– It’s April 2017. We have a new president. We have a new administration
and first time in over 6 years we’ve
broken the grid lock. One party has control of
both houses of Congress as well as the White House. So, that means a policy
agenda can be put forward by one particular party. So, starting with that,
I’ll turn things over to our speakers, here. I’ll start with Ramesh. Following the failure to pass
the AHCA that Paul Ryan led health care legislation in
the house, I was wondering what you think the
best path forward is for the Trump-Ryan coalition
to enact healthcare reform and achieving a
goal of repealing or
replacing Obamacare. – I think that
there’s actually been significant amount of progress
in the Republican Party. It is well disguised
what that progress is in reaching a consensus during the somewhat herky-jerky
legislative process. The moderates in
the Republican Party have been willing to
embrace a restructuring of Medicaid they were
leery of in the beginning. The Conservatives have been
willing to embrace a tax credit to enable people who don’t
have access to Medicare or Medicaid or employer
provided health insurance to buy insurance for themselves. That’s something
that they’ve been historically pretty leery of, but there’s still some
distance between them. – It’s been seven years or
just over seven years now since the Affordable Care
Act was signed into law in March of 2010, and looking
back on those seven years, I’m curious to
hear your thoughts on what you think the biggest
successes and challenges have been for the Affordable
Care Act up until now. – I would say over
the past seven years, some of the effective
aspects of it are that the pernicious
practices in the
insurance market, like pre-existing
condition clauses, which make it very
difficult for people that have health conditions, that require
constant medical care and the expenses
that come from that, to get health insurance
or to maintain it. The other aspect of
the regulatory system that I think has
improved is the pricing. Now, discriminatory
pricing based on gender, based on health conditions,
has been eliminated. Community based
pricing is in effect and all the insurance companies that sell insurance on
the market exchanges have to cover an essential
benefits package. I would also say that
there are some limitations and some areas of improvement. The way that the Affordable
Care Act was rolled out was not optimal. (laughing) It was a real debacle in
terms of communication and organization, structure
didn’t make the government look very good. I agree that premiums are high and I think that we
all want to pay less for our health
insurance coverage. The Affordable Care Act doesn’t
have all of the provisions that are needed to reduce costs. – On the topic of access,
Ramesh, I’m curious, when the CBO scored the
AHCA that Ryan led bill, they projected that 24 million
people would lose coverage over the next 10 years by 2026. Compared to if we
were to stay on course and stick with the ACA, one, I’m curious do you
trust those numbers, and two, what can
the next iteration of Republican
healthcare legislation, the next iteration of the bill do to improve these
risks to reduce access? – Well, the Congressional
Budget Office is full very conscientious
and smart people who are, I think, doing their
best to model the effects of healthcare legislation. But, I do think that the
model that they work with has some structural biases. That said, the flaws in the
Congressional Budget Office’s approach, and I should note
that the model (inaudible), but the basic model
they’re working with predates Keith
Hall’s tenure at CBO. Those flaws should not
be treated as a reason not to improve the legislation
to enable more coverage. I think there are a number
of things that can be done. Some of those things, putting them into
legislative language, particularly at the federal
level might be tricky, but one thing you could
do would be, for example, to require insurers who are
benefiting from the tax credit to sell at least one policy
that has its premiums set at the level
of the tax credit. So, you don’t have to
dip into your pocket. You can at least get
the cheapest possible
coverage policy at no expense to yourself. Another would be, and this
would probably be something you’d want to do
at the state level, to have state
governments enroll people who choose not to
purchase insurance out of inertia or
or unfamiliarity, assign them a default
insurance policy that is set at that
same premium level so that they do have access
to that if they need it. I know some governors,
Governor Walker in Wisconsin, want to be able to do that if some Republican
legislation passes. So, that’s one or I
should say two ideas. I do think also, I think the
Affordable Health Care Act, that Republicans had,
they have flat tax credit as opposed to the sliding
scale one that is in Obamacare, and I think they do this for a couple of
reasonable reasons. One is because they think that the Obamacare version of
this is too complicated, and second, because
there is some evidence that there are
work disincentives to phasing out of that subsidy. But, I think they went too far in making an actually
purely flat credit and it needs to be
a little bit higher for people just above
Medicaid eligibility line to make it easier for
them to get insurance. So, I do think there are
some things they can do to expand insurance coverage. Oh, I guess one last
point I would make, even assuming the numbers
are right on CBO’s part, if you say 14 million
people will lose or drop their coverage
if they’re not required to have that coverage, I mean, there is the normative
judgment that you have to make also about how should
we regard that number if a big chunk of
it represents people who are only buying
this policy because they’re being forced to buy it. – Staying on this topic
of access, Jennifer, I’m just curious,
what do you believe the adverse selection risks are to repealing the
individual where mandates? Could we see some
sort of an insurance sort of death spiral? Also, do you think
that the framework of heavily subsidized
high risk pools that are sort of been
a staple of a number of the Ryan plans? Do you think that
could be (inaudible) to mitigate the adverse
selection problem that might come about
from repealing individual and employee mandates? – Yeah, no, I’m glad
you asked the question about adverse selection
because I think it’s very problematic in
the health insurance market. Because there’s a community
rating component now of the Affordable Care
Act, there can’t be this sort of effort
in what we call in the insurance
market cherry picking. Whereas, insurance
companies try to pick the healthiest populations so that they can reduce the
amount that they have to pay. So, what we have is we
have risk adjustment, and risk adjustment is an
effort to recognize that. And so, the payments
and the transfers occur, and this helps with
