 On behalf of the McLean Center for Medical Ethics, I'm delighted to welcome you to today's lecture in our series on Ethical Issues in Healthcare Reform. But before I introduce Professor David Hyman, I do wanna say a few words about the next three sessions, next three sessions in our series. Only one of the three is actually listed in the brochure so that next week on May 21, as listed in the brochure, there will be a talk on healthcare reform moving forward, policy changes and cost containment strategies by Neera Tandon, who is the president of the Center for American Progress and a former senior advisor for health reform at the Department of Health and Human Services. Next year, next week's lecture, the one by Neera Tandon will be cosponsored by the Institute of Politics. So I encourage people here to register early because when the Institute of Politics cosponsors, they have an additional mailing list. The following week, May 28th, and this is not on the schedule, we'll have a talk by Jeff Goldsmith. For many years, Jeff worked in strategic planning in our dean's office here at the hospital, but he's been a scholarly healthcare consultant. And Jeff's topic, this will now be on May 28th, will be the tragedy of health reform. So Jeff will be speaking in this room on May 28th. Godfrey, do you remember? Goldsmith, you do. Finally, the last talk of the spring quarter, again, not on your brochure, will be given by Dr. Ezekiel Emanuel. And the topic is reinventing American healthcare. Now, Ezek's talk was arranged not by us, but by the Institute of Politics, although we, the McLean Center, will be cosponsoring the talk. It will not be in this room. So it will be on Wednesday, June 4th at the Quad Club at 6.30 p.m., so it's a different time and a different location. I'm told that space is really limited, and so application for attendance there would be through the Institute of Politics. Okay, those are my preliminary announcements. Today I'm delighted to introduce our speaker, a dear friend of mine for many years, I think even perhaps a student at some point, of mine and of Godfrey Getzes. David Hyman is a graduate of the college of the Pritzker School of Medicine and of the University of Chicago Law School. David is the H. Ross and Helen Workman Chair in Law and a Professor of Medicine at the University of Illinois, where he directs the Epstein Program in Health Law and Policy. David's research focus is on regulation and financing of healthcare. He teaches a wide variety of topics, including civil procedure, medical malpractice, law and economics, insurance, and tax policy. While serving as a special counsel to the Federal Trade Commission, David was principal author and project leader for the first joint report ever issued by the FTC and the Department of Justice, a report entitled Improving Healthcare, a Dose of Competition. David is also the author of Medicare Meets Methodophiles, a book selected by the U.S. Chamber of Commerce as one of the top 10 books of 2007. David has published widely in peer-reviewed medical health policy and law journals. Today, David Hyman will speak to us on the implementation challenges of health reform. Please join me in giving David a warm welcome. So thank you, Mark, I appreciate the gracious introduction. I think more years ago than I want to recount, I was sitting in those chairs and realizing it was much easier to sit and hide than be up here and talk. The converse of that is it's always easier to look smarter when you're asking the questions than when you're answering them. So keep that in mind for later. I'm gonna talk about the implementation challenges of PAPACA, which is, of course, the Patient Protection and Affordable Care Act. I call it PAPACA because when I call it Obamacare, my liberal friends yell at me because they think it's a slur. And when I call it the Affordable Care Act, my conservative friends yell at me because they think it's just an inaccurate description of the likely consequences of the legislation. So rather than try and sort that out, I just call it PAPACA. I'm gonna talk about implementation challenges. The title actually got picked back in May of 2013 and I picked it because I was pretty confident that there would be implementation challenges. I certainly don't want to suggest that I anticipated the various forms that they took or the direction in which they're likely to go, but I will have some more to say about that. Implementation is one of those issues that people tend not to want to focus on or pay much attention to. It's much more exciting and glamorous to talk about all the wonderful things that the legislation will do than actually attend to the sort of grubby, dirty details of grinding out a system that will actually end up delivering them. And I'll have a little bit more to say about that as we go. But for those of you who are unpersuaded that there are implementation challenges, this is the cover of Time magazine from back in November of last year, they were enthusiastic supporters. I think it's fair to say of health reform legislation as it went along. And then this was their take two months after the exchanges opened for business. So a couple of things I'm not gonna be talking about today, just sort of fair disclosure. If you wanna talk about these, Mark, you'll have to have me back, although you may not want to after you've heard my talk for today. But I'm not gonna talk about the pretty important subject of whether health insurance or Medicaid save lives or improve health and how much they do that, if they do that. Second, whether universal coverage has cost justified the highest invest use of our money. Not gonna talk about that either. For those of you who wanna have an argument about single payer, not the place, not gonna be the talk for that. Same for those who wanna talk about tax credits, HSAs and selling health insurance. I'm basically taking the legislation as given with the solutions and reforms that are reflected in the statutory text and trying to give you a read on how things have gone so far, perhaps why there've been some of the difficulties that have emerged and some thoughts about issues we're likely to see going forward. So the things I'm gonna be talking about today are first of all, a sort of quick snippet about ideology and the way in which people think about PAPACA, which I think will be important for reasons that'll become apparent in a moment. Then some just basic background on implementation, why you should care about it, why it matters, why passing laws no matter how well-intentioned and how carefully crafted if they crash and burn on launch or have adverse consequences at the back end that people who were responsible for drafting it didn't really think about, would not have wanted, let alone the people who have to flip the consequences later. And so that I think are reasons why we ought to care about implementation. And although I'm gonna be focusing on PAPACA, you can tell similar stories about all sorts of legislation at both the state and federal level. These are general phenomena that we ought to worry about when we're doing these kinds of things. And I'm gonna talk about both the politics and policy aspects of PAPACA because I think they're inseparable in important ways, partly because of the nature of PAPACA but also partly because of the nature of implementation across all statutes. And then finally I'm gonna give you a couple of hedge predictions about things you might wanna be looking out for in the next one to three years as we move forward with this statute in whatever form it takes. So what is PAPACA? Well, it's a law. It's a statute that was passed by Congress. It includes eight