Care Act or whatever new
letters they put in place, it’s all about how to manage
that total pool of money. And then how it’s
going to be paid for. And in thinking about
two different strategies, you have to think about the
distributional fairness, who’s paying and what the
provisions of that bill do to control that total
amount of spending. It’s often said that
the Affordable Care Act didn’t do much to control
health care spending, overall. That’s that total pot of money. And that’s probably,
actually, not really true. Joe mentioned a number of
ways they had, in Medicare, a number of provisions,
which I think will not only help slow the rate of growth of
Medicare health care spending, but, frankly, have
spillover effects that might slow the
growth outside of Medicare in a whole variety of ways. There’s a series of other rules. The Cadillac tax,
which Joe mentioned no one likes and
has got postponed, but it was, never
the less, in the law. There were other provisions
in the exchanges of trying to promote insurer competition. So there was a lot of provisions
in the Affordable Care Act that were, at least, intended
to control health care spending. I’m not sure we’ve
really cracked that nut as to how to do that. But, nevertheless, the
Affordable Care Act had a bunch of things. And any replacement
will undoubtedly have a bunch of
other strategies. And I’m going to talk
about those right now. So start with the basic premise
that there’s a big bag of money that we have that’s going to
health care in this country. And we have to
finance that amount of money, one way or another. I want to talk about three broad
ways that we might do that, where the Affordable Care Act
sort of fit in that spectrum and where the new administration
and Congress might go. So the first way to finance
that is through taxation. So death and taxes,
necessary evils. Taxes have a dampening
effect on the economy. I don’t know if
anyone loved taxes. But it is a mechanism to finance
a whole variety of things that the government does. And, it turns out,
that it is mandatory. And it tends to be progressive. Richer people pay more, by
and large, than poor people. And you could use that money
to finance health care, plus a whole bunch
of other things. And, of course, tax policy
is incredibly controversial and will also be– there’s probably across
the river, somewhere, a seminar at noon
on what they’re going to do for tax policy. But in any case, it remains
a fundamental controversy about how much we should
rely on tax financing to support health care. The second way of thinking
about supporting health care financing is through premiums. And this gets at why health care
is a somewhat unique product. It’s not like broccoli. Unlike most products when
you purchase the products, the cost of health
insurance depends on who buys the health insurance. That is different
than most products that you buy, at
least qualitatively. It’s much more important. So essentially, the health
insurance, by its nature, pools people together. And I want to draw a distinction
between two types of pooling. There’s pooling between
my brother and I. And you don’t know him. We’re actually quite different. But, because you don’t know
him, I’ll make up some things. He may be watching. In any case, imagine we’re
basically exactly the same. It’s the beginning of the year. And we buy insurance. Maybe we have the
exact same risk. One of us may be lucky. One of us may be unlucky. It turns out, it’s
always my brother. But that’s a separate story. But at the end of the
year, it turns out the lucky one, through
their premiums, has effectively subsidized
the unlucky one. But at the beginning of the
year, it was totally fair, because you didn’t know at the
beginning of the year who was going to be lucky
and who wasn’t. So there a cross-subsidisation. But when you bought
the insurance, it was really not a
question of fairness. Everyone was, basically,
pitching in to pool their risks. Then there’s another
type of coverage, which would say pooling,
which might be, say, between me and my dad– which
isn’t exactly right since he’s on Medicare, but anyway– where people have
fundamentally different risks. You know some people are high
risk with chronic disease. And some people are low risk
without chronic conditions. And if you force them into
the same insurance pool, the people who are healthy
are effectively subsidizing the people that are sick. And it’s not necessarily
simply because some of them are lucky or unlucky. You know going in that
some subset of people are paying more
than, essentially, their fair share would
be if they were just paying for their own risk. But they’re paying part
for their own risk. And they’re also paying
for the risk of people that are higher risk than them. And, of course, the people
that are a higher risk are benefiting from
that cross-subsidy. That sort of pooling is
accomplishing both the risk per risk mitigation
part of insurance, but it’s also accomplishing
this type of cross-subsidisation that goes on, in
some ways functioning like a tax on the
lower risk people. And, as Joe mentioned, there
is a tendency for those markets to try and unravel,
because you don’t want to be an insurance
pool with my dad. How they separate
out is challenging. The Affordable Care Act, through
a whole number of mechanisms, some of which Joe mentioned–
the mandate, the subsidies, a whole bunch of things– tried to push those
groups together. And do it in a way
