 As many of you know, this is the next-to-last talk in a seminar series of 28 talks that we've done this year on ethical issues in health care reform. The final talk, not in your brochure, will be given next week by Dr. Zeke-Lemmanuel. The title is Reinventing American Health Care. Dr. Manuel's talk will be on Wednesday, June 4, not in this room, but at the Quad Club. And it goes from 6.30 to 8.30 at night. The talk was arranged by the Institute of Politics, and the McLean Center will be cosponsoring that talk. I'm told that tickets for that final talk are sold out, but they're keeping a list of people who might be called if others cancel. Today I'm delighted to introduce our speaker and an old friend of mine, Jeff Goldsmith. Jeff is president of Health Futures and is an associate professor at the University of Virginia Medical School. From 1978 to 1982, Jeff was director of planning and government affairs here at the University of Chicago Medical Center. Jeff Goldsmith is published frequently in the Harvard Business Review and in health affairs. He writes op-eds for The Wall Street Journal, The New York Times, Business Week, and other publications. Jeff is a member of the editorial board of Health Affairs. Jeff has written a number of books, including the seminal work, Can Hospitals Survive, The New Competitive Health Care Market, and other books include Digital Medicine, The Long Baby Boom, An Optimistic Vision for a Graying Generation, and his most recent book in 2011 is The Sorcerer's Apprentice, How Medical Imaging is Changing Health Care. Today Jeff is going to speak on the topic you see above me, The Tragedy of Health Reform, Why This Issue Brings Out the Worst in Americans. Please join me now in welcoming Jeff Goldsmith back to the university. Thank you, Mark. Good afternoon to all of you. It's good to be here. I don't know if this is working or not. I turn it on. And before I say anything else, I want to congratulate the McLean Fellows on their graduation. We need you. So looking forward to meeting some of you after this talk. It is surreal to come back here to this institution 39 years ago this November 1st. I came to this medical center to help a new dean try and turn around a really struggling both clinical and academic enterprise. Thank you. I was 27 years old, 27. My responsibility was to try and prevent the Medicare and Medicaid programs from killing us while we tried to figure out how to turn around the institution. But it wasn't just the institution. The entire region just seemed like it was sliding into the abyss. The steel mills in Indiana and North Chicago were closing. The employment base was seemingly evaporating in front of our eyes. We didn't think we could do anything about it. And it was really a scary time for this institution. And as the dimensions of our problem became clearer, I got a strategy and planning element added to my portfolio to try and help our clinical faculty regain their position as the preeminent consultative and referral resource for this region. So it's a remarkable thing to come back here and to see the place doing well if not overtly prospering. We're going to go back a little bit in history, only we're not going to go back 39 years, we're only going to go back a little over six. We're going to talk about the chronology and development of the Affordable Care Act, which is the health reforms that were signed into law in 2010. We're going to review the politics surrounding the implementation of the law as well as its development. And then kind of reflect on the process and what it tells us about our political system and about us as a society. And in case you're curious about it, people will guess about my political orientation. I remain a Democrat. I'm an independent Democrat, what they used to call here in Illinois, that is a non-machine Democrat. Virginia, we used to have a machine only, it was the bird machine, the segregationist. So the day after the election in 2008, those of us that had spent our entire lives waiting for health reform and for the implementation of universal health coverage, I think what we were trying to do was to contain a soaring sense of expectation that finally the wait would be over and we could get this done. The president actually began planning his health reform initiative in the late summer of 2008 when it was clear that he was going to be elected. He had transition planning underway. John Podesto, who's now back in the White House, was actually asked to lead that process. And the team, which was full of Clinton health staffers, were haunted by the failure of the 1993-1994 Clinton health reforms. So as one of those looking back on the warrior lost kind of thing, people wanted to make sure that they didn't make the same mistakes that they made in 14 years earlier. The battle plan was to co-opt Congress rather than to dictate to Congress what was going to be in the law. He selected the former majority leader of the Senate, Tom Daschle, to lead the effort and significantly both as the secretary of health and human services and as the White House-based coordinator for health reform. So there wasn't divided between the department and the White House. There was going to be one very powerful, very knowledgeable person in charge of the process. They were going to move quickly. They actually wanted to get something enacted by April of 2009. They weren't going to over-determine the outcome from the White House. That was one of the key mistakes that Clinton's made. They had that task force with 500 people and they were going to write the law and then they were going to send it to Congress and say vote on it. That clearly didn't work. They were going to try and prevent the health system, the $2.5 trillion entity that you guys were all a part of, from rising up and killing it by gently nudging, you know, sort of massaging its claws and, you know, stroking it and trying to get it involved without accusing it of causing all the problems. And they were going to control the political narrative with Rahm Emanuel, who's now your mayor, to manage the politics from a position of chief of staff in the White House. This was, I thought, a brilliant appointment. Tom Daschle, not only, you know, a moderate Democrat was defeated for re-election in 2006, but prior to that time was the majority leader in the Senate, who in the intervening period of time had written what I thought was a really great book called critical about how you actually reform the health care system and I thought it was a very thoughtful book that provided kind of a roadmap for how the administration could make it through this process and get to universal coverage. Unfortunately, strategy ran into trouble quickly as not only is economic reality intruded, but so did political reality. Tom Daschle was revealed to have accepted $80,000 worth of limousine rides without declaring them on his taxes and while not seemingly a fatal problem, when he began, when the president and Rahm began consulting his colleagues in the Senate, they basically said, we're not going to vote on him. And within about 72 hours of this problem being discovered, Daschle was jettisoned and the administration took almost four months, the four months for what it's worth that they were planning on actually enacting the law to get a team back in place to actually move forward and implement health reform. They eventually selected Kathleen Sebelius, the ill-fated, recently resigned secretary of health and human services and they nominated a friend of mine, Nancy Ann DeParle, to be the White House health policy coordinator. Meanwhile, the bank and automobile bailouts burned political capital and angered the public as our nation's economy as a