Andy Slavitt, MBA was acting administrator for the Centers for Medicare and Medicaid Services from March 2015 until January 2017.
This is Part One of the lengthy interview. Topics in Part Two include whether high-deductible plans encourage wise consumer choices, the value delivered by the HITECH EHR incentive program, whether incentives are aligned for EHRs to improve patient outcomes and the provider experience, and Slavitt’s future plans.
Everybody has their own perceptions and beliefs about the US healthcare system and how it should change. How much of that is driven by personal experience that can vary widely based on income, health status, and location?
That’s a great question to start with. People would always come at us at CMS with whatever their point of view is. My warning to the staff — because you get pretty cynical because people always are representing some interest, whether it’s money, some industry group, etc. — is that everybody is right, to some extent.
If you say that there’s too much burden in healthcare, you’re right. If you say that there is too much fraud in healthcare, you’re right. If you say that we don’t measure enough, you’re in part right. If you say we measure too much, you’re right.
Then you add to that the fact that the healthcare industry isn’t really capable of changing at any great pace — and certainly not en masse at scale — and you end up having to always balance a lot of perspectives. Sometimes just moving forward in any direction, as long as it’s somewhat positive, is better than doing too much overthinking. Getting to understand what actually engages people. If they’re engaged by technology, if they’re engaged by measurement, if they’re engaged by simplicity, getting them to make progress along those fronts is going to just move things in the right direction.
Healthcare arguments always boil down to access and cost. Studies have suggested that we have a problem with high prices, not high utilization, and prices were not addressed by ACA. Will pricing pressure be applied to the health systems and drug and device companies that have benefited from having more insured patients?
Unit costs are the primary factor. You are right — it’s one we don’t talk enough about. We’re not talking as a country about prescription drug costs for a couple of reasons, and I think maybe there’s lessons in here. It has hit people extraordinarily hard. People depend on their medications and so many people are past the point of being able to afford them. Then there’s just been some really egregious examples.
I think in healthcare, for there to be a change in attention, yes, you need data, but you need stories. I think the EpiPen became a story everybody could relate to. The $50 aspirin in the hospital became a story that people could relate to.
If you talk to a serious hospital CEO or a serious pharmaceutical company CEO, they will tell you that they need to work on their unit cost and their pricing. Most serious hospital CEOs – of big IDNs, I’m not talking about serious community hospitals, I’m talking about ones with scale — have some sense that they need to reduce their cost structure by 10 to 20 percent and are working on it.
Likewise, not exactly parallel, but in the pharma industry, you have many of the big pharma CEOs who understand that around the world, there is some gating factor on prices and that they have to figure out how to strike that balance.
We can afford to get people access to care before we completely tackle unit prices. I don’t think you would wait, but I think you can use the force of more consumers and more volume. That’s what we’ve been trying to do to get people to take these issues on. They’re very serious issues and there’s plenty of resistance.
Does it sting a little bit when people blame the Affordable Care Act for higher premiums and deductibles when they might have increased anyway?
Boy, I tell you what, if I felt stung by every little criticism, I would be in the wrong place. At this point, I’m pretty calloused to that.
Let me start this way. We clearly could do a better job of explaining to people why the ACA matters to them, what the ACA is intended to do, what it means to people, and why it matters in their lives.
Seniors love the fact that their donut holes closed, but they don’t necessarily know it was because of the ACA. People who are employed love the fact that there’s no longer lifetime caps or limits on their policies, but they may not know that it’s because of the ACA. Many young people with pre-existing conditions don’t even remember a time when pre-existing conditions weren’t protected. Then of course you’ve got the millions of people who’ve gotten new coverage. They may know, but they’re not a politically powerful force.
On the one hand, I’d say that story needs to be told better, and I think people are starting to understand those things now. The other side of it is there needs to be an understanding that a law, just like a business strategy, is the first step in a process. It’s not supposed to be the end point. It’s supposed to be the first step.
The ACA was supposed to be a launching point towards improving all sorts of things in our healthcare system. When you go through eight years, where there’s not just active resistance but an active attempt to tear down the law, to strip out funds — billions of dollars were taken out by Congress that were intended to stabilize rates and so forth – lawsuits, etc., you realize it’s harder to make progress.
As a country, we need to move past the place where one party owns health reform or the other party owns health reform. It’s just not the right kind of environment. It’s not so easy. The people now who are putting together plans, people that complained about high deductibles, you look at the replacement plans, what do they have? High deductibles. There are no silver bullets here.
