Podcast available of Stanford health-care economist on reform efforts
Alan Garber, MD, PhD, recently discussed the failure of the Congress to enact a health-care reform bill and the prospects for future action, in an interview for the “1:2:1” podcast (available at http://med.stanford.edu/121/2010/garber.html) from the Stanford University School of Medicine. Garber, a professor of medicine, is also director of the Center for Health Policy and the Center for Primary Care and Outcomes Research at Stanford, and director of the Health Care Program at the National Bureau of Economic Research. Here’s an excerpt of his conversation with interviewer Paul Costello, executive director of the school’s Office of Communication & Public Affairs.
Q: Are you disheartened by the failure to pass a health-care reform bill, or do you still have hope that in the end the Democratic majority and the president will put a piece of significant legislation together?
Garber: The news has been filled with reports that the president and congressional leaders are going to try to cobble together something more modest. The thing that’s very difficult to envision is what that more modest piece of legislation might look like. One of the reasons that the legislation became so complex is that these pieces are all linked, and it’s not easy to break off one piece and say, “This is a good thing. Let’s do this.”
To give you one example, there is a lot of public support for health insurance reform—that is, to change the practices that health plans use to sell health insurance. For example, denying pre-existing condition exclusions, making it easier for people with illnesses to purchase health insurance. Well, it turns out if you pass legislation that says anybody can buy insurance at more or less the same rate, maybe adjusted for age, then you have to mandate that everybody buys insurance; otherwise only people who are going to need a lot of care buy insurance, and the cost becomes astronomical. The individual mandate provision of the health reform bill was one of the most contentious, bitterly fought pieces, and if you need that in order to get the supposedly simple and politically easy piece of legislation in, can you pass the entire package?
Q: The Senate bill was the last piece that was voted on. Did you, as a health-care economist, feel it would address some of the long-term fiscal problems?
Garber: Yes. I thought that the Senate bill was flawed but had many important elements — several that we thought could never be passed by Congress, yet the Senate got the necessary votes.
One example: the so-called “tax on the Cadillac” health plans. This is equivalent to what economists call a cap on the tax exclusion for health insurance. It means that if you purchase a very expensive health insurance policy, the amount of the premium that is over the limit, which was going to be $23,000 for a family, would be taxable at a fairly steep rate. There are two reasons to have that kind of provision. One is obvious: Raising revenue to help pay for other aspects of health reform. But in my view, the more important reason to do it is to encourage health insurers to come up with lower-cost health insurance plans. The idea was to make the plans more efficient, not to penalize people with costly health conditions and their employers.
Q: What else should we know about the Senate bill?
Garber: Another aspect that was controversial but made it into the bill was basically a series of provisions to improve the efficiency of Medicare. This included expanded use of demonstration projects. These were intended to get health-care providers—hospitals and physicians—together to provide care in more innovative ways that would be more efficient. It included creating an independent commission that would make a set of recommendations to keep Medicare cost growth under control. These were provisions that had real teeth and represented real progress.
Q: You were part of the group of 23 health-care economists who sent a letter to the president, and you had four elements that you said were critical to have included in the health-care package. Were they in the final Senate version?
Garber: The first of them was the overriding one, and that’s really the one we should focus on. And that was to ensure long-term fiscal sustainability. The other elements, which included things like the tax exclusion and reorganizing care and the independent Medicare board, those were all means of achieving that end. So let me just focus on the fiscal sustainability issue.
As the president said in his State of the Union address, we face a truly catastrophic picture. That’s not his term, but that’s what many observers would say about [the federal government’s] very high, long-term debt. At the moment, there is a lot of controversy about fiscal and monetary policy. The bottom line, according to many experts, is that in the near term we need to continue to sustain a large deficit in order to pull the economy out of the doldrums. So this exacerbates our long-term budgetary problems. My colleagues and I thought it was absolutely crucial that whatever else the legislation did, it would set the American health-care system—and the way that it’s financed—on track to be fiscally responsible for the long term. And that meant it needed to decrease the federal budget deficit eventually.
The Senate bill really would have reduced the deficit within 10 years. Some of these pieces would kick in sooner rather than later.
This notion that you will decrease the deficit by this set of policy changes is extremely important: We can’t go on borrowing and borrowing and borrowing to pay for our health-care obligations.
The way that these individual features of the legislation contributed to deficit reduction differs. The idea of the demonstration projects and reorganizing delivery was to replicate the successes that we’ve seen in some organizations and some settings and make care more efficient. That is delivering better outcomes at lower costs. [The objective is to] extend this to all of Medicare, study what works and then replicate it throughout our health-care system. We’re not talking about pie-in-the-sky stuff because this kind of care already exists, and it’s just a matter of making sure that we all learn from the experience of the most forward-thinking groups of doctors and hospitals providing health care.
Q: So where do we go from here?
Garber: Well, there is a version of reform that says we go for smaller subsidies. That means fewer people will be covered, and it will cost a lot less. That might be less contentious. That doesn’t mean the politics will line up, if the Republicans and some of the Democrats decide not to play. We [could be] faced with gridlock for a while.
But I’d like to point out a few things. First of all, President Clinton accomplished some of his greatest legislative achievements after the Democrats lost the midterm elections when he was president. Welfare reform, which by many measures was one of the most important pieces of domestic policy legislation, occurred after that disastrous midterm election for the Democrats.
The other thing that is likely to happen is greater attention to entitlement reform — Social Security and Medicare — by virtue of the fact that the federal budget deficit is becoming such a big issue. The technical fixes to Social Security are relatively simple. I don’t mean to trivialize it, but people pretty much know what you need to do to bring Social Security expenditure growth under control. But Medicare is really difficult. Even if we do nothing about the uninsured, we will have to do something to change Medicare because the current trajectory of Medicare spending is simply unsustainable.
I believe this problem will be addressed one way or another within the next six years, and it might be within the next two or three years. As part of the approach to Medicare reform, we will be revisiting many of the same issues that came up in the general health reform debate.
So if you think about the health-care reform bills that were discussed in Congress, they started out mainly about the non-Medicare population, everybody but Medicare, but it ended up moving into Medicare reform. We could start at the other end—Medicare—and move toward general health-care reform. I think that remains a very good possibility.
On the positive side, when you think about the debate that's occurred, people have gotten a somewhat better understanding of the health-care issues, despite a lot of distortion on both sides. People understand that there's a lot at stake, and I see the rise of the political independents as an argument for pursuing a centrist course. I think that the centrists are concerned about the budget now. The politicians tend to be very reluctant to engage in any serious attempts to deal with the federal budget deficit because it hits on such politically sensitive areas, but once enough people view the deficit as an important enough problem, that may overcome some of the political resistance. I do think that we’ve all learned that it is easy to distort these issues. It’s also easy to confuse people unintentionally. So we have a huge education effort ahead of us. Although people have learned quite a bit from the debate, I think we have a much better idea of where the information gaps remain.
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