separate titles. I've sort of listed them for you here. They encompass pretty much every aspect of the healthcare system, including some aspects of the healthcare system that don't exist yet because PAPACA is trying to move things away from where we are to some new system for delivering and financing healthcare. And so it's important to recognize first of all that there's a law that's written down. It's got words in it that purport to provide guidance to the people who are responsible for implementing it as well as for judges who will hear challenges as well as for businesses and individuals who are trying to sort out what their obligations are in light of the statutory text. That's the sort of first cut. The second cut is if it's a law, it's a somewhat unusual type of law. In lots of ways it's a progression of a long standing tendency which is it's a law that delegates lots and lots of responsibility to other people to make decisions about what the law will actually look like when it's operational. So the words the secretary shall are included secretary, meaning the secretary of health and human services. That's a sort of classic delegation strategy for a bureaucracy to put flesh and sometimes bones on the statutory text which basically says we'd like to see this, you go and figure out how to do it. So there's a very significant degree of delegation to the back end to subsequent years. Sometimes that's because the people who are writing the statute couldn't figure out what to put in the statute and it's much easier to just kick the can down the road, say we'd like this and leave the people responsible for administering to figure it out. Sometimes it's because actually you can't anticipate the ways in which the statute should be operationalized and so you have some broad commands but you give a fair amount of discretion and deference to those responsible to implement it in a sensible way. And that sort of makes a big chunk of what we're doing a hostage to the future, to future political developments, to the people who are making the decisions about implementation, to the larger economic circumstances in which particular provisions are launched or not launched and so on. So although it's a statute, it's a very open textured and open ended statute which creates both opportunities and difficulties. More on that in just a few moments as well. But the other thing I think Pappaka really is is a Rorschach test, okay. People from across the political spectrum can look at the statute and draw radically different conclusions each in the utmost good faith as to what's in the statute. It's a long and complicated statute. If you can't find anything in there you like, you're probably not trying very hard. If you can't find anything in there that you dislike, you're definitely not trying very hard, right? This is a compromise, a very significant compromise, albeit a compromise within the boundaries of the Democratic Party and its majority status. So this is from an article I wrote a couple of years ago that sort of continues on this Rorschach theme to its enthusiast, Pappaka is a historic transformation that will dramatically broaden access, lower costs, reduce the deficit, eliminate healthcare, fraud, waste, and abuse. It's also a dessert topping and a floor wax for those of you who remember that reference. It does everything, right? It's all upside, no downside. But there are obviously people who don't like it and there are people who don't like it across the political spectrum to critics on the right. Pappaka is a catastrophically misguided, ineffective, and unaffordable monstrosity, crammed down the throats of an unwilling public by special deals in legislative jacanery. I left off job killing in there but you can sort of fill that in on your own. But if you ask the critics on the left, it's a disappointment of epic proportions. It's hard to sort of overstate the degree of disappointment. Control of the presidency, the house of filibuster proof majority in the Senate, albeit for a very short period of time, they couldn't even deliver a public option, let alone a single payer system. So lots and lots of disappointment on that issue. The other thing to appreciate about Pappaka as if what I've told you already isn't make the point clear is that ideology matters and how people look at the same data and what they think about the solutions ought to be to that. And this is from a very clever paper in health affairs. Oakman's the first author, Bob Blendon's the second author. And what they did is they interviewed people from across the political spectrum and they asked them basically, how hard do you think it is for the uninsured to get care? And then they asked, what's your position on national health insurance reform, which they basically described as the government collecting a lot of money and using it to pay for the health insurance for people for health care or health insurance there for people who don't have it. And so the thing to note on the left side is if the respondents assessment is that it's not at all difficult for the uninsured to get care and over on the far right hand side, if they think the uninsured can't get care at all. Okay, so that's the sort of scale here and here is the fitted probability of respondents supporting national health insurance. So the good news is pretty much across the political spectrum, the more difficult you think it is to get health insurance, the more you're gonna be supportive of something, potentially something big to deal with it. So that's the good news. The not so good news is that there's a vast and yawning gulf between Republicans and Democrats on their willingness to support that issue even after controlling for their assessment of how difficult it is to get. So for example, if a Republican, median Republican voter thinks it's not at all difficult to get care, basically about 5% of them are gonna think that we ought to do some form of national health insurance reform. Democrats, it's north of 60%. Looking at exactly the same situation, okay? Not at all difficult to get care, 60% of Democrats still think we ought to do national health insurance. And the sort of disparities narrow a little bit at the far right, but they're still pretty impressively large. So long story short, don't think people will look at the same data and draw the same conclusions and instead reflects their larger views about the role of government, about the degree of individual responsibility versus collective responsibility we ought to have. There's also by the way differences in the distribution of voters from left to right, depending on their political affiliation. But even after you control for that, you still see these differences. The second thing I wanna show you is another example of ideology matters. A week before the Supreme Court issued its opinion in NFIB, the Health Reform Challenge, CBS and New York Times did a poll where they asked people, what do you think the Supreme Court should do? Now this is just a straight popularity contest in important respects. It's not a question about what does the law say the Supreme Court should do, but that's a larger discussion. But what do you see? Well the first thing you see is that 41% of those they polled wanna just rip out the entire thing, root and branch. Now that's not a promising sign for easy implementation if the Supreme Court doesn't do that for you, right? If 40% of people basically wanna fire bomb the legislation, you're gonna have some problems. But 27% think that you ought to just scrap the mandate, which was in fact the constitutional challenge along with the Medicaid issue that was before the court, and then 24% wanna withhold. So this is a deeply polarized population. You can take pot shots at the pool that they sampled and whether it's big enough, but nonetheless it sort of shows you depolarization. The more interesting thing though is to look at the breakdown by political affiliation. So 67% of Republicans basically wanna scrap everything versus 20% of Democrats. And you see the sort of flip side with uphold. 