that’s essentially trying to bring the healthy people in. But bring them in
at a premium that’s slightly higher than the
actual fair premium for them, because that extra
amount of money is being used to
finance the people that are somewhat sicker. If they came in and just
paid the premium that was the appropriate
premium for them, it wouldn’t help solve the
problem that the sicker people have much higher premiums
that they can’t really afford. So that’s one
financing mechanism, which is inherently unstable
because of the tendency of the healthy people
to try and get away from the sick people, at least
in terms of their insurance pool. We love them, but,
anyway, you don’t want to be in their insurance pool. The other way to do some
type of cross subsidy, is to have people pay
more for their care, at the point of service. So when you go to the
hospital or the doctor, you pay something out of pocket. You’re now charging not
necessarily the high risk people, but the
people who end up sick during the course of the year. Even the healthy
people end up sick. There’s always that person
who was super healthy and got hit by a bus or
had a bad disease. Those people may have
bought an insurance policy that was very cheap. And they thought it was
perfect, because they never need health care. Some of those people that never
need health care turns out will need health care. And you can finance some of
that health care spending by charging people
when they get sick. So that is problematic, in the
sense that it imposes risk. Remember insurance– should
be clear from the name– is designed to
mitigate that risk, so you don’t face the very high
expenses when you get sick. That’s, in many ways,
the economic purpose of insurance, which
is diminished when you have to pay all out-of-pocket. But the advantage of
charging people out-of-pocket is it helps them manage
their health care spending. It’s a little daunting to
make that point, sitting next to Joe, because the
seminal work on this was done by Joe in the RAND
Health Insurance Experiment. But the point remains. If you tax people,
or if you just make them buy an
insurance policy and pay through their
premiums, you’re not doing very much to control
health care spending growth. If you charge them more
at the point of service, for better or
worse, you actually will reduce the amount
of health care spending. And the price you pay
societally for that is your imposing risk on people. And you’re typically
charging the sick people more than the healthy
people, because they’re the ones that go to the
doctors and the hospitals more. And there’s a whole series
of other issues related to income distribution
consequences of forcing people to pay out-of-pocket
when they get sick. The fundamental debate
that we’re having, now, is between the mechanisms that
the Affordable Care Act put in place, some combination
of taxing and forcing people into a common pool to handle
that financing problem, with where I think the
current administration and Congress want
to go– although, frankly, I’m not sure
where they want to go. So this is my impression,
not necessarily true. But in a way which
is charge people more at the point of service by
encouraging them to enroll in plans that are less
generous than the plans that the Affordable
Care Act set in place. So there’s a bunch of things–
the essential benefits, the actual value
rules– which determine how generous plans have to be
that are in the Affordable Care Act that the current
drafts of things have tried to release, relax,
combined with reduce taxation by reducing the amount
of premium support going into the system. And they are and has
been, as Gina pointed out, they were not quite successful
in getting a version of this to the floor a month or so ago. And so, now, they’re taking
a crack at it, again. And the issues, basically,
are how much money are they going to put in the
system, taxpayer funded money, are they going to
put in the system, and how are they going
to direct that money to offset the cost, largely,
of the people that are using a lot of health care,
particularly the people that are high risk people. So there’s issues of high risk
pools and reinsurance schemes and a bunch of other
things that are really too technical to talk
about, at least in my intro. But, by and large,
it all has the flavor of charging people who are
sicker, ex-ante, more than they would have had to pay in
the Affordable Care Act and charging the
people who get sick during the course
of the year more than they would have paid
in most Affordable Care Act policies. And you may argue the
social equity of that. I don’t want to argue the
social equity of that. But economists are
much more equipped to talk about
efficiency than equity. But that seems to be the sort
of philosophical direction that the current Congress
and administration seems to be going in. And the point they make–
which is, in fact, true– is we can’t manage the rate
of health care spending growth that we’ve experienced in
the past going forward. And we need this type of
fiscal discipline, if you will, in order to ultimately slow the
rate of health spending growth. Whereas, admittedly, that will
cause adverse consequences for a range of people,
particularly people that are ex-ante
sick, people that are depending on
the subsidy scheme relatively lower income in
the grand scheme of things, or who get sick over
the course of the year. And again, the details