whole seemed to be falling into an abyss, rising unemployment and a deteriorating fiscal picture frightened voters and then the stimulus bill, roughly a trillion dollars, burned up more political capital, further angering the public and nothing seemed to work. I mean, the crisis, the economic crisis seemed to be deepening all around while the White House's energy continued to be focused on implementing health reform, the federal deficit exploded to a trillion five hundred billion dollars, a number that no one, no one could even comprehend based on declining revenues and rapidly increasing spending. That's what happened to the adult unemployment rate, so from, you know, the end of the election to the middle or end of 2009, October 2009, the adult unemployment rate tripled to over 10 percent and that didn't count all the young people that were living in their parents' basements at the time that weren't, you know, technically counted as adults. If you added together the people that were unemployed, who were looking for work, the people that were unemployed and quit looking for work and the people that wanted full-time work who were accepting part-time, there were over 25 million Americans that were out of work. In other words, almost great depression levels of unemployment. Despite the fact, the White House doubled down on health reform into mid-2009, the White House staff went to DEF CON 4 as roughly 80 percent of its energy was going into trying to manage the health reform process. There were literally all-day meetings of the entire senior staff in the White House focused around health reform, but rising pushback from the president's political staff, from Rahm Emanuel, from Axelrod, about, wait a minute, what about the economy on fire? Shouldn't we be dealing with that? But, you know, full speed ahead. The White House shifted the burden of drafting the law from the Senate where it would have been under Daschle, to the House of Representatives, with, I think, very significant downside consequences. And the tone-deaf messaging about, well, you know, don't pay attention to all that stuff out there. Health reform really is about economic recovery. It's about jobs. It's about growing the economy, et cetera. No one really believed any of that, but it was the beginning of what has turned out to be a four- or five-year period of complete inability to communicate in comprehensible political terms what this process was about. This is a picture of the war room. This is my friend, Ancienne DeParle. You can see the now ex-secretary. But, you know, the really notable thing in this room was the sort of the high level of testosterone. You had Rahm Emanuel, who was sort of off the charts. Joe Biden is kind of slowing down a little bit, but he's still pretty high. You know, Larry Summers, who knows everything about everything. Peter Orszag. I mean, these folks basically dominated the war room conversations, even though they had almost no practical operating experience with the health system itself. They all had theories about how the health system would work and how health reform would affect it. But with the absence of a strong leader, like a Tom Dashel in the room, they all had their say. So these meetings had a kind of a surreal sort of academic seminar quality at the very time that the economy was on fire, and this process was really sputtering. The deadlock consumed the second half of 2009. The Democrats actually had a 60-vote majority coming out of the 2008 election. But you'll remember Al Franken of Saturday Night Live fame. I had like a 30-vote lead or something, and it took until June to finally resolve that he had won the election over Norm Coleman. But the Democrats, by the time they did that, at the end of June 2009, had a 60-vote, a veto-proof majority in the Senate, veto-proof, and an 83-vote plurality in the House of Representatives. So this argument that obstructionist Republicans stopped or perverted this process is at least, for this six months anyway, complete nonsense. The Democrats were in charge, and the real problem was the lack of unity inside the Democratic caucus about what ought to happen. On July 15th, the House of Representatives moved first, and introduced something called HR3200. I'll talk about that in a minute. That was the first finished piece of legislation. It was only 1,000 pages long compared to the ultimate 2,300 page summa bonum that emerged in about nine more months. And the reaction to 3,200 really played a major role in stimulating the growth of the Tea Party. There was an immediate, it was like a violent immune reaction on the part of the body politic to this law. And when Congress reconvened, Senator Bacchus, the chairman of the Senate Finance Committee, squandered another four months after it was already too late trying to build a consensus inside the both Republicans and Democrats in the Senate about what the real law ought to be, and then Congress went home for the holidays in December without a health reform bill. 3,200 played a crucial role in the process here and almost killed it. It was written in the Speaker's Office and sprung on the membership. Unlike the Senate, which is a fairly collegial place, the House of Representatives from Newt Gingrich's time onward has really become a dictatorship, where the Speaker's Office has circumvented the traditional role of the chairman of Ways and Means, the chairman of Energy and Commerce. The Speaker's Office essentially wrote this bill, Wendell Primus and some of the staffers in Ways and Means and Energy and Commerce. It basically federalized the private health insurance system. It remained private but created a regulatory structure that basically controlled rates, underwriting strategy and access to it and contained a public plan that would have the effect of competing against those private insurance plans. It was financed by raising taxes on small businesses and on individuals making over $350,000 a year and for an S corporation raised the marginal tax rate to 46%, if you included the increase in income tax and the roughly 8% that was going to be used to finance the health benefit if employers didn't provide the coverage. It was a hard employer mandate. It, I think, applied to every business with a payroll of more than 400,000. I know two person businesses with payrolls of more than 400,000. So, and a hard mandate, it wasn't an indirect mandate, it basically said, thou shalt provide the coverage to your workers or you will pay a tax. It established community rating and federal premium regulation through a national health exchange. It also created, as I mentioned earlier, there was a robust public option in the bill and it appointed a health choices commissioner. I love the symbolism there to regulate the health insurance market and to help us with our health choices. The Democratic Party was bitterly divided over this bill. Forget about the Republicans in the House, they were irrelevant. The Democrats had an 83 vote lead in the House when this bill was introduced. The safe seat Democrats coming from overwhelmingly Democratic districts really wanted single payer healthcare. The public option for them was a sell out. They really wanted single payer healthcare. Let's complete the new deal, let's have universal coverage, let's have it guaranteed by the federal government and don't touch the rich union benefits of a lot of the public sector workers that were part of the core constituency, the Democratic Party. The running scared Democrats on the other hand, the Democrats that were in places like Tennessee and Georgia kind of looked at this bill and said, wait a minute, they were not only concerned about the deficit and were we increasing it by creating this new