6% of Republicans versus 42% of Democrats. The good news if you're an independent is you're squarely in the middle, right? You're sort of in between on every relevant measure. So the point of this and the reason why I highlight it is because of the problem of motivated reasoning and thinking about how implementation is actually going and where we ought to go from here. And this is from another article I wrote that sort of summarizes an extensive body of psychological research, the long story of which is where you stand depends a lot on where you sit. Your priors about which side you think has the better of an argument have a profound impact on how you assess the data as it's presented to you. And so people tend to ignore evidence suggesting their prior views are incorrect and focus on information confirming their prior view. That is somewhat discouraging as an educator. But nonetheless, I think it's an important point in thinking about implementation. If you want two concrete examples of this when the exchanges fell flat on their face in October and November, the sort of consensus view among Republicans was that this was the end of health reform and it would be a straightforward shot to repeal it instantaneously because the public would be with them once it had failed so publicly. And conversely, after eight million people turned out to have enrolled in the exchanges, more on that in a couple of minutes, the Democrat take at least for those who were willing to voice an opinion was this was a huge success and it would never go away and the debate was over. And those are I think nice examples of motivated reasonings on both sides. And everybody subject to it, it's important to recognize that when you're looking at the kinds of questions that involve implementation every bit as much as anything else. So this is a quote from a movie called Particle Fever, which is about theoretical physics and the Large Hadron Collider. I went to see a movie about it on Monday. That's what we do in Champagne as we go to see movies about particle physics because there isn't much else to do. But this is a quote from a very eminent theoretical physicist at Stanford. And he says, the secret to success lies in jumping from failure to failure with undiminished enthusiasm. That's probably a good strategy for theorists, for people who are trying to come up with new and exciting explanations of what's going on in the world. However, it's a terrible strategy for implementation. If your approach is jumping from failure to failure with undiminished enthusiasm, you will relatively quickly be out of a job if you're responsible for the implementation of a law or anything else for that matter. And it's really bad for practice, really in healthcare. This is from a piece I wrote back in 2009 about the similarities between what was happening with the rallies against Papaka and the debates over the Catastrophic Coverage Act several decades earlier. Healthcare is deeply personal for people. If you mess with their healthcare, they won't just write a nasty letter to the editor. They will show up at demonstrations with homemade signs, scream at you, chase you down the street and maybe put in probably, depending upon the district that you're in, vote you out of office. So you better have a good reason for what you're doing and a compelling explanation of how your plan will personally benefit your constituents. And you can sort of draw your own conclusions about how effective the administration has been in meeting those preconditions. So let me talk now, turn to implementation policy. The core issue with implementation is when it's done effectively, we don't notice it and we don't think about it and it becomes part of our lives. So passing a law that says you ought to have clean water is all fine and good, but if you turn on the tap and there's no water, you get irritated with the people. It's when you turn on the tap and there's water and you don't even think about it that you know that implementation has worked well. So that's one important point. If it's done right, we don't notice it, but it doesn't happen that way without lots of hard work, lots of creativity and adaptation to difficult circumstances, including the importance of interest groups and stakeholders. Implementation is just the continuation of the fight over the original legislation. All of the people who had views about the original legislation don't just go away. They don't say, okay, you won, we're finished, go right ahead. They just keep on slugging. They change the domains in which they're arguing. They develop new strategies for arguing, but they don't go away. So don't assume that implementation is a purely technical matter to be done by technocrats. It's intensely political. A couple of issues and challenges when you're dealing with implementation. The first is you have to think about, well, who do you give the responsibility to, right? There's lots and lots of entities within the federal government and within the state governments who you give it to ends up making a difference in what it looks like. So programs that are run by the Department of Treasury look completely different than programs that are run by HUD or Interior or HHS. In healthcare, it's relatively straightforward. It was likely to go to HHS, but there are lots of subdivisions within HHS as well. And the personnel that work within those subdivisions each have their own prior training, their own interests, their own way of looking at problems, who you give the problem to and their training and their ability to actually handle the problem that you've given them makes a big difference in whether the implementation goes smoothly or not. And there's, I think, a fair amount of evidence that the sort of face plant of the exchanges had a lot to do with the personnel who were given responsibility, the way in which responsibility was allocated within HHS, which was, of course, a response to the political environment in which they were trying to implement the statute. Second is those sort of priorities, okay? Now it's one thing for people to pass a law and for the president or the secretary to say this is an important priority. But if it isn't the priority, the day-to-day priority, the single most important thing that people are working on, that are working on it, it gets pushed to the bottom of the stack. They don't pay as much attention to it. They don't worry about it as much. It's just, it's not a priority, right? So one of the things that I think effective presidents are good at when implementation is on the table is paying a close eye on what the administrative state and the bureaucracy you're doing rather than just assuming that passing the law was the hard problem. Third is bandwidth, right? Time is limited just like everything else. Agencies have lots of other things to do with. If you give them additional responsibilities but you don't give them more money or more headcount or both, even if they wanna work on it, even if it's their priority, even if they have the skills, they're not gonna be able to effectively implement it. Fourth is, of course, bureaucracy, right? The whole thing is structured as a bureaucracy for a bunch of reasons, some of them good, some of them not so good. Think about who ends up working in