of that matter. And we haven’t yet
seen the bill that threads that needle between
what is politically acceptable and what they think is– meets their other fiscal goals. So that’s what I
think the tension is. That’s where I
think the debate is. It’s, in part, a
debate about efficiency and how to control that overall
amount of spending that’s going into the health care system. And it’s part a debate about
the distributional consequences. Too often, I think, it’s poised
as a debate about premiums. But, understand, I can
make premiums really low, if I just gave everybody
a $20,000 deductible. Premiums are just
one way by which people pay for their care. And so you take the
total cost into account. You think who’s
going to pay for it. And how is that going to
affect the aggregate amount of spending? So that’s where, I
think, the tension is. And I look forward to questions. Gina might ask some. Thank you, both. Again, if you’re
watching through Facebook or through our live
streaming, send us your questions at @talksat12. T-A-L-K-S-A-T-12. Thank you. Are there questions? We have microphones. [INAUDIBLE] So we are going into
the social [INAUDIBLE], why does no incentive, like for
the prevention, for example. At the end of the year, if
I am having good health, a portion of it
should be returned to me, for the insurance
costs, just like in taxes. At the end of the
year, we do the taxes. And you get some of
the more big based on the insurability
They would also use the cost of the
health insurance, also, would be in it. Could you repeat the question? Yes, I’ll repeat the question. So the question is
why isn’t there more reward for preventive behavior
or possibly amounts refunded at the end of the year. I’d make a couple of points. First, the ACA did make all
preventive services free. So while there’s a lot of cost
sharing, high deductible plans, and so forth, in all
plans, preventive services are to be free. There’s a whole debate
about what constitutes preventive services. But it’s defined by the US
Preventive Services Task Force. That’s one point. Second point– as Mike
referred to high cost sharing, large deductibles,
co-insurance and so forth, if one is successfully
preventing illness, which, of course, could be by
lifestyle, such as exercise or diet or tobacco
non-use and so forth, one will be spending less on
cost sharing, presumptively. It will be going less to
the hospital and so forth. So I would say there are rewards
and incentives in the ACA for preventive behavior. We can argue about, maybe,
they should have been greater. But they are there. And I’ve said two
things first is I’m a huge supporter of prevention. I have, actually,
two wristbands on to make sure I get
all of my steps, because I’m also a little OCD. But that said, the
evidence of prevention, at least all these programs
to increase prevention, save money is quite
dubious, as a general rule. Picking up on what Joe
said, the prevention that is free in the
Affordable Care Act is primary prevention, getting
largely cancer screenings things like that, as opposed to
secondary prevention managing your diabetes, managing
your heart disease. And there’s a big
controversy around that. And I’ve been quite involved
in trying to support that type of prevention. But I think one of the
fundamental issues that you raise has to do with the
equity between people that are healthy, versus
not, at a point in time, and how much the people that
have maintained their health should subsidize the people
that are less healthy, which again, may be
because of their behavior, may be because of a bunch
of whole other reasons. And so there’s a bunch
of discrimination issues that arise in thinking about
how much you should charge a healthy person
versus a sick person, because only a portion
of the health difference is related to
prevention or behavior. There’s a lot of the
health difference that’s related to a whole
bunch of other things. And that becomes a broader
philosophical equity issue, which, gratefully, you
asked us not to address. Susan. Thank you. My question is in
respect to how healthy are preventative
medicine [INAUDIBLE] preventive [INAUDIBLE]. Most of all, there is a
lot of genetics material that can make things
appear out of space. I am an advocate
for health equality. I’m wondering why these
[INAUDIBLE] administration is what’s the [INAUDIBLE]
in place to help the weak, the poor,
and the sick try to get a life that they
deserve, in which ACA has tried to give
to them by making health care affordable and all. I think the quick answer
is there are, certainly, some protections and
subsidies in the current law. They are not as great as
in the Affordable Care Act and, now, reflects a
series of priorities that might not match the
priorities that you eloquently vocalized. So I don’t have a great
answer for why they want to do what they want to do. I think it largely
has to do with meeting the fiscal challenges that
they see in the future. But the debate
now is essentially how much of those types of
protections and what form they should be in the
new rule and what form those protections should take. But I think it’s probably safe
to say that, for the most part, the protections in what is
being discussed moving forward would be weaker than the
protections that were under the Affordable Care Act. We’re not advocating
anything, one way or another, incidentally. I’m just saying that’s
my take of the situation. Dr. Chernew, Dr.