entitlement but they wanted to focus on the economic recovery. They really didn't want to get into this dialogue about the complications of the Republicans. I mean, they were wandering around out there barking at this thing but it was really the disunity inside of the Democratic Party that was really troubling. And by the time they worked this bill through the political process, the House voted on it in November of 2009. Main liberal Democratic constituencies in the Democratic base were really dissatisfied with this law. The public option disappeared, women were angered by the Stupak amendment which actually tightened restrictions on federal funding for abortion. There were hostile anti-immigrant provisions that angered Hispanics and the Hispanic caucus in Congress. And it basically trapped the moderate Democrats, many of whom, 40 of whom actually voted against it. So it only passed by a five vote margin even virtually every Republican. I think every Republican voted against it and something like 40 Democrats. And then in January, a Republican came out of nowhere and won Teddy Kennedy's Senate seat in Massachusetts and the Democrats lost the 60th vote. Now if the political dialogue had not been so polarized by that point, they could probably have bought the 60th vote from Olympia Snow or Susan Collins with a strategically placed aircraft carrier. I mean, it wasn't beyond belief that you could find the 60th vote but in the inflamed political climate that had grown up by then, the Republicans were acting more and more like a block and that one vote was very, very difficult to get if not impossible and the president was kind of looking at health reform, getting away from him. And at this point in the process, Rahm Emanuel and David Axelrod and David Pluff and the sort of the political brain trust confronted the president say, give it up, we can't do this. This is a terrible idea. We are committing political capital that we're never going to get back. Let's lay the groundwork for health reform but get busy on the economic issues that are a lot of voters, including independent voters, really want us to be focusing on. The president went to Nancy Pelosi and said, Nancy, I have a bad feeling about this. And Nancy basically said, over my dead body, am I going to make my members walk the plank on this issue too and not come away with health reform and refuse to go along? She basically said, you won't get another single thing through the House of Representatives while I am speaker. If you don't move ahead and close the deal on health reform. And here he is talking to the political leadership in the Senate trying to get a deal done. I mean that's, I think it was late February of 2010 that this picture was taken. He doesn't look like he's having a lot of fun. And then on March 23rd, 2010 the president signed this remarkable 16 pound congressional offering into law. I hope it doesn't diminish your opinion of me to know that I've read this twice, twice, front to back. It's been four years. If you tested me on all the stuff that was in there, I probably would flunk. But this was an incredibly painful process. This is an example. This is one paragraph in what turned out to be about a 950 page document. See if you can read this. Is that remarkable? It's sort of like a sneak swallowing its tail. If you mandate benefits, which the bill had to do. In other words, if you were to comply with the individual mandate, you have to have coverage that's consistent with what is required in the law. This paragraph along with about eight other paragraphs was an attempt to define what a mandated benefit was. Okay, that's what this paragraph was for. There were a thousand paragraphs like this in the law. I mean it was just bewildering. There were great things in this bill. So I don't want anyone to walk out of this room and believe that we did not move forward as a society by signing this into law. And I don't say that as a Democrat or an independent or whatever. I'm saying it as a citizen. There were a lot of good things in this bill. So at least about that Zeke-Manuel and I agree. A trillion dollars in subsidies for people to help buy insurance. A new access point for purchasing health insurance, a private health insurance exchange, public health insurance exchange. Lots of money for experimentation with new care design and reform of care delivery. A billion dollars a year for an agency that was spending about 30 million a year on this before the law. An investment in comparative effectiveness research and the creation of a new institute called PCORI for patient-oriented outcomes research institute. And almost doubling of the funding for a federally qualified health center saw a big investment in improving the safety net at the community level for the people that were left out of this law. So don't anybody walk out of this room believing that repealing this is somehow gonna help us. Not so. Having said that, this was deeply flawed legislation. The Senate bill, which ultimately became law, was riddled with drafting errors, over a hundred of them, including some that were nearly fatal. I mean, I drafted legislation when I worked for the governor of Illinois. And I'm a non-lawyer, even I knew that you put a severability clause in the darn law so that if one paragraph was held to be invalid, it didn't invalidate the rest of the law. There was no severability clause. There is actually not language authorizing the federal exchange to pay subsidies for workers who get coverage through the national exchange, even though it was clearly legislative intent. There were just whoppers in this bill that the House leadership intended to correct if the bill ever got to a conference committee and was rewritten and it never was. It was an astonishing bureaucratic project. 30,000 pages of implementing regulations ultimately required to implement this law, but only about 400 more staff for CMS, an agency that was understaffed before this law went into effect. Most of my friends in the federal government believe that CMS needed about 1,000 more people beyond that to fully implement the provisions of the law, but the Republican frees on resources in the fact that Congress wasn't able to pass a budget during the, oh, that was noisy, three years after the law went into effect meant that CMS didn't get the staff that it needed to implement the law. It delayed actually signing people up for four years, past two election cycles. You know, when Medicare was passed and signed into law by President Johnson, it took 13 months for people to get their Medicare cards. When Commonwealth care, the Massachusetts health plan was signed into law, seven months for people to begin signing up. So here, four years, and they still screwed it up. And it wasn't just the federal government that messed up the implementation, but a lot of good government states like my home state of Oregon, I mean, they basically had to throw it in the trash and agree to use the national exchange. Maryland, Hawaii, Massachusetts of all things couldn't implement a health exchange to save their lives and spent hundreds and hundreds of millions of dollars on code that was ultimately wasted. And even the federal exchange today can't reliably pay the bills. In other words, the back end part that actually transmits insurance, premium payments to the insurers that people choose in the exchange still isn't working. So, and it's probably going to be six to nine months before that part of the exchange is actually working. My daughter, my youngest daughter, Amy, is the youngest Affordable Care Act navigator in the state of Virginia. So I was getting literally hourly text bulletins after the website was allegedly fixed saying they're