bureaucracies and what their incentives are, right? Nobody gets stock options for the success of a successfully implemented piece of legislation. So you gotta come up with some other motivations. And so you need to think about what those will look like. We actually, and it was my privilege to work as a federal employee for three years, we have a far better bureaucracy than we deserve. We have immensely talented, hardworking people working in a relatively dysfunctional system. And so if you wanna blame someone, don't blame by and large the people who are actually working pretty hard to try and make this work. The fifth problem and it's a really important problem is information. It's really hard to figure out what's going on out there in the world. And for healthcare, where adaptation to local circumstances and the pace of medical technology are constantly in flux, you really should worry about doing nationwide programs. And so part of the design of PIPACA with its emphasis on state involvement was to try and finesse that problem and to try and also diffuse some of the politics of it, ultimately unsuccessfully. But the Hayekian information problem is always gonna complicate implementation, strategies that are set from the center. Next to last is politics. Politics affects what agencies do and how they do it. Influential congressmen calling up and yelling at the secretary or doing an unpleasant oversight hearing will make people more risk averse than they would be to begin with and can dramatically affect the decisions. And then finally is of course the law. Sometimes the people who are implementing the law wanna do something that the law seems to prohibit. Well, the usual response is not to say, well, let's just waive the law or just ignore the law. It's to go back to Congress and get a change in the law and the way in which you do that is you implement it as written to get them to see that there are problems with it. So law ends up being a constraint on bureaucracy responses sometimes for good reasons, right? The bureaucracy wants to do one thing and Congress wants to do another. The last time I checked the Constitution, Congress wins in those fights. But if you're interested in quote, sensible policy, you will often find Congress making decisions that don't map on to what experts in the field think we ought to be doing. And that's because of politics implemented through law. So a sort of concrete example to make the point plain. This is my stylized version of health policy in the United States. We have three little pigs, one of which wants privatized healthcare, somewhat ironically they're on the left side of the picture. And then we've got another little pig who wants single payer healthcare, they're on the right side of the picture. And the compromise is of course to build it out of twigs. Think about whether each pig, other than the one that got the twigs in the middle is gonna be happy with implementation decisions of the steer straight down the middle. Each of them is gonna try and torque the decision making in favor of what they wanted when you're in the back end implementation stage. So don't assume that the underlying dynamics go away just because you've enacted a piece of legislation. So the other complication here with implementation is its complexity is a function both of the tasks that you're trying to do and the number of those tasks that you're trying to do simultaneously. So law professors sort of divide things, the things that the government does up into two big categories. One is correcting for market failure. The other is advancing other social goals. I've listed for you four different examples of specific market failures. Each of them calls for a different regulatory strategy. The things you do, the things you would look at, the kind of information you need are all gonna be influenced by which of those things you think you're about. And similarly advancing other social goals. So part of the challenge with PAPACA is it's really doing all of these things simultaneously. And so it calls for both incredibly complicated responses multiplied by the number of those things you're doing simultaneously. So this was never gonna be an easy situation independent of the complexity of the underlying statute and the politics into which it was launched. And for those of you who wanna sort of read more about implementation, there's a wonderful book that just came out by Peter Schuck who's a law professor at Yale retired called White Government Fails So Often. Those of you who don't wanna buy the book, he was on The Daily Show with John Stewart a week and a half ago, you can get the short version by watching the video. But the short version is government fails a lot of the time. Even with the best of intentions, even with all of the hard work by everybody involved, there are some reasons why that happens, but we don't tend to attend to those reasons in our next iteration down the pike. So Schuck thinks it can do better. He's got some things that he lists as to how it can do better. One of the striking things with PAPACA is how much it fails to take advantage of the things that Schuck thought were necessary in order to do better. So Henry Aaron's a well-known health economist at Brookings in D.C. Back in 2010, he sort of gave you, I think, the conventional ex ante view about implementation that it was gonna be tough. The remarkable challenges needing adequate funding, enormous ingenuity and goodwill, as well as cooperation from anybody. How many people think we had those preconditions in place? Okay, 0% voting in favor of that. I might say we got some of those things, but we certainly didn't get the full list. Aaron also gives what he thinks is the ex post risk. If you don't do implementation right, you get zombie legislation, a program that lives on but works badly, poorly funded and understaffed state health exchanges that don't drive improvements in the system, clumsily administered subsidies that lead to needless resentment and confusion and mandates that are capriciously enforced. We've got some evidence of the last one already, but the other ones I think it'll remains to be seen what we ultimately will end up with out of this legislation. But these are the risks if you don't do implementation strategy, right? Getting the statute passed was in some sense the easy part. Implementing it and doing so successfully in a way that gets people to invest in it and believe that it's part of their lives just like the water is a very different scenario. Okay, so now let me turn and talk about the politics of implementation. This is a quote from Daniel Patrick Moynihan who was the longtime senator of New York and he was talking to David Gergen. And he made, I think, an important observation which at least reflected his reading of history, which is if you wanna do major social change in the United States, you need two things. You need significant bipartisan support from both sides of the aisle. Otherwise, there would always be trouble with it, meaning the legislation. Second, landmark social legislation should enjoy solid support from the public before it is passed. So Moynihan could be wrong, right? He may have been just describing the way that things were in the past rather than the way they'll be in the future. But it's useful to sort of ask yourself the question, well, how did we actually do on the two criteria that he listed? And this is from Aaron's same New England Journal of Medicine article. I apologize, it's maybe a little hard to see. But this is the sort of Republicans and Democrats voting in favor and then against major social legislation and the striking thing is the sort of bipartisan