Newhouse, I’m curious. In the new plan that we ant– what do you
anticipate we’re going to see, any of the
provisions of the Trump, Ryan plan that will be reprised? Well, first of
all, I don’t think it’s 100% we’re going
to see a new plan. I gave a talk about the
future of health care. And my first slide,
the title of the slide, said let’s start with the
honest answer to this question. So I had a picture
of a crystal ball. So I– I just don’t know. As Mike said, if they
move to the right, they lose votes on the left. I, personally, thought
the political history would be they would get
a vote out of the House. I was a little surprised
it would go to the Senate. The Senate would
probably pass some kind of very different bill through
reconciliation, so-called. And then the whole
thing would probably come apart in conference,
because the Senate and the House wouldn’t be
able to agree on a bill that could pass both houses. But we haven’t even
gotten to that stage, yet. So I don’t want to try to
predict what this modified bill will look like. Yeah, I think one
of the challenges is there’s a number
of things that may happen that
will affect the way the Affordable
Care Act functions. So you should not assume that
simply because the Affordable Care Act remains
the law of the land that the Affordable Care
Act will function the way the Affordable Care
Act has functioned– the biggest of which, Joe
mentioned, is the cost sharing subsidies, which are
currently being debated and you’ll see debated a lot. If they decide– if they, the
administration and Congress, decide not to fund the cost
sharing subsidies– in fact, even if they decide
to fund them, but they just wait
quite long enough and do a bunch of
other things they may cause the exchange, which
is one of Joe’s four segments, to collapse in a
whole variety of ways without having to get
anything through the House or the Senate. And the fundamental question,
there, will be who is to blame. And if that does happen,
and they come to the floor now with a bill having the
Affordable Care Act effectively not functioning, what will
people on the political left do? So there’s one view that
they will say, you broke it. You own it. Let’s take it to 2018
and let it play out. I’m not saying they
should or would do that. There’s another view, which is
there’s so many people that are suffering in a variety of ways. We will accept a much
weaker bill going forward, just to get something
as opposed to naught. And, again, I don’t
have a good answer as to how that will play out. But don’t believe that
simply because they can’t get a bill
through Congress the Affordable Care Act will
function the way that it has. And just to give you a
little more detail, the House Republicans, when they were– when President
Obama was in office, brought a lawsuit, saying
that the administration– it was unconstitutional
for the administration to pay these subsidies,
because the Congress had not appropriated the money. And a federal district
court judge in Washington actually found for the
House in that lawsuit. And the Obama
administration, this was near the end of the Obama
administration, appealed. And then we had the election. President Trump was inaugurated. And all of a sudden
there was this lawsuit from the House
Republicans on appeal to stop the cost
sharing subsidies. The Trump administration
could, of course, decided to drop the appeal, in
which case, the cost sharing subsidies would– the federal district
court judge decision that they were unconstitutional
would have held. And they would have disappeared. So the House, which now,
since the Republicans were now the governing party,
was having second thoughts about whether they
really wanted to do this. Ask the court,
the appeals court, for a stay, which the
appeals court granted. So the original
decision is stayed. The stay expires May 22nd. But, as Mike said,
the insurers have to decide what they’re going to
do before then about submitting bids for 2018. At least, in most states
they’re going to have to decide. Some states have given
an extension to June 1, but that’s still a
very narrow window. So if the exchanges are going
to function reasonably well in 2018, it’s going
to be important for there to be some
clarity about what’s going to happen with these
cost sharing subsidies in the next few weeks. We have a question from Twitter. This question is
from Michael Chernew. Medicare faces long
term fiscal challenges. How do you see reform of
Medicare taking place? Will benefits be cut or will
premiums or cost be sharing– I’m sorry. Will premiums or cost
sharing be increased? Medicare does face fiscal