lying. I can't get anything done through the site. I can't, I'm sending in paper applications that just disappear. I mean, it was an amazing process. Truly amazing. Part of the reason why I've read the law twice, it did absolutely nothing to reduce health costs. I mean, even the Washington Post said, how can you pass this law and not attack malpractice costs? I mean, even the Post thought it was, you know, kind of unbalanced. And at least in my judgment anyway, it relied upon a broken Medicaid program for half of the coverage expansion, perpetuating deep inequities and threatening state finances in a lot of states that are only really gonna become apparent when we have the next recession. And I'm not gonna predict when that is because I'm not an economist. And by the way, that law contained more than 25 Republican amendments. So the argument that the Republicans were just completely shut out of this process or took themselves out of the process, not true. There were over 25 Republican amendments accepted to the law. Don't ask me which ones, because I can't tell ya. But because of the political price paid to get this bill done, a process of self-deception set in in the White House, one of the president's political aides said, we really don't have to talk about this anymore because this bill will sell itself when people realize all the good things we've done for them, they'll love us and pivoted to try and deal with growing the economy, repairing the economy. So the result was, you know, with all this controversy over this 900-page, incredibly opaque piece of legislation, the White House invested almost no energy at all in trying to explain to the typical American what they got out of it and what they'd done and how it was gonna help us. And the result was, you know, they just kind of abandoned it in the bulrushes, sort of like Moses, you know, and left people to their own devices to kind of, from whatever sources they were able, figure out what Congress had done and what the president had signed into law. And the result of that was, this law became a giant Rorschach plot onto which Americans of whatever political persuasion could project their anxieties, their fears, their hopes, whatever it was. I looked at this thing and you know what, it looked to me like a priest being torn apart by a couple of winged monkeys. I mean, what do you think? I personally, you know, I mean, that's kind of a scary vision, but I mean, that's what the Affordable Care Act was like. People could, because you try to read it, right? You had a thousand paragraphs like that when I showed you, it was impossible. I mean, I'm a political technician. I drafted legislation, I couldn't figure out what they'd done. So how was a typical citizen, right? Gonna, you know, so it became this exercise in projection. And the result was a profound, enduring sense of skepticism on the part of most Americans that this was actually gonna make any difference in their lives. It didn't sell itself. Public opinion has pretty much gone sideways. The red line is the number of people who have an unfavorable opinion of the law. Today, well, in April, which is the latest data I have, I think there's now in August, oh, April's pretty recent, isn't it? In April, only 38% of the public approved of this law. And that's like eight points lower than it was when the president signed it. So clearly that idea that it was gonna sell itself, it's so obvious how good this is, wasn't obvious at all. And when you delve into the political splits, the sentiment about health reform almost defines the schism between Republicans and Democrats. And of course, you're sitting there saying, well, why isn't this 60% very favorable? Well, a lot of the progressive base in the Democratic Party viewed this law as a sellout. Because it didn't move us to single payer. It didn't have a public exchange. A lot of progressives believed that this bill was essentially a sellout to the pharmaceutical companies and health insurance. So they didn't really like it all that much. And really want Congress to return and make it tougher and more federal. It's interesting that the independence, which is now the largest political party in the country, splits more Republican than Democrat. In other words, 31% of independents have a very unfavorable view of this law. And that's been a fairly consistent finding for most of the three and a half years, almost four years since it's passed. But the main thing when you look at the public opinion data is people don't have the faintest idea of what's in this law. As of late last fall, or I guess it was August of 2013, almost 40% of the public were unsure whether the law was actually in place or not. Many thought the Supreme Court threw it out, even though it basically affirmed the law. 31% either didn't know or refused to characterize the current state of the law. And then when you look at some of the big issues involved in this, almost 70% of people thought there was a public option in here. 64% either believed or were not sure that undocumented folks could get coverage under the bill, even though there was an incredibly divisive thing to exclude them. Established death panels, 62% of people either are certain that there's death panels in the bill or not sure, and cut benefits through the traditional Medicare program. Also not true, but 60% of people think that it cut benefits. It cut payment levels, but it left the Medicare benefit intact. And the price paid for doing the right thing? All the Democrats lost control of the House of Representatives. In the bloody 2010 election, a neck snapping 80-some odd vote shift from Democrat to Republican. The most significant electoral shift in Congress since 1936, what was that, 80 years ago? And are, I think, better than 50-50 likely to lose the Senate this fall. Why is this issue so divisive? Why is it so hard to get this right? Why is it so hard to do something which seems so bloody obvious? Well, let's start with the fact that 93% of the voting public already has health insurance. So the main concern of a lot of those folks is making sure that we don't impair what they got. So there's an immediate reactionary starting point for dealing with the politics of this issue. When you ask who the uninsured were in 2008, and if you take out the fact that they sort of over count the number of people who say they're uninsured that are actually on Medicaid, maybe 46 million Americans, 10 million young people between the ages of 18 and 26, a third of them were insured. Ooh, jeez, I didn't want to leave that. 10.2 million people who are not Americans. They're living here and working for us, but they're not Americans. Perhaps six million of whom are uninsured. So six million of the folks who are foreign born or whatever actually have insurance coverage through their employer or through fraudulent ID. A very large percentage, perhaps as many as a quarter, maybe 12 or 13 million people eligible for Medicaid or S-CHIP but not enrolled. A lot of those folks are in the South, which makes it very difficult for people to get on Medicaid. The Medicaid uptake rate in those states is below half. So one of the big things that the Medicaid expansion was trying to do was to force states like Texas and Florida to enroll the people that were already eligible for it. You know, people who retire, become contractors, or lose their jobs or lose retiree health coverage. Almost 11 million baby boomers have no health insurance, which I think is maybe the scariest subgroup in here. To be, you know, 24 and immortal and not have health insurance is one thing. To be 53, widowed and diabetic and uninsured, a completely different deal. A third of the Hispanics in the U.S. are uninsured