support for everything up to the Medicare Modernization Act of 2003 or the MMA and then zero votes from the Republican House. That's the House and that's the Senate for Papaka. So at least one important precondition that Moynihan identified, not just fails a little bit, but fails completely, sort of lockstep opposition. In fact, the only thing bipartisan about Papaka was actually the opposition to it. There were a significant number of Democrats who voted against it at the end of the day. What about public support? Well, this is a sort of poll of polls that pulls together all sorts of polls that were taken starting in November of 2009 and going to yesterday. And this line on top are the people who are against or oppose the healthcare law. And of course you should raise all of the same questions about polling people and push polls and asking questions about things that people don't fully understand. But basically at no time since they began polling was there a popular support for this piece of legislation that exceeded the opposition. Right about now we're about 10, 11% upside down. And you can find polls where the margins are smaller and polls where the margins are larger, but this is a pretty consistent plan. So if you think Moynihan was on top of things at all in terms of prospective, you ought to worry and worry a lot about Papaka's future if neither of the important preconditions are satisfied. More on the politics. This is a New Yorker cover from last month. It's obviously the president feeding medicine to these are various major Republican figures, Ted Cruz, John Boehner, Mitch McConnell. They're obviously not very happy about it. This was the sort of triumphalism. Remember what I said about motivated reasoning and thinking about Papaka. So that's certainly one side of the divide. This is the other side of the divide. This is a cartoon from about a month and a half ago. This is a donkey, obviously, the Democratic Party symbol that's got cement overshoes and sinking as a result of Obamacare. So that's our radically different takes on exactly the same factual setting. If you look, this is a study that got posted on the web. I don't vouch for the methodology, but I thought it was interesting. Somebody take a look at the websites of the various House Democratic and Senate candidates and tried to see what their take was on Papaka if they said anything. So outright support over on the left, support and strengthen, support and change, change or oppose, avoid mentioning, and bad or outdated website. And so the striking thing here, at least in the House, 63% of the people, all of whom are in safe districts, outright support for the legislation. What about the Senate? Well, it looks a little different, right? 55% of people want to pretend that there isn't a piece of legislation that they voted for. So radically different takes. Keep in mind the redistricting issues and the gerrymandering of districts makes lots of districts in the House safe, but you shouldn't assume that for the Senate. And of course, the other complication with Papaka is because it rolls out in sequence. Every two years we have an election where people get to vote on whether they think this is a good idea, where control of the House is up for grabs and potentially the Senate as well, depending upon how many seats are really in play. So the politics of implementation turn out to be very challenging for anybody who's trying to do anything in this space. So what about policy, right? I've talked so far about politics. Let's talk about policy. Well, what went right? And there were things that went right, that went smoothly, that we don't notice, that we don't pay attention to them because they just seamlessly work their way into our lives. So the first thing that went very smoothly is the ability to enroll your children up through the age of 26 in your policy. No fuss, no attention, nobody paid much debate over this issue, estimates of how many people got covered in the range between one and three million people. It worked fine. And maybe that's because we had parents making decisions for their children. But nonetheless, it went very smoothly. The new taxes also went into effect pretty smoothly. Those of you who fill out your own taxes may have noticed there were some new forms that required you to pay new taxes if you made enough money. Flexible spending accounts and a medical device tax went into effect as well. There's actually a lot of pushback on the medical device tax that may end up going away. And there's lots of other low visibility stuff that I don't want to take the time to talk about. But there are large chunks of this that were just sort of the regular bread and butter government people didn't pay much attention to. But there were some things that went wrong and not just wrong, but sort of catastrophically, publicly wrong. The first of which was of course healthcare gov. I hasten to add, this is not the first government IT project that's gone south. The FBI had a sort of big set of problems as did the IRS with its sort of computer initiatives. It's also not the first government procurement project to go wrong. But what's striking about this one, unlike other things is it's visible, it's salient to people, and they can easily compare the government's healthcare.gov to other areas of their lives where things seem to work better. So the comparison to Amazon or Travelocity or Kayak was easy to make. And so sort of magnified the visibility of this failure. And so the New Yorker triumphant in March, but back in November had this cover that's Kathleen Sebelius crossing her fingers in the middle, President Obama on a phone from about 1980 on the right side, and then someone trying to put a floppy in big floppy into a very old computer. It looks like one of the old Macs, SES that I actually bought when I was an undergraduate, along with a hammer and a screwdriver, which I assure you are not useful tools when you're trying to improve your website's functioning. So I thought I would try and show you a quick video that's sort of a message from the Department of Health and Human Services. Now, a lot of folks have been talking about our new healthcare enrollment website and it's been crashing and freezing and shutting down and stalling and not working and breaking and sucking. So when Saturday Night Live knows the name of the Secretary in Health and Human Services, let alone makes its opening about the healthcare.gov, that's not a good sign, right? That's not the water working the way that it's supposed to. Mark, how much longer do I have? 10 minutes, okay, so let me skip that. It's actually, doing this was really hard, right? This was not a sort of straightforward walk in the park. This is the simple flowchart of all of the things that healthcare.gov was supposed to do in the background and failed badly. The fix, which was actually remarkably successful, fixed the front end, but didn't do very much about the back end. I think they're gonna be serious implementation issues at the back end with reconciliation with the insurers and actually getting from people filling in their forms to figuring out who's actually enrolled. But I don't wanna suggest that healthcare.gov was a straightforward issue to do, but how did it happen that nobody had any idea of how bad it was? So this is a quote from the Time Magazine, McDonough, who was the chief of staff of the White House and Jeannie Lambrou, who was the sort of point person, basically all thought that everything was going fine as well. In fact, McDonough told his friends, 36 hours before launch, this is gonna knock your socks off. So that's a real remarkable picture of dysfunction within the