challenges going forward, largely, because of the
demographics, quite frankly. It turns out when you have
more people on Medicare, you have to have the people
paying taxes pay more. That’s– you don’t need a lot
of math to figure that out. And that becomes problematic
in a variety of ways, at least politically, quite problematic. As Joe mentioned in
his excellent summary, there was a lot that was put in
place in the Medicare program to try and control the rate
of spending growth per capita through reducing fees to
facilities, through innovation and payment, through the
Center for Medicare Innovation, the Innovation Center. I believe that the hope is
that those things will pay off in a way that will alleviate
the pressure on Medicare and any shortfalls be
made up through taxes. I do not see further
fee cuts in the future. Physicians are going to get a
fee in inflation adjusted terms anyway, given the MACRA
law that Joe mentioned. And the facilities are
getting fee increases that are below the
cost of their inputs. So I don’t see fees
going up more slowly. And I don’t see dramatic changes
to make benefits less generous, just given the way
that the population is on Medicare votes. So my sense is that
if they can’t– if those things don’t
work sufficiently, there will be some
attention to either taxes, maybe eligibility rules in
a variety of ways, maybe means testing
premiums in Medicare, things of that nature. But I think the hope
in the near term is that the things put in place
as part of the Affordable Care Act and other laws
like MACRA will be sufficient to control
the rate of spending growth. Although admittedly,
the current forecast suggests that’s not the
case when you get out to 10 years from now. But we will have to
see how that plays out. There is a related feature of
the Affordable Care Act, which is a surcharge of 9/10
of a percent on income for high income individuals
to the payroll tax to finance Medicare. If that is repealed,
which is part of the Republican
bill that didn’t pass, that would advance the time
at which the Part A, that’s the hospital part of Medicare,
goes to a zero balance, which the press says means go broke. But that’s not quite right. That goes back
from 2028 to 2025. So there is an
impact on Medicare, but of a larger
financing problem. Another question. It Seems to me that
part of the problem is the evolution of the
term insurance, which really is for something that’s
unlikely, like a tornado. If you look at people
who are under Medicare age, the majority
of patients who will have the majority of
costs, we know them already. It’s not a surprise, because
they have chronic conditions. The majority of costs,
now, go to people who already have a diagnosis. It seems that we need to work
much harder at identifying those groups, figuring out how
to care for those, and then the truly low risk
people leftover, as you discuss, become
a simpler issue. And plus, that improves
the incentives to get really good care for
these chronic conditions that we already know
are very expensive. So that, hopefully, was
the theme of my intro, in some ways, that that is
the crux of the problem, that there are people that
have high expected expenditures to some extent, although
not perfectly I might add, to some extent they
can be predicted. And the question, then,
is who pays for them. The answer is either they
pay for themselves, which seems problematic
in a bunch of ways, that we pay for
them through taxes or by charging the healthier
people higher premiums. That’s the basic issue. We have not, yet, figured
out a great way to control the amount of spending
that those people make. And in fact, it
has typically not been the case that giving
them more care or better care lowers their overall spending,
And that’s just, unfortunately, the way that the
innovations look. To the extent that
delivery systems can do a better job of
that, then the world would be a better place. But that has been hard to do. No, but I mean, for instance,
for renal failure, which is clearly, now, a carve out. At least then we’re dealing
with the problem that we have, rather than diluting it with a
totally separate problem, which is how much to get
from the healthy. If we at least are focusing
on the individual chronic conditions and what
constitutes a high enough risk if they pull out. There are not a lot
of things that there’s bipartisan agreement on. But there is a fair amount of
bipartisan agreement on a move to shift risk downward
toward providers, or provider groups,
really, which goes under the
banner of value based purchasing, which is a little
bit of a misnomer in my view. But in any event, it would