and people that lose coverage because their husband dies or they divorce, and it's mostly women. In other words, what's the common denominator here? There isn't one. It's not like there's a big voting block. It's not like they have a political action committee writing checks to gubernatorial and senatorial candidates. It's like a lot of folks on the margins of society that don't have a voice. So politically, you know, a very difficult group of people to help. Flip it around and ask yourself who were the insured people in 2008? Well, a different story. Who wasn't uninsured? Well, veterans and active duty military personnel have a care system or tri-care. Native Americans have the Indian Health Service. Unionized workers, two-thirds of whom in the public sector have some of the richest benefits, though that's changing fast. Most professionals, through their jobs, including most of you. The elderly, a term I put in quotes since I entered the Medicare program in October of last year. And poor people plus kids. When you look at the bottom four groups, what you got? It's the core of the Democratic Party, the core. So the core of the Democratic Party are people that already have, to some degree, coverage. And, you know, the essence of the political problem, and I think Paul Star put it very well in his marvelous book, Remedy and Reaction, which I encourage you to read, which covered both the Clinton and Obama health reforms. Star's argument is that those 160 million privately insured, and maybe another 100 million publicly insured, constitutes something he calls the protected public. Most have coverage through a vast network of hidden subsidies that are either paid for by tax dollars or paid for by tax exemptions or by employer contributions or by payroll deductions, so they don't actually write a check for the coverage. But the fact that they have the coverage, and by the way, that employer tax subsidy, the fact that the employers don't have to pay taxes on the 80% or so, the $800 billion that they put into people's health coverage in their place of work, is the largest single tax preference in the U.S. tax code, it's over $200 billion. These subsidies, Star argues, endow those covered folks, the 260 million or so that have coverage already, with the magical quality that they earned the benefits. You know, either I'm in the service and people are shooting at me, or I was in the service and people are shooting at me, or I'm 65 and I've been paying in all my life. There's a narrative for almost every one of those folks that already has coverage that says, I've got mine because I deserve it. The subtext of which is the people that don't have it maybe don't deserve it. Or they're lazy, or they're not motivated to sign up, or they're not working, they don't want to jump. You know, there's this old sort of back story about the 50 million people that are outside the system that pervades our society. Not just the Republicans, but the Democrats as well. So, and one could even argue that protecting the protected public has become the core business of the Democratic Party. More important than expanding the number of people that have coverage. And the fact that the core was covered. And this was an argument that I originally heard Ted Marmer make in the politics of Medicare. Ted was here in the 70s and 80s and went off to Yale. He was a White House Fellow for Joseph Califano during the Lyndon Johnson administration when Medicare and Medicaid were enacted. His argument was the fact that we went and covered the most important people in the core of the Democratic Party diminished the Democratic Party sense of urgency about universal coverage. Because the people that had, you know, the people that they were focusing a lot of their attention on already had coverage and got it through the great society. Now of course the Republicans have a completely different and less charitable take on this issue of the undeserving uninsured. There was a amazing blog posting in the Heritage Foundation blog in 2009 that basically said this isn't a 46 million person problem. It's really a 4 million person problem. And we don't, you know, universal coverage, I mean forget it, you know, we just need to solve the 4 million and we'll be okay. So what you have to do to get from 46 to 4 is you have to engage in an exercise in people's subtraction. So who do you subtract from the roughly 46 million? Well, you know, take out the people that were uninsured for a full year because obviously they're gonna get coverage, you know, they don't know when exactly. Take out the illegal aliens, remember half of them, not all of them are uninsured, subtract the wealthy. So there's 13 million people with household incomes over 50 grand a year. In Topeka, Kansas, that's a lot of money in Chicago, not so much. Why did we have a recession in the first place? Well because the people with $50,000 a year had leveraged themselves up to their eyeballs. Mortgage, credit card debt, student loans, right? You name it. So the idea that people with a $50,000 a year income are simply slacking off and could possibly afford $16,000 a year in premiums for health coverage for their families is just a complete fantasy. Don't get me started there. The S-Chip eligible kids that weren't enrolled, six and a half million and you know, you add all those things up and subtract them from 46 million and there's four million people that we really need to care about and we can take care of those folks with the familiar list of 30 year old home empathic remedies that the Republicans have been offering for dealing with this. High risk pools, selling insurance across state lines. I mean it is just, it is a laughable agenda and it's an agenda that fits a problem that isn't anywhere near as large. It's a tenth as large is the problem that we actually believe based on actual numbers exists. Now this is all going to get complicated by the fact that the Census Bureau is in the process of changing the methodology here and when we get an estimate in 2013 it'll probably be a lot lower and not because of Obamacare but because they corrected a lot of the problems with the questions that they were asking people in the survey. So it may be only 40 million uninsured instead of 46 million that was the baseline against which we measured what we got out of Obamacare. Then there's the electoral politics of health reform which is even more daunting. This is what the president promised in 2008. I'm not gonna read all those but that's basically was his campaign platform. I mean that's pretty scary when you think about it. The least believable thing was the all reducer in health insurance premiums by 2,500 bucks a year, no one believed that. But the one that really nailed him was that you can keep your doctor and health plan if you like them one because even I would have lost my health insurance coverage if I hadn't gone on a Medicare because I didn't cover maternity benefits for myself, I mean kind of pregnant. But in order to comply with the law you had a maternity coverage, you end up stop smoking, you end up pediatric. I mean I didn't need any of that but I would have lost my coverage. So what people actually got in the Affordable Care Act didn't bear much resemblance to what he promised and there's a political price paid when you do stuff like that. 25 million people were covered by a tax. That's what the Supreme Court called the individual mandate. So this I won't tax you thing wasn't real. 20 million more including most of the public workers in this country, this doesn't just apply to businesses will be paying a 40% Cadillac tax starting in 2018 if their coverage is worth more than 10 grand for an individual and I think like 23 grand for