10 Questions with One of Obamacare's Architects
On the eve of the implementation of one of Obamacare’s most significant provisions, Governing spoke to Harvard economist David Cutler.
On the eve of the implementation of one of Obamacare’s most significant provisions, Governing spoke to one of the law’s architects, Harvard economist David Cutler. He helped shape then-Sen. Barack Obama’s platform on health-care reform during the 2008 campaign and serves on the Health Policy Commission in Massachusetts, which enacted its own health-care reform that served as a model for parts of the ACA.
In this condensed and edited interview, we discuss Republicans’ claims that Obamacare will disrupt the labor market, the metrics by which observers should evaluate the law’s success or failure, and what other states can learn from Massachusetts’ attempt to cap the growth of health-care spending at 3.6 percent.
President Obama has embraced the term “Obamacare” as shorthand for the Affordable Care Act. How closely does the ACA resemble what he proposed during the campaign?
It's similar in that what Obama had envisioned was a system where everyone would get coverage, largely through a series of insurance exchanges; people with low incomes would receive subsidies; coverage would be guaranteed; and there would be insurance reforms. All of that came to pass.
But the biggest difference is that when he was running for president, he said he wanted to pay for it by letting the Bush-era tax cuts for high earners expire. In the interim, that money got spent on the recovery and the bank bailout, so that's where you get all the tax provisions for large businesses and things like that.
Critics of the ACA argue that its mandate (which has been delayed for a year) for businesses with more than 50 employees to offer affordable health insurance to people working at least 30 hours a week will cause employers to shed jobs and cut workers’ hours. What impact do you think the law will have on labor markets?
I think universal coverage will have an enormous positive impact. Think about it by reference of an analogy with Social Security. Nobody worries that if they change jobs, they're going to lose out on retirement. Whereas, an incredible number of job-related decisions are made with regard to health insurance. Once you have universal coverage, all that goes away. All the "I need to work in this kind of firm;” “I can't be part time because I need health insurance;” “I can't retire now;” “I can't get off welfare;” will disappear.
You're talking about the benefits of universal coverage, but the U.S. Supreme Court's decision to make Medicaid expansion an option for states means that millions of people still won’t have health insurance. Should we be talking about something more like expanded coverage that’s going to leave a significant number of lower income people uninsured?
That's a good question. For a few years, that's what we're looking at. Over time, the states will pick it up. Again, it all depends on the costs. If the costs moderate, they'll pick it up. If the costs don't moderate, then the thing will become an albatross, not that the health-care system wouldn't have become an albatross anyway.
Of the states that have chosen to operate their own health exchange, many have lowered expectations for the open enrollment period, which starts Oct. 1. Do you agree with the conventional wisdom that implementation is going to be slow and difficult?
I think California and New York’s health exchanges will be successful. If they turn out to be successful on both of the counts we’re talking about — in terms of covering people and costs being at or below what was expected — then the rest will kind of move along. The same thing happened with Medicaid. It's not going to be pretty, but they'll get there.
How will we know if the ACA is working?
One: Do people actually get covered (which we'll know in a few months)? Two: Do we materially bend the cost curve? If you do those two things, it'll be a success. If you fail on either, it'll be a failure.
Let’s talk about cost control. Health care cost increases have slowed significantly in recent years. Why?
The biggest thing is probably that the sort of "technological" drivers of health care have slowed down. That's a very big deal because those are the kinds of things that you should always add to expense. The fact that those are so slow means that you're just not getting a lot of that technology induced. Stents are flat or declining; drugs are going off patent; imaging growth is slowing down.
Now, we don't know what that's going to look like five or ten years from now, but we know enough to say that the next two years are not going to look like that.
You’re a member of the Massachusetts Health Policy Commission, which aims to hold increases in health-care spending to 3.6 percent this year and to the state rate of GDP growth thereafter. How is Massachusetts pursuing this goal?
Massachusetts is doing a bunch of experimentation with different models. The alternative quality contract/Accountable Care Organization model is the one that's the farthest along. Beyond that, it's a bit of a mixed bag. We have a bunch of medical home projects. It's not clear how that all comes together. That's one of the reasons for having the Health Policy Commission: to try to make a little bit of sense of it all.
What might other states take from what Massachusetts is currently doing?
Despite our reputation for having heavy-handed regulations, we’re putting an enormous emphasis on getting better information to people so they can make better choices. For example, by October of this year, every insurance plan has a month to be able to tell people in real-time what their cost-sharing will be for services anywhere. That's a huge, huge deal. It came about because people face very, very high cost-sharing. If you're going to give them extremely high cost-sharing, you better at least give them the information so they can figure out where they can go to get care cheaper.
But the Health Policy Commission has no authority to impose a global cap or force insurers or providers to do anything, if I understand correctly. So how real is this 3.6 percent limit?
That limit isn’t really a hard-and-fast rule; it's more of a target. What it’s really doing is concentrating the mind. It's a way for the organizations to capture the interest of their doctors, so instead of just saying, "We need to save money," they can say, "Look, the state said we can only increase 3.6 percent."
A lot of insurance contracts are also being rewritten with that limit in mind.
Wellness programs, such as the Massachusetts Wellness and Prevention Fund, are popular in both the private sector and the public sector, but experts have long been skeptical that they save money. Is this something we know how to do yet?
I think dealing with those kinds of programs is going to be the hardest part. There are several very easy ways to save money like get people not to come back to the hospital after they've been hospitalized, not doing stents on people who don't need them, actually having discussions with patients about their preferences toward the end of life, and preventing infections.
Then you get into sort of real prevention -- I don't think we know how to do that part really well yet and it’s not going to yield a lot of money in the short term.
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