shift risks somewhat away from insurers or purchasers,
including Medicare, toward provider
groups, as I said. And one of the reasons,
or rationales, for that is that, then, the provider
groups would have an incentive to coordinate care for
the chronically ill and try to reduce their use
of services in the future. We have a question,
here, another one, here, and one at the top of the room. Yeah. So this might be a
somewhat trivial question. So ACA tries to harmonize,
or bring together, very different
interests in society. And the American societies
are heterogeneous in this, in their
risk assessment or social responsibility
and so forth. Now, to some extent
different states have different overall,
average view of these issues, like Massachusetts tends
to vote in a different way than, for example, Texas. So why aren’t these problems
tested for the next 10 years at the state level, trying
to find different models, whichever works. For Massachusetts, there’s a 99%
coverage in health insurance. So other states would
try something else that would be more in
concert with their own view. So the issue is simple. The first part is just money. Massachusetts gets money. And so how much money should
the feds give to the states to do that? And the second one is
concern in different parts of the political
spectrum about the people that end up in states that
have a solution, if you will, or approach to that problem
that not everybody likes. So there’s some sense in
which the federal government is trying to impose
certain types of standards across all of the states
to manage that issue. Medicaid expansion would
be an example of where that would be the case. Though one of the
fault lines that runs throughout
American history, starting with the
Constitution, is the role of the states versus
the role of federal government. And you can see that
play out, certainly, as Mike said, in the Medicaid
decision of the Supreme Court. But at bottom, there’s an
issue about, for example, should Massachusetts
voters have the prerogative to say to residents
of Texas that you should provide better health
care for poor people in Texas. Or should that be left
to people in Texas. Another way to say that is
when we say the United States. Is the emphasis on the United? Or is it on the states? And this is just a tension
in the American, political, governmental system. It has been there since the
founding of the country. And it’s still there. So go see Hamilton. [LAUGHTER] We have two more questions. One, and then
we’ll have to stop. One of my good friends,
a former president of one of the partner’s
hospitals, said something that happened to be
the same thing that one of the major fidelity
economists mentioned to me, too, on the tennis court one day– that there’s not enough money to
afford the Affordable Care Act and so that it was
not going to succeed. It was inevitably
bound not to work. And then a Republican friend
of mine in the Midwest said something I didn’t
expect to hear from him, which is basically, that he
thought that single payer was inevitable, which is kind of
consistent with those other two comments. And I wondered what both of you
think about the inevitability of single payer? Inevitable, I think, is
too strong of a word. But I certainly could see a
path should the Affordable Care Act collapse through
law or neglect that we move to provide care
for people at some basic level. Single payer means
different things to different people in a whole
variety of complicated ways. But through expansions
of Medicaid, through people
buying into Medicare, through a whole
series of things, we could certainly
move in that direction. The notion that there’s not
enough money for the Affordable Care Act, but there would
be for a single payer, doesn’t make a lot
of sense to me. Again, a lot of that’s a lot
of complicated hand-waving when the basic point is there’s
a certain amount of health care spending. There’s a certain
number of people. The people have to pay for
the health care spending. And so one way or
another, the question is how much health care
are they going to go. And a lot of that not
enough money means, is code for, we’re not willing
to tax ourselves enough. We’re not willing to
put enough pressure on the suppliers of health
care to be able to afford it. But there, also, is
the escalation part, that the health care
expenses, and you’ve alluded to this, continue
to escalate very steadily. And if we can’t solve
that, there is– it’s true. If health care spending
grows to 2% faster than GDP, it turns out there
will, mathematically, be not enough money