a family of four which is you know most unionized benefits are richer than that. So most of those employers are developing an exit strategy to essentially get out of that coverage because the 40% tax basically nukes the benefit. So I'm not gonna tax your benefits thing that wasn't the way it worked out. Five million people including it would have been me if I'd been a year younger would lose existing coverage because it didn't comply with the minimum essential benefit, health premiums rose by 71%. Not minus 2,500 but plus 3,000 in something from 2008 to 2012 and a full implementation despite the horrendous political price paid to implement this law there will still be 31 million uninsured Americans in the country according to the CBO. So it paid this huge political price and probably lost control of both houses of Congress and yet ended up with 31 million people still uninsured. That's a pretty terrible political calculus. So just from a sort of a hard nose cost-benefit relationship you give up your party's control of Congress in exchange for maybe doing half the job. And then you had the rollout. There were a whole bunch of really cruel cartoons. I mean this was a cartoonist, you know, I mean really amazing cartoonist dream. What Paul Starr said when he founded the American Prospect in 1990 was many Americans have become convinced that there are simply no public solutions to our national problems or if there are that Congress could not possibly enact them in a rational and coherent way. He went on to argue that unless Americans could become convinced that our government was capable of solving social problems the progressive political agenda at which universal coverage was the core would be unachievable. So measured against that standard, the messy political process by which this flawed law was created, the horrendous rollout have probably reduced rather than increased citizens' concepts of the efficacy of government and thus raised new questions about whether we can trust the federal government to do anything else. Someone warned me that I'd be asked about single payer in this room. Well good lord, who would have to write the single payer legislation? It's the same people that wrote this law. Who would have to implement it? Well it would have to be the same agency that blew the implementation of the website. So it's beyond damaging. If you believe that government is really the only place that we can turn to for solving very large problems like this one, you have to come away from watching this process genuinely concerned about whether it's really possible or not. So in 2028 when President Chelsea Clinton turns to her advisors and says she wants to finish the job and cover the other 31 million Americans what are her political advisors gonna tell her? Well your mom and dad lost control of Congress in 1994 by failing to implement health reform and Barack Obama lost control of both houses of Congress in 2008, 10 and 12 by actually implementing health reform. So what do you wanna do, you know, Chelsea? What would I have done? Okay Mr. Smart Alec from out of town. He has to work here. I've 40 years worth of health policy memory. I would have taken a very different approach. I was a Wyden Bennett fan for those of you that are arch policy wamps. He would have basically gone, you know, pretty much away from employer based coverage. He would have phased it out in favor of subsidized private coverage for individuals through a health exchange where everybody gets an income graded subsidy up to a certain amount. You get to select your own benefit. He would cash out work or I would have cashed out workers tax free. In other words I would have given him a pay increase equal to the amount of the employer contribution. So they could use it, you know, to buy coverage or not depending on what they needed. I'd replace the employer contribution with a special purpose value added tax. This is exactly what Zeke proposed in his book in 2008 I think. It's essentially what Victor Fuchs proposed. In other words, get the health benefit off the wage base so you don't force employers to choose between the benefit and creating another job. So focus it on consumption and if someone wants to buy $100,000, you know, Portia, well they also buy four or five people health insurance in the process, phase out Medicaid, phase it out in favor of direct care through federally qualified health centers but below the poverty line, not free, maybe it's two bucks a visit and four bucks a prescription and a 40 buck copay if they end up going to the emergency room instead but basically give people the care for a nominal amount of money and then ask the federally qualified health center which is a community based organization with a community board to manage the total health of those folks including paying all of you. So I would effectively capitate the poor part of the Medicaid program through our nation's community health centers and to the extent that we have gaps or if there's not a public clinic system available to pick up the slack, make sure they get federal funding to do it so there's tremendous leverage there, I think. And then for the chronic care part of Medicaid, give Medicare the job of comprehensively managing the chronic disease risk for us older folks using a sort of a care model, advanced medical home kind of model. I would radically simplify, I was here a year or two ago and talked about this, I would radically simplify payment for primary care physician services by paying on a relationship basis, essentially per capita rather than per visit or per service. And when someone needs a complex clinical intervention, like back surgery or an open heart procedure, I would pay single severity adjusted payment from diagnosis to recovery and count on you to manage the cost of that complex episode within a fixed budget. That's what I would have done. But I would have explained in English why people were probably going to be getting a better product out of our medical care system and really keep hammering away until people felt the questions were answered before moving ahead and trying to force something through Congress. So the health policy lessons from the Affordable Care Act, I think the biggest one is promise what you can afford, attack problems at the top of the economic cycle, not when you're falling into the abyss. So you've got the resources available to actually do what needs to be done instead of trying to pretend that it isn't gonna cost anything. They explain in English what you're doing and how it's gonna help people where I frankly believe the administration abjectly and deliberately failed. This was the biggest problem that you weren't able to communicate. What it was that this law did, I mean my daughter said it to me just the other day. She said 95% of the people that come in to have me help them sign up for coverage don't have the faintest idea of what's in this law. But they all have really strong opinions about it. I absolutely love that comment because here's a person who is spending 75 hours a week trying to get people into the system that still today, almost four years later, have no idea what they got. Explain in English, explain in English, rinse and repeat and then finally deliver what you promised quickly. What do the Affordable Care Act show us about our country? Well, Thomas Jefferson in whose hometown I now live, Charlottesville, Virginia, which just like he was there yesterday, got his way. We don't have a king. But yet it takes a strong federal government to do anything meaningful about a three trillion dollar economic activity which is what our healthcare system is. Unfortunately, political parties dominate our political process. And I