Alain Enthoven: A Balanced View of the Affordable Care Act?

[MUSIC] As I was reflecting on the my assignment, which is a balanced view of the Affordable Care Act I thought back to Harry Truman, who was President when I was a Stanford undergraduate, and studying economics And President Truman was famously quoted one day as saying, oh God, give me a one-armed economist Otherwise you know, it’s on the one hand this and on the other hand it’s that [LAUGH] And but Stanford was turning out two armed economists in my day and so you’re gonna get a two-armed economist In thinking about the healthcare situation, and trying to place this is some historical perspective, it’s important to bear in mind that the healthcare in this country is changing rapidly It’s a, it’s you have to have a motion