for health care. We’ll be running around
healthy and naked, whatever it happens to be. There will be no food. Right? I mean, yes, that’s the
way the math works out. And so if we don’t
solve the rate of growth in health care spending part– it’s great to be here to talk
about the Affordable Care Act or the American’s Health
Care Act or whatever other act they want to put in place. But if you can’t
solve the health care spending growth problem,
it’s just a matter of time before you have
this other problem. And the Affordable Care
Act tried to do that. I would just add that
single payer is not the only necessary
tool for that question. I mean, you can have some
kind of all payer rate regulation, which we’ve had
in various states, at times. It hasn’t worked very well,
but that’s a different issue. I’d like to– Can we take one last question? One last question. Yeah, one last question. And I– we could be
here for another hour. We’ll have 12 at
noon another time. So I like the example you
gave of the bag of money that we all have to split for
everybody to have health care. And, from the discussion,
it seems that everything that’s been going on is people
fighting over the same amount of money, and who gets a chunk
of it, who gets insurance, who doesn’t. I like the direction of
the Affordable Care Act in that it’s moving
towards giving everybody health insurance. My question is what
are the provisions. What are examples
of provisions that were put in health care laws
that would try and focus on spending some of that
money on actually reducing the cost of health care, in
terms of health care design, for example, new
innovations that costs less. Are there any laws that make
sure that some of that money goes in that direction to
better make use of that money? Well, the thing that
comes first to mind was the thing we’ve
already discussed, the Center for Medicare
and Medicaid innovation. That was part of the ACA. A lot of Republican
voices didn’t like that Center when they
were out of power, I think, there’s been some
rethinking about that since they’re in power. But one of the things
to keep your eye on is what happens to the
monies and the authorities of that Center. I think one of the challenges
is your basic philosophy to do that there’s a view
in which the government is more prescriptive. And they take money
and they pick things, like information
technology or prevention or pick whatever you
want, and try and funnel money toward– telemedicine–
they try to funnel money towards those things. That’s one strategy. I’m actually a little skeptical
on a lot of that strategy. But that is one strategy. The Affordable Care Act– and
frankly, I think going forward, we’ll see more of this– is less about picking
those winners and losers and more about putting
the responsibility to develop those innovations
on the delivery system by giving the delivery
system a set of incentives to be sufficiently
innovative underneath. It’s turned out that has been
a hard thing to have happen. Many people thought,
they still think, there’s 30% waste in the system. And if we change the incentives,
30% of health care spending will just melt away. And it turns out
that the innovations have saved a little
bit of money, that it’s a lot harder to
change provider behavior and come up those innovations. And when you try and find
those innovations directly through IT, you don’t
nearly get the savings. It’s proponents of those
things said you would get. So I think the Innovation
Center that Joe mentioned and, I think, the broad
philosophy both of the ACA and of where the system is
going outside of the ACA, and where the new administration
and Congress would take it, are all about having
the incentives go down to the delivery
system to let them do what they
want to do, as opposed to having the
government, certainly the federal government,
pick selected winners. And some of the
things that might help is relaxing a certain
types of regulations– I won’t go through all
of them because of time– to try and give those
organizations a little more flexibility to do that. But we’re at the
beginning of that process. Dr. Newhouse, Dr. Chernew,
thank you so much. [APPLAUSE] There’s much to talk about. There’s much to talk about
in the months to come. We’d love to invite you back. [SIDE CONVERSATION]

7 Replies to “Transforming Health Care: Understanding the Affordable Care Act and What Might Come Next”

  1. https://upgroup.io/ug/don < This is the Future of Medicine.. saving you money on prescriptions, letting you know if money is owed to you by medical malpractice, and no cost procedures you may be qualified for.. Sign UP Today!

