A Governor's Take on Fixing Health Care
Tennessee Gov. Phil Bredesen discusses health reform, the future of health IT and how states should approach regulating private insurers.
Gov. Phil Bredesen, who will complete his second term as governor of Tennessee next month, isn't just an accomplished politician whose approval rating hovers around 75 percent. He's also a health policy wonk. Prior to governing Tennessee (and, prior to that, serving as the mayor of Nashville), Bredesen established a health-care management company that grew into a 6,000-employee firm. More recently, Bredesen was on the shortlist of candidates considered for the position of secretary of the U.S. Department of Health and Human Services.
Despite his Democratic credentials, Bredesen has emerged as a critic of the Affordable Care Act (ACA). Earlier this fall, he wrote Fresh Medicine: How to Fix Reform and Build a Sustainable Health Care System that puts forward an alternative vision of the future of health care.
I recently caught up with Gov. Bredesen to ask him about health reform, the future of health IT and how states should approach regulating private insurers in this abridged and edited transcript. A full review of Gov. Bredesen's book will appear on GOVERNING.com next week.
Before we talk policy, let's talk politics for a moment. How do you interpret congressional Republicans sweeping wins in the November elections?
I think there are a lot of people who truly are hungry for change and for doing some things differently. Democrats and the president promised them that two years ago. I think they did not deliver, and I think we're paying the price for it. It flips around every so often. If Republicans don't deliver four years from now, we're back in the other direction again.
Let me pivot to health care. In your book, you describe ACA as "a stunning disappointment." Why were you disappointed?
I thought, as I said in the book, that we would begin that process. I didn't think it would happen miraculously overnight; I thought it would be a messy process. The phrase I use in the book is that "when conditions are right, you do the hard things." We had the planets lined up. You had a new president who clearly had made this the top domestic priority. You had people who were genuinely looking for a different way of handling things. But it was just business as usual. It was just driving a bill through. There was no compromise with other points of view about what ought to be in the bill, or how far it ought to go. It was designed by Congress, which can't design something like that. It was driven through with very hard-nosed politics and no Republican votes.
Do you think ACA should be repealed?
I certainly think that there are a lot of ways in which it could be modified. There are some good things in it. I don't want to take care away from 30 million people. But I think there are a lot of things that have to be done to make it a little more frugal and a little more fair in terms of the way people are treated.
What's your assessment of the ACA's impact on the states?
I'm trying to be somewhat respectful and circumspect politically. I'm a Democratic governor, and I don't want to go out of my way to make a political issue out of it. But I think it puts huge fiscal strain on the states. We estimate that over the next five to 10 years it's going to cost Tennessee $200 million a year. We expect in 2014 [that Tennessee will] be back to 2008 revenue levels. At that point, we won't have given raises to our employees for a long time; our reserves will have dwindled down. We will have some work to do with our pension plans to ensure they're fully funded, and we will have deferred all sorts of things like capital expenditures for a long period of time. To come through at that time and say, "And, oh, by the way, you also have to start paying for something which we did not allow you to participate in the design of..." that seems to me to be extremely contrary to the way the relationship ought to be between the federal government and the states. You can pay a lot of lip service to this issue of unfunded mandates, but this is a heck of an unfunded mandate.
I remember having a conversation with a U.S. Senator, a Democrat, back in the middle of this whole thing, and he was saying, "Well, we've done our part. Now, you need to do yours." My response was, "You haven't done your part at all. You're doing this all with borrowed money. You're not cutting in other places to get this stuff done. If you starting playing by the same rules that we do, then when you do your part, I'll respect that and step up to ours." But in the meantime, if all you're doing is borrowing and then saying, "Oh, you guys figure out some way to fund your part of it." Then that, I think, is a contemptuous treatment of the states.
What would your approach to health reform be?
What I was proposing was really a two-piece thing: It's Medicare for all, but give people a voucher and limit the amount of it. I don't think you can solve it by leaving it as an open-ended entitlement. Every other country has some limitation.
I'd like to get your thoughts on how states that choose to create health insurance exchanges should proceed. Broadly speaking, there seem to be two schools of thought on how to structure them. First, there's the Massachusetts approach: Force insurers to compete on the basis of cost and quality by letting only certain types of plans into the exchange. Second, there's Utah's approach.
The Craigslist approach.... I certainly believe that probably the Massachusetts approach is better. You look at Medicare Part D, which has the Utah feel, and most people can't figure it out. It's too complicated. I think that if you structure it as two or three plans where everyone understands what you are getting, you are probably doing customers a favor. You're trying to prevent insurers from working the system. Insurers are going to work very hard to get the best selection they can.
Do you believe that the health-care field is on the brink of an IT-driven transformation?
I have been very strong about health IT, but it's this bizarre situation where to get it installed, it's all push. There's no pull out of the industry. If you structured incentives like what I describe with systems of care, they would have a direct economic interest and would naturally gravitate toward investing in health IT. Boeing doesn't have to get a grant to get computers. The fact that we have to push that much is an indication of how messed up we are.
Confused by all the rules and regulations associated with the ACA? The Congressional Research Service has just published a handy overview of the 18 final rules promulgated by the U.S. Department of Health and Human Services in the eight-and-a-half months since the final passage of the law.
A federal district judge in Virginia ruled that the individual mandate provisions of ACA were unconstitutional but declined to suspend implementation. Two other federal district judges had rejected challenges to the legislation, laying the groundwork for appeals to the appellate court that could take two years. Twenty states have joined lawsuits against the law, with more plaintiffs possible as Republicans take office. Meanwhile, states are scrambling to decide whether to seek exemptions from the recently announced medical loss ratio rules.
Boston's Beth Israel Deaconess Medical Center has negotiated what could be a global payment arrangement with Blue Cross Blue Shield. Most health policy experts believe the United States should move away from "fee for service" arrangements whereby doctors and hospitals are paid for procedures performed, and towards systems that reward providers for maintaining healthy patients.
The Council of State Governments examines the states that are leading the way in the development of patient-centered medical homes (Colorado, North Carolina, Rhode Island and Washington). The National Association of Health Data Organizations is encouraging states to develop all-payer claims databases as public health tools. A new Health Affairs study finds that requiring hospitals to report process improvements is linked to better outcomes. Why don't more states do it?
Conservative American Enterprise Institute fellow Scott Gottlieb warns that accountable care organizations could become cartels that thwart cost control. Harvard's Benjamin Sommers and Arnie Epstein worry that Medicaid expansion is "the soft underbelly of health reform," and Urban Institute economist Bob Berenson fears that expectations of cost savings from accountable care organizations are overly optimistic.
Finally, in case anyone doubted how valuable retirement health benefits are, a new report from the Employee Benefit Research Institute finds that a 65-year-old woman retiring this year will need to have between $143,000 and $242,000 to cover her health insurance premiums and out-of-pocket expenses in retirement. For men, that number is slightly lower: $124,000 to $211,000.