bureaucracy, failure to communicate information, failure to send useful feedback. Megan McCartle, who's a blogger, similarly has a sort of explanation that the policy people said, gee, we'd like these really cool things, and the technical people basically thought to themselves, well, we can't do it, but we're not gonna tell them because they're idiots, because they're asking for these incredibly complicated things. And so you end up with a circle where nobody's willing to tell anybody the bad news and you have this very public embarrassment. And so that's the cover of Code Red, the people who rescued the website for a time to put a bunch of techno nerds on the cover shows how bad things really were. So what else went wrong? Well, a couple of other things. The state exchanges, not very many states, ended up opting in of the ones that did, some of them failed in their own right. So Oregon succeeded in enrolling absolutely no one and cost $250 million in federal funding. Some of them succeeded in enrolling people, but they had pretty high costs per person, particularly for the small states. Connecticut, Kentucky and Washington seem to have actually developed exchanges that work pretty well and reasonably cost effectively. We had similar problems with the Medicaid opt-in. About half of the states opted in. The administration is trying to offer various sweeteners to get the rest to come along. It remains to be seen how effective that'll be. This is a map of which states sort of ran their own exchanges versus let the federal government do it. Let me skip that in the interest of time. About 26 states in the District of Columbia opted to expand their Medicaid program and big states, Texas, Florida and Virginia and Pennsylvania's still thinking about it. Obviously, if they're not opting into the exchange, you don't get nearly as much coverage. It also makes the program cheaper. If we're not covering as many people, it's suddenly much cheaper. That I don't think is what the people responsible were shooting for, although they are bragging about it being cheaper without acknowledging that this is an important part of the cause. So what else went wrong? Well, a bunch of other things. The contraception mandate involved picking a fight that I think ultimately is not gonna end very well and getting on the wrong side of both the Constitution and the Religious Freedom Restoration Act. We'll see how the court ends up handling that. The employer mandate's been deferred twice. It remains to be seen whether it'll ever go into effect. The subsidies, there's a serious argument pending as to whether subsidies are in fact payable for the federal exchanges. If they're not, you can basically just close most of the legislation down because 35 states suddenly are not gonna be able to offer subsidies or alternatively, it goes back to Congress and it's anybody's guess where that ends up. I talked about the back office functionality. The other I think issue that went wrong that people aren't focusing on is the sort of ad hoc improvisational nature of the administration's implementation and serious question as to whether some of the things that they've done are authorized by the statute. There's a long standing argument about what you can do with executive power. I think the important thing to recognize is the sauce for the Gander precedent, right? The next time there's a Republican precedent, he's gonna use all of the same strategies and you might not be nearly as enthusiastic about it as if you're a Democrat watching President Obama. So I think we'll see how that ends up playing out. There's a whole bunch of things that it's just too early to tell, right? So we have eight million people that are supposedly enrolled but we don't know how many of those are actual real live applications. There's lots of concern about duplication. We don't know how many of them will actually pay and keep paying their health insurance premiums. We don't know how many of them were previously uninsured, right? The goal of this was to expand coverage more than to provide an additional option for people who are already insured. I think we don't know how the Medicaid expansion is gonna pay out. The secretary has basically indicated they're enthusiastic about giving waivers to the statutory framework if it gets people to sign on. And so the Medicaid program may look very different in five years if states negotiate waivers. So Pennsylvania wants to impose a work requirement to qualify for Medicaid. Arkansas, and that's pending, Arkansas wants to use the Medicaid money to pay for private coverage through the exchanges. That's a very different model than we've had historically for Medicaid. And the sort of, I think the big questions that we just don't know the answer to yet are will the delivery side innovations work? Will quality improve and will costs go down? We've seen some evidence that costs may go up, but it remains to be seen, right? You're gonna cover a lot of additional people. You have to dramatically drop your price per person in order to imagine costs are gonna go down either in real terms or relative to your preexisting inflation rate. So a couple of future risks and challenges and then I'll wrap up and we'll have time for questions. The sort of disclaimer here is if I was any good at predicting the future, I wouldn't be here, I'd be in Las Vegas as opposed to being a law professor, but a couple of things to watch for. Well, the first thing to watch for is what happens in the next set of three presidential and congressional elections because the way the law looks is gonna look completely different if the Senate is controlled by Harry Reid for the next couple of years than if it's controlled by Mitch McConnell. Long story short, right? And so every two years we're gonna have a referendum on these sets of issues. Second thing to watch for is to see how many people actually end up paying for coverage and keep paying for coverage. Everybody's fixated on the first month. I'm more interested in the fifth or sixth month. If people see value and are willing to pay, well, it'll be very different than if they pay a month and then they discover they have other things that they need to spend their money on more. There may be consumer pushback on narrow networks. The exchanges actually have very high deductibles relative to what we've seen historically and significantly narrowed networks. And I think it remains to be seen whether consumers actually want that. This is a quote from yesterday's New York Times from an insurance executive. We have to break people away from the choice habit that everyone has. That's not typically the way people who are trying to sell their product in a voluntary market talk to their customers. So if consumers like open access and broad networks, the exchanges are not gonna be very successful. If we get premium spikes in individual states, that'll make a big difference, right? That's gonna depend on whether the insurer is underpriced, the risk, what they think is coming down the pike and whether the risk corridors actually stick. A couple of other things to watch for, if Medicare beneficiaries get mad, watch out. So this is a picture from the, Danny Rostinkowski is in the limousine and this woman right here is about to jump on the hood of his car to explain to him why she doesn't like the Catastrophic Coverage Act. About nine months later, the Catastrophic Coverage Act was history even though it passed overwhelmingly a year and a half before. Second, watch what's happening with Medicaid opt-ins and how the waivers are actually treated. Watch for whether specific provisions in Papaka actually go into effect or not. That'll make