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  2. FOX NEWS,MITCH MCCONNEL,NANCY PELOSI,RICK SCOTT,RAND PAUL AND CHUCK SHUMER WILL DO WHAT THEY CAN TO STOP US FROM GETTING MEDICARE FOR ALL.,EVEN THOUGH 70% OF THE PEOPLE WANT IT.THEY ARE MORE CONCERNED ABOUT HELPING INSURANCE COMPANIES PROTECT THEIR BILLIONS OF DOLLARS IN PROFITS,EVEN IF PEOPLE DIE,CANT AFFORD CO-PAYS,HIGH PREMIUMS,HIGH OUT OF POCKET AND BALANCE BILLING.

  3. Isn't it interesting that  candidates KEEP mentioning how the people of the district, are talking about why  prescriptions cost so much.   The intelligent question would be, why do doctors get paid to treat symptoms instead of curing illnesses and that  is definitely what the country needs and people, citizens, and civilians deserve.   The best chance of that type of care being given from coast-to-coast instantaneously would be for universal healthcare to be the law of the land.   Equally as important if not more is the best cure for any illness, disease, sickness, and or injury! Is prevention….. And that starts with clean air, water ,high nutritional, value food supplements organic GMO free would be best!  Combined with a decent workout regiment at the same time making sure anything that touches the body as in clothing, make up, beauty supplies,and cosmetics so forth and so on are made to the highest standards of quality! Which is organic, biodegradable, earth friendly, raw, wild, and natural.   The bottom line if you want each person's generation to become stronger,  smarter, healthier, happier, better off physically, mentally, and financially possibly spiritually than the previous generation we need to improve upon and maintain the quality of standards.                Which can only come from clean and high paying jobs from coast-to-coast that will improve upon and maintain the quality of our air, water, foods, supplements, sources of nutrition, landscapes, working/living environment, and every day home products.   We have the manpower capability technology resources to manufacture mass produce in state-of-the-art facilities instead of run down hole in the walls death traps.  Again we can mass-produce distribute things made to the highest standards of quality and we can ship these goods in  a way that leaves very little excess poisonous toxic waste behind eventually none at all.   Anything less is sacrilege against love honor and the creation of life.   Laugh, smile, grin, chuckle I say with absolute confidence!! If life is not free why the hell would death!  Be any cheaper  It's not.              The good news souls and spirits have paid out are picking up the Tab on the end results of dirty low-paying jobs which have resulted in a diminished quality of life.   The good news souls and spirits have paid out! Are being held or have been managed directly, maintained, and implemented with all the disease, sickness, illness, pain, suffering, torment, anger,  sadness, abuse, and neglect that has been allowed to manifest throughout the history of mankind into what it is today thanks to people like Donald Trump case closed. Mercy, forgiveness, and spiritual welfare are not changing those facts protecting carrying compensating any souls or spirits that are connected to a life that freely does not do its best to improve upon and maintain the quality of it.   When I want your opinion I will give it to you!
      That is the best  you will ever get.  If you go along to get along, assuming and  presuming or falsifying on your own behalf taking whatever is most convenient instead of what is needed to make real, physical, mental, and spiritual progress. Now I wish and pray for my soul and spirit to be held spiritually accountable to the statements I proclaim.   I guarantee you never see here another body man in power persons of legal religious authority leaders ever freely validate the statements they proclaim with that level of certainty.  One reason they don't have the best interest of the majority of the population's needs at Heart another reason may be the come from a breed of cowards. Or simply have a lifestyle that suggests confirms validates them as being feebleminded, physically inadequate, submissive subservient.   One is genetic hereditary the other is a generic learned behavior either way it is physically, mentally, or spiritually useless to live and die in such a low quality manner especially if it is due to self-neglect or stupidity that stems from being soft, lazy, out of shape, over fed, undernourished, overworked, and underpaid. S.R.F.

  4. there is NOTHING affordable in the care act for me. my premium is 3x from my private, lost doctor, worse coverage, higher deductable….haven't had insurance since i got kicked of my private plan because i can't afford it! was $269 with the "affordable care act" it went up, yes UP, to $780.

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