say this equally about the Republicans' democratic process. These parties are intellectually bankrupt. They are both abject reactionary parties that are increasingly dominated by the respective bases when the largest political party in the country is none of the above. It's the fanatics that are picking our candidates, not the broad public. And there are only two larger countries in the world. Did you know that? Two larger countries in the world, China and India, both of their political systems are massively corrupt and increasingly ineffective. So is the US too big to succeed? Or is the political system that was designed by a bunch of brilliant, if elitist founding fathers, never conceived in the world that we'd be trying to manage almost a 17 trillion dollar economy and 320 million people. Is it one society? Or is it a bunch of fragmented societies? Is it us and them? Or are we all in it together? Are we too culturally and politically and community-wise fragmented to be governed by a 230-year-old constitution? So I'm sort of with John Paul Stevens, our Chicago boy, made good, that we probably need a new constitution. A new constitution that takes into effect the reality of the incredibly complex and diverse society that our country has become. I really do believe we're all in it together. And the fact that the things that unite us as a society have become so abstract and so difficult to connect to our hearts, to our values is the essence of the problem. Why is it so hard to do something so obvious and so necessary as health reform? Thank you all very much for having me here. I was thinking, as you were describing in your last slide, why things didn't work. I'm thinking maybe politics is more like warfare. And we have military colleges where people go to study war tactics. Are there places people go to study political tactics as the Institute of Politics like that? They go to Harvard. You've got an Institute of Politics right here at the University of Chicago headed by one of the chief warriors for the Obama administration. Sure, I was a warrior. That's why this made me so angry because I actually believe if you're gonna shed blood, you need to get something for it. I'm not sure where you ended up in terms of whether or not the ACA, everything considered, was a good thing to do or not. Can you sort of... I think I probably directly said that we are way better off as a society for having done this. No, I'll say it now. There's no way that that, I had a whole list of benefits from this law that are a step forward from where we are. Repealing the law would be a giant step backward. I don't want anyone to walk out of here believing otherwise. I was mentored by an individual who participated in the Kennedy administration, the first Kennedy administration. And their vision at that time was to have a clear federal role, not only for the elderly, but for those who were vulnerable, whether they were minority impoverished or disabled. And somehow that gets lost because in this private sector model, traditional health insurance, never covered women, never covered the disabled, was really not set up to cover those who were different. And we can't even get into the ballpark about talking about this. And I think that the amount of misinformation that's out there is incredible. And it's not only that we don't have a king, but we don't have a way to get any accurate reality testing. And the misinformation is intensely subsidized and paid for by people who don't want this system to change. I don't know if that's a political problem. I don't know if that's a reality testing problem. I don't know where it comes, but it's more complicated than some of the things that you have shared with us. And how would you address that misinformation? I think the burden on those who want progressive change is to explain to us in English how it's going to help us and what it costs in English. And that test, this administration failed. I'm not gonna say anymore. It's the reason I voted for him because I thought he was going to be a good teacher. His political staff concluded, for reasons I completely understand, looking at the polls, that the American public wanted them to be doing something else than reforming our healthcare system, which is to try and repair an economy that, for what it's worth, is still damaged. And with the old adage about when you're in a hole stop digging, they didn't want to invest further political energy in trying to explain something that was so costly and so damaging to them, they really didn't want to change the conversation. And as far as I'm concerned, if you raise all these issues, if you raise all those concerns, if you set off the antibodies and they're out there squawking about all this stuff, you have to continue talking until you've tamped down the infection. That's my personal view. Can you mention some of the really big systemic problems with the Medicaid program just for having sort of major systemic issues? I wondered if you could just, if possible, highlight some of the biggest issues that you see generally with the program. And then how does that inform what you think will happen and what you think should happen with further expansion in states that haven't expanded? Right. I mean, I think the problem with Medicaid is that it's trying to do too many things at once without enough resources and without enough programmatic focus. You've also got the problem that in states where covering the poor is politically controversial or unpopular, you can leave half of the eligible population unenrolled and it not cost you politically. I actually had a map in here that showed the Medicaid uptake rates. I mean, there's no incentive for a state to want to go from 50% coverage to 80%. If they're paying 40% of the bill and they don't have the money. So I think a big problem with the program is that it's counter cyclical. The point of Medicaid is to help people when they're in trouble and yet at the very point where they need the help, the state's revenues are falling and it's going on into deficit. So I think a major flaw in the program that we have is that states haven't been required to create a rainy day fund so they don't have to cut the hell out of reimbursement to places like the University of Chicago when they run out of money. I mean, the Medicaid care burden is not equitably distributed across our health system. It piles up in places where the poor live. So the University of Chicago can be drowning in Medicaid cuts and the folks at Northwestern just steaming on in their Rolls Royces and it's okay, that isn't okay. So I guess my point is, is it better to provide a really inadequate level of faux health insurance coverage for the poor or just to give them care? And I think we've reached the point where the insurance model is irretrievably broken and that we really ought to just be using the public safety net infrastructure that we already have to provide them direct care and get out of the payment model. I think it ought to be a service benefit model rather than a payment and reimbursement model. Thanks for that wonderful talk. The list of things that you would do was really interesting and I wonder if you see a roadmap to getting to those solutions, maybe through the state's experimenting or what would be your roadmap for getting some of those things? Whoops, well I was gonna try and get my list back. I mean part of the problem is, moving away from employer based coverage requires you to explain that you're only paying for 20% of it yourself. Most people think they're paying the majority of the cost. Employer based coverage costs the average family of $416 grand a year. The Republicans actually tried one of the reasons why Obama