a difference. That'll tell you what the administration is thinking and worried about. If there are mass cancellations of existing employer coverage or insurance coverage that's obtained otherwise, that's a lot, that was an important precursor to political opposition, particularly when the exchanges weren't functional. And significant changes in the financing can make a difference as well. And I think the wild card that nobody's talked about but I worry about is if there's a data breach of healthcare.gov, you can just shut it down because people won't trust it, right? They're already skeptical about whether the NSA is reading their email. If scammers from some unnamed country end up getting all of people's insurance information from healthcare.gov, people will not trust it and they won't participate. Skip that in the interest of time. Let me close with three more slides and I'll wrap it up, Mark. So the first is, Owie Reinhart's a well-known health economist at Princeton. A couple of years ago, he sent out this Christmas card and I like to show it to people because it sort of helps frame these issues. So if you poll people and you ask, should we have universal healthcare in the United States, you get a remarkably high number, right? 85% of people agree we should have universal healthcare. If you ask them whose responsibility it is, drops off, 75% of people want the federal government to do it. People trust the federal government, at least when Owie collected this data. How would you finance this? More taxes, 65%. Last question, would you be willing to spend more than $50 a year in taxes to finance this? Now $50, not a month or a week, but a year, okay? That's nowhere, Mark, what's the average cost of a health insurance policy? $15,000 per year. $50 a year doesn't go anywhere and what's the answer? 20% of people think it's a good idea, suddenly. So we tend to focus on the top number, but it's important to ask yourself, what do people actually believe? Well, they believe what they're willing to pay money to do, and so the numbers are not nearly as high as I think people believe. The next to last word is making the same point from the San Jose Mercury News, somebody who just signed up successfully for exchange coverage, and she said, of course I want people to have healthcare, I just didn't realize I was gonna be paying for it. Well, yeah, we are gonna be paying for it, individually and collectively, and if we are, then that's great. But if we're not, you ought to worry about implementation. So let me leave you with one last thought. I've sort of spent the last out 45, 50 minutes giving you a depressing take on implementation. I don't want you to think I'm all doom and gloom, I'm actually fundamentally optimistic about all sorts of things, and so I want to leave you with a short passage from James Q. Wilson's book on bureaucracy. And he observes, and I'll just read it to you because I find it deeply moving and also correct. We live in a country that, despite its baffling array of rules and regulations and the insatiable desire of some people to use government to rationalize society, he's talking about law professors there, still makes it possible to get drinkable water instantly put through a telephone call in seconds, deliver a letter in a day, and obtain a passport in a week. One can stand on the deck of an aircraft carrier during night flight operations and watch 2019 year old boys faultlessly operate one of the most complex organizational systems ever created. There are not many places where all this happens. It is astonishing that it can be made to happen at all. And so the reason that we're arguing about health reform is because we can do these astonishing and amazing things. And don't lose sight of that, no matter how mad you get at the person who disagrees with you about the merits of Papaka or lack thereof and the best way to implement it. So let me stop there. What I said was you were picked, I think it was an unforced error because the statute didn't require it, right? The statute delegated authority to the secretary of health and human services to decide what would count as the minimum benefits package. And so you didn't have to include it if you didn't want to, they chose to for I think their own sets of reasons, some of which we can talk about what those reasons are. But my point was it was the sort of thing that was picking one more fight that involved both the Free Exercise Clause and also the Religious Freedom Restoration Act. And so you shouldn't have assumed that this was gonna be a layup, right? If you, I mean, if you had other reasons for doing it, well then we can talk about whether those are good reasons. But my point was this is one additional problem in implementation. And you might view it not as a bug but a feature that it includes this. And there are certainly arguments that way as well. But picking, part of the question is how broadly or expansively you want to think about what the mandate needed to include, right? The fight didn't need to include abortion services and it didn't have to include contraceptives that are relative to most of the other things that are covered inexpensive. Now, I mean, we can argue about whether it was a good fight to have, right? It'll be clarifying at the end of the day. We'll actually know what the Free Exercise Clause says about this particular issue and what RIFRA says. But it was an unnecessary fight if you already had a bunch of other campaigns going on simultaneously. That was my observation. Not with regard to the substantive merits of should it be covered as a matter of health policy. Richard? This is a question also. So that's why I listed three further elections before we know. What counts as success is I think a very important question and one to which people on opposite sides of the political divide will give very different answers. The risk for problems actually much worse than most people think because it's not eight million if even if that's the top level number, which I don't think anybody actually believes it'll turn out to be, it's that number divided among the states, some of which have small and consequently relatively fragile risk pools and you ought to worry about adverse selection the smaller the number of people. There's evidence that sort of points in both directions. I think we won't know for sure until we strip out the risk corridors and the reinsurance and the insurers actually are writing these without a safety net and then decide whether they want to participate or not. But it's never over. We're gonna keep fighting about this one. Irrespective of what the data actually is. Nothing. Well, I mean I don't want to be too glib. It's a different person who's not been a lightning rod in the past who hasn't violated the Hatch Act, which the previous secretary did. Who, I mean, I don't think having a new person will suddenly mark the rise of a new era of good feeling and bipartisan cooperation, right? It's just that people's interests are pointing in quite different directions and you shouldn't assume changing the faces is gonna change that dynamic. That said, can't hurt, but I think the might help is of a relatively small magnitude. So let me start with a qualified defense of the keep your government hands off my Medicare observation, right? And you can interpret this as simple ignorance, which I think has been the conventional framing, right? They don't understand that the government is in fact providing their Medicare. You can also interpret this as I'm in Medicare and I want you to keep the funding of Medicare separate and apart from the funding of all of these other people, which is what killed the Clinton health