President Obama told me once early on that once we pass the ACA, we tacitly agreed in everybody’s mind that everything that happens in the healthcare system from here on will be our fault. We own it. We just have to understand that there’s now a tactical place to point your concerns. Literally, if your doctor closes his office two hours early, people would write President Obama to tell him it was because of the ACA. That’s what they were led to believe.
The people insured by the ACA are a decentralized population, many of them receiving subsidies, without a lot of economic clout. However, many of the millions of people who obtained insurance via the exchange may have the financial means but don’t have an alternative because insurers don’t otherwise sell individual policies. Are the people who are ACA-insured mischaracterized as a group or are they not a cohesive enough group to convey the message that there is no alternative for them if exchange-sold insurance goes away?
President Obama has said, and I agree with him, that the ACA was a massive policy success and a political failure. If you were going to try to make this a political success, you would have focused on marginal improvements for middle and upper middle class people.
I’ve been in healthcare for decades and a sad reality is that I could do the most brilliant thing in Medicaid policy or the most awful thing in Medicaid policy and it wouldn’t even make the newspaper. But if I did something that affects some fitness craze, it’s going to get massively covered, because people care a lot more about the programs that they can relate to. People just don’t want to read about what happens with people who have less than them.
What’s interesting– and I think this has happened since the election — is the 27 percent of Americans who have pre-existing conditions and are speaking in a more unified, loud voice. I think you’re seeing now today in Congressional town halls, in social media, and in all other kinds of events and places that people are speaking out and saying, I wouldn’t be here today, I wouldn’t have been able to have left my job and started this company today, I wouldn’t have the economic freedom today, if it wasn’t for the ACA.
There’s no pride of authorship for me, whether it’s the ACA or how it continues to evolve. It’s supposed to evolve. But the reality is that group of people is saying, if we go backwards as some are hoping or proposing, here are the consequences. I believe that’s starting to get heard over the last 60 days or so.
Insurance companies struggle to cover costs incurred by a self-selecting risk pool in which young and healthy people don’t sign up and the insurers get stuck paying for older, sicker people. How can that be fixed?
It’s a feature, not a bug. We should step back and think about this. We have never as a country, until six years ago, said to people, we will make sure you can get coverage. It doesn’t matter your financial needs. Doesn’t matter your health status. We will make sure you get access to protection. We’ve never done that. In the history of our country, we’ve never done that. A lot of countries around the world do that. We never have.
We decided to. It’s a big thing. It’s a big change. It’s a hard thing. No one should have been expected to know how many people that would be, how sick people would be.That’s why we created a rate stabilization fund that the Republicans de-funded, because no one could be sure.
The point of it all was to say, we will learn over the first few years what that costs and how to price it. In the mean time, we will get the data, we will study it, and we will look. If it turns out to be more expensive than we thought originally, we can look at that. If it turns out to be less expensive, we can look at that. We can see what kind of adjustments are needed. There are a series of adjustments that I think would help make healthcare much more affordable for that very small group of individuals that are saying “higher rates."
By the way, it’s about 2 percent. So when people talk about the rate increases and the talk about the pool and they talk about all these things, we’re talking about 2 percent of the population. We’re talking about only people in the individual market and only people that don’t receive a subsidy. Maybe 2-4 percent, not to try to be too precise, but it’s a very, very small percentage of the population.
That small percentage is dealing with rates that have grown a little bit higher because, as you say, the risk pool is a little bit sicker. There are things we can do, and if Congress or the states are willing to do those things, they’re pretty incremental. There’s no question it would work because it’s just math. It’s not anything complicated.
The individual mandate is always a question, where young invincibles or people who don’t want to pay premiums and deductibles decide not to buy coverage knowing they won’t be denied care in a real emergency. How do you address the issue of people who are willing to gamble that they won’t need health insurance?
I’s a question of health literacy. You don’t need anything until you need it. We live in a bit of an on-demand society. That’s OK in many arenas. But until you have a kid with autism, you never thought in a million years you’d need mental health services. Until you are a 30-something year old woman who gets diagnosed with breast cancer, you never really thought that was possible.
It’s one of those things that isn’t too useful to rail against it too hard. It is a mindset. Would making insurance a little more affordable or a little more flexible help? Probably, on the margin. But I don’t think you change the fundamental truth that when you’re 25, a little extra pizza and beer money is a little bit more important to you than paying an insurance premium. That’s always a reality.
That’s why you sometimes need policy. The purpose of government policy, not just health policy, is to help make laws for the collective good that aren’t necessarily good for any one particular individual. If you try to make a law that creates the flexibility that every single person gets exactly what they want, then you’re really not supporting the society as much as you need to.
Part Two of the interview will follow.