the selection issues. The risk adjustments
occur based on, and the provision is
based on health status. So, there’s some way to
sort of transfer that risk in some way that’s
calculated or estimated through these risk
adjustment measures. – Well, there are
certainly people who argue that the Affordable
Care Act has succeeded in bending the cost
curve downward. I think that if you
look at longterm trends on health care inflation,
if you look at those graphs, it’s pretty hard to see that. In them, you can see slowdown depending on the
way you look at it starting in 2003 or
starting in the mid-1980s. You can see a slowdown
that does not seem to be confined to
the United States. So, I don’t think the
evidence is very strong, that it has met the cost curve. On the other hand, predictions
of critics of the law, that is was going to spur
health care inflation, don’t seem to have
come to pass either. And, I think that one of
the things that’s happened is that the footprint of
the law has just ended up being smaller than anybody
expected in 2009 and 2010, Both because, in part
because the Supreme Court changed the way the
Medicaid expansion worked, there was less uptake of that than there would
otherwise have been. And then, because the
exchanges turned out not to attract as many people
as people at that time thought they would. – Since we got on this
topic of cost here, Jennifer, what do you
see is the path forward for payment reform – that is, the shift away from
preferred service or the value based
paying sort of ACO model? And, how could this
potentially change under a Republican version
health care reform? – Yeah, I mean, politics aside, Republican, Democratic,
whatever, Libertarian, I think that we all agree
that costs need to go down in health care and cost
control measures are required. We have had a lot of
experimentation on that over many, many years
within this country, and we also have a lot
of experiments, again, from other countries in
terms of the way to reimburse for services – pay for services. I think that there’s a lot of
room for more understanding from studies from
surveys of stakeholders, whether at the provider level,
which is the supply level, the hospitals, the clinics,
and the nurses and doctors and other people, and
pharmacists, as well, or on the demand side, and
that’s us, the consumers and what we’re looking for. I think there’s some
common ground here. We want the best outcomes
for the lowest cost. So, how do we get there
and what do we do? What kind of method? What kind of incentives
are we providing as part of our policies
to get us to get us to that sweet spot? – I want to ask you both
about entitlement reform. The AHCA and the ACA,
really health care reform over the past seven
or eight years has primarily focused
on reforming Medicaid and expanding access
to health insurance, but has by and large left
Medicare and Social Security untouched, by and large. I’m curious, Ramesh,
is there political will or entitlement reform
under the first term of a Trump administration
with a Paul Ryan led Congress or do you think that’s something that could more likely be
done in a second Trump term or a future administration? – Well, President Trump, during the campaign, was pretty emphatic
in being against cuts to us beneficiaries from
Social Security and Medicare. So, I guess that
means: who knows? (audience laughing) From the stand point of
people who would like to see the costs of
Medicare and Social Security in the future brought
more into line with what we can afford, what’s positive is
that Trump’s rhetoric on those two programs
was so witless and so directed at straw men
that it’s very easy to design a sensible piece of
conservative legislation on those things that doesn’t
violate his stated red line. So, for example, if you
just changed the index for calculating initial
retirement benefits for future retirees
in Social Security so that it rises
with the price level, but it doesn’t rise
with wages anymore, you can at least maybe just do
that for the highest earners. You’re not cutting any
existing retirees benefits. You’re having a very gradual
reduction in the growth rate of future benefit levels and you can make the program
solvent just by doing that. – I think we need to figure
out sort of how we want to, again, organize these
programs and create policies to support them so that we
can have the best outcomes in terms of people’s ability
to do what they want to do, live the American dream,
have equality of opportunity, but not break the bank and do it in this efficient a
manner as possible. Entitlements are
interesting, aren’t they? It’s even an interesting
way of phrasing it. Phrasing it a
little bit more like what can policy and
government as, you know, sort of an instrument
of the people in terms of our social
contract with each other, what can we do? What do we owe each
other to make our lives as best as they can be
within reasonable cost of it? So, I do think a lot of the
action is on the cost side. You look at some of it,
as we were just saying. So, the Medicaid program we
have lots of opportunities to experiment across states. The Medicare program, I think it’s a very
interesting relationship between the government
and the American people. There’s a famous
quote that people use to demonstrate the
disconnect some people have to the understanding of
the Medicare program. Sometimes the
issue is brought up about changing the
Medicare program. The famous quote
is someone said, “Whatever you do, don’t let the government
take over Medicare.” And, of course, we know Medicare is a government run program. So, yet people seem
to be fairly satisfied with the Medicare program. Why? Because it’s a public
insurance program that, again, spreads that risk
equitably and efficiently, but it’s more or less
a private provision. So, it’s a private sector. So, people are interacting
with their private providers whether it be the health system
in terms of the facilities, but also the doctors and nurses,
and people that they know and want to seek
health care from. So, you know, it’s
an interesting. I think there’s a lot to
learn from that program too and understanding. And, I think it also can help with understanding
entitlements and reform and having the
largest stake holder, which is the American people, understand these
programs better. What we all need to do,
because we’re all paying for the costs of these programs, what we all need to do to
make them more equitable and efficient in the long run. – Well, I want to thank
Jennifer and Ramesh for taking time out of
their busy schedules to share their thoughts
on health care. I also want to thank
Andy, Wharton Health
Policy Initiative, and AEI for
sponsoring the event. And, thank you all
for coming out. I know we have a reception
afterward planned as well as a number
of events tomorrow. I think we all hope to
see some of you there and continue the
discussion there. Thank you, all for coming. (audience applause)