reform legislation was that same basic instinct. And I think you remember one of the things on my list was if Medicare beneficiaries ever get exercised about the fairly significant cuts relative to the existing baseline of expected spending on Medicare to help finance the health reform legislation, they're not gonna be very happy about it. And so part of this relates to the people who are in Medicare Advantage plans who are looking at fairly significant hits, right? It's more than 25% of the Medicare population are in these programs. They're in there because they like them and they want the benefits that they provide. They're not gonna be very happy to discover they're suddenly not available anymore. And so we've ended up with these sort of ad hoc strategies to kick the can past the next election to try and avoid that. So that's my qualified, and I don't know what the people who did those signs actually were thinking, right? If they thought the former thing, they're wrong about Medicare and about who's funding it. If they think the latter thing, they have a perfectly defensible argument. And I haven't seen anybody else make that so I felt like I should at least say that. That said, I think in some ways, and this is unfortunately hardwired into the way the legislation is built, I would not hold my breath waiting for people that get the coverage to be all that over enthusiastic about the benefits that it offers. I think part of the problem is it's not visibly government in the same way that social security is. You're obtaining coverage from a private insurer. You may get a government subsidy, but you're not really thinking about that because it doesn't show up in your paycheck each week as something that the government has visibly done. And that was a necessary consequence of the politics required to get this passed in the first place. I think the people who had pre-existing conditions but can't get coverage will probably be appreciative, but human beings have a remarkable ability to get over being appreciative very quickly. Talk to my children, not. But in any event, we'll see, right? But the way in which we'll see is not that people express on the blogs that they're enthusiastic about it. It's that they'll go to the voting booth and elect people who will promise to support and strengthen rather than repeal and replace. And I think we don't know how that's gonna play out. I think the gerrymandering of districts makes it hard for that to actually happen anytime on the timeframe that I'm talking about as to whether we know whether this'll become a durable part of the American economy or some zombie legislation or the sort of next Medicare Catastrophic Coverage Act. I think we don't know, and we're not gonna know for a couple of years. So you couldn't do both? So there's a fundamental inconsistency between broad provider networks and lower costs just because of the dynamics of bargaining, right? If you can offer more business to someone, you can get them to give you higher discounts. And the reason why any willing provider legislation is backed by physicians is because they understand that it disarms the ability of insurers to strong arm them. I think patients, as you sort of seen some of what I've shown you, seem to wanna have it both ways. They want broad networks, but they're unenthusiastic about paying the necessary costs. The narrow networks didn't end up that way because the insurers wanted to offer them, right? They could have offered them, but they sometimes patients want them and sometimes don't. They did it that way because it was the way in which they could meet the sort of fairly significant restrictions that were placed on the exchange policies that had to be offered, right? They had to offer a whole bunch of things and they had to have sort of payment at a certain level of incurred medical expenditures. And there are only so many moving parts that you have, right? You can adjust the deductible. You can adjust the monthly premium. You can adjust the size of the network. Those are sort of the main ones that come to mind. Deregulation will make broader availability of wider networks, but it won't necessarily cause people to buy them, right? And so I think healthcare providers to a person are convinced that they offer value to their patients and they ought to be included in any network. Patients when they're buying insurance seem to behave somewhat differently, right? There's a reason why we've seen the gradual tightening of networks over time. So I don't have any easy solutions to that particular problem. I'm also not sure it's a problem per se, right? It's gonna depend on what patients and consumers actually want. When I was at the Federal Trade Commission, they sort of beat out of you, give consumers what you think they want. It's make sure the market makes offerings available to them from which they can choose what they want. And that trade-off of cost and access and quality and convenience and all of the other attributes of healthcare delivery are how markets end up solving these problems. So the government is us, right? That I think, you know, saying the government needs to do something, the government is us. We get the policies based on the people that we elect based on the constitutional structure we have. So we'll see, right? That I think is the first point. The second point is that if you expand Medicaid, you will cover more people. Some of the states have decided that's a good deal, especially if they can push the costs off onto the federal government. If they think the federal government's gonna actually keep the bargain. Other states have decided that their state budgets are under significant stress. Medicaid's a huge expense for most states. It's, you know, we can talk about the quality of care that's actually delivered and the accessibility to care for Medicaid beneficiaries, as opposed to technically having coverage, right? The difficulties in getting in to see physicians, particularly specialist physicians. But other states have reached a different conclusion and I'm not trying to take a normative take on it. I'm just sort of saying this is what you get when you allow the states to opt in or opt out. Some of them opt out, some of them opt in if they get a special deal. And what Medicaid looks like in five years will look very different if each state gets to cut its own special deal. I guess the third point that I wanna make is, you know, there's a tendency to say we don't have social solidarity. We actually have a lot of social solidarity. It's not clear how universal it is, but the Medicare program, which costs us hundreds of billions of dollars a year, and the Medicaid program, which costs us hundreds of billions of dollars a year, our versions of social solidarity, the question is whether people are willing to take that additional step. So I would push back on the suggestion that we're all amoral libertarians who have no interest in our fellow citizens. We actually spend billions and billions of dollars a year on healthcare for one another. The question is, again, going back to where I started, different views about what the role of government is, the extent to which you trust the federal government versus the states, the extent to which you think the government's already blown enough money and you don't wanna give it more, I could go on, but you get the point. I guess the last point is, if you're seriously concerned about public health, there's some stuff in Papaka that could help with that, but we have bigger problems with our public health infrastructure that Papaka's not doing very much to solve. Please join me in thanking Professor Haydn. Thank you. Thank you.