ran against taxing the benefit was because John McCain's whole thing was to transfer that $200 billion from employers to individuals. And for the life of him, he couldn't explain how it worked. So I mean I think the problem with my agenda here, the problem with Zeke's agenda in his 2008 book was that it would require a level of education of the public far beyond what Barack tried to do. So I guess my concern about, okay well here's the rational way I would redesign our healthcare financing system works is who is gonna be patient enough to sit there and explain to people where their current benefit comes from and how much of it is being wasted. And how wouldn't it be better if you had a choice yourself an adequate choice not where you have a $5,000 deductible that you never meet and this huge co-payment requirement that you don't have the cash to pay for which is what we ended up with coming out of a lot of these health exchange choices. So I'm gonna be pretty harsh. It would require a Reagan-esque level of communication and empathy to put that across. I think even Bill Clinton couldn't do it. He's a pretty slick talker. You gave an opinion that it might be necessary to have a new constitution in order to solve the problem of congressional dysfunction. Yep. And I've actually been thinking about something that could achieve that that might be far simpler which would be a law that basically says that the perimeter, the net sum of the perimeters of all congressional districts has to be minimized. I love it. So you have a mathematical solution. Do you think, what would you think of something like that? You know, I mean, it really does go down how you design congressional districts and what role the parties play in actually putting people in office. So what the state of California has tried to do and it's interesting, they did it even though the Democrats run the state. They run it. They have the governorship. They have both houses of their state assembly. Is they've created a commission to design the congressional districts and they've created a who gets the most votes way of electing people where the political party doesn't define the choices. So watching what happens in California might be a real clue about how powerful some of the solutions like the ones that you proposed might really be. I think we have to go further. The idea that bribing a congressman as protected speech under the constitution is certainly troublesome. So is the idea that a corporation is a person. I don't get either of those things. I mean, I think when I'm talking about redesigning the constitution, I'm sort of like thinking about how do we frame the role of government in the economy and polity that we have today. Not that we had when we were 12 million people in a bunch of colonies and people living on plantations. Back to the room. Two questions, if you don't mind. The first one, the quicker one. I came in a bit late, but you talked about the public information problem on this issue. And your last slide before this one, you had Thomas Jefferson, who was known for it to be a good writer and a terrible speaker. A terrible speaker. So who in fact did form the language of this that even you, the policy warm can't understand? Who actually wrote the bills? The 900 pages. Elizabeth Fowler did. And who she? She was the lead health staffer for the Senate Finance Committee. She's now a lobbyist. So she worked under Max Fawkes? Yeah, Max's staffer wrote the bill. And nobody else had the input? Well, I mean, they had input, but I mean, even Max didn't read the darn thing. Even the senator who's committee it was didn't read the bill. She worked for Nancy Pelosi? No, no, no, no. She worked, it was the Senate billmark that became law. And the Senate bill was written by the Finance Committee. And the lead staffer was Liz Fowler. She's a smart person, but not smart enough. Okay, well, thank you. My broader question is those, you've told us about the states that didn't expand. Right. And what the problem they're gonna have financially. But those states that did accept the expansion, like Illinois, where I understand in three years it's sunset. So the feds pay for it for three years. And so those governors that did buy on, you think they made a mistake? I just, you know, the argument in Virginia, which has not expanded on the part of the Republicans is, there's no guarantee that the state share in 2019 of 10% doesn't become magically 30, right? That Congress has the power to increase the state's share for the newly enfranchised people, and that we can't count on Congress to keep it at 10%. I think that's a bogus argument, because the match has never been cut since Medicaid was enacted. It's never been cut. It was increased temporarily during the recession as a part of the stimulus bill, and then set back to where it was since the late 1960s, but it's never been reduced from the level of statutory guarantee that was there in the bill. And why, you know, states like Mississippi don't pay half the cost of their Medicaid program because it was indexed to the per capita income of the state. So I think they only pay 30% or 32% of the total cost. The reason why states were reluctant to expand were the huge number of people that were eligible for Medicaid under the old law, but not enrolled. And when they enrolled, the state would have to pay between 30 and 50 cents on the dollar for every one of those folks that came out of the woodwork and got coverage. Now, even Texas and Florida have seen about a 3% increase in their roles, and nearly all of those folks aren't 100% fed. They're like 50% or 40% or 45% state. So, you know, I mean, I became an expert on Medicaid. Whenever Medicaid got the sniffles, we all here got pneumonia, and I got this burning in my gut, because I had to dust off my telephone and start calling our trustees to try and stop them from killing us. I was here during a time when Medicaid went from cost-based payment of outpatient services to fee-for-service. We went from 90 bucks to 10 bucks. It was 60 days notice. $15 million in economic losses to this place because we budgeted for them to continue paying us on cost. And there's just been this sequence of horrendous things that happen every time the state runs out of money. You know, Medicaid is like having a whole bunch of cannonballs in the hold of your ship. You know, when it gets really stormy, the cannonball shift in your upside down, and if you're the governor, you get fired. You have to either increase taxes or cut the hell out of the payments for caring for the poor. And people that are at risk for that, like you folks are here right now, are the people that really end up paying the price because you can't get paid an adequate amount of money to take care of people who desperately need your help. Looking ahead, five years. Five years. Figuring that the Goldsmith plan is not likely to be implemented. Right. It's extremely unlikely to be implemented. The Goldsmith widened the manual plan. Where will we be five years from now in terms of the bill for the board? We'll be coming out of the next recession. We will have cut the hell out of the subsidies. We'll have cut the hell out of provider payments for the 80 million person Medicaid program we created. I'm really not sure, Mark. I mean, five years from now, I think we will have a recession between now and then and I think it will be an incredibly damaging recession to our healthcare system. I'm really concerned about the cyclical survivability of the structure that was created by ACA. Now, I mean, we need to keep this recovery going. We need to get the other 11 million or 15 million people back to work. We need a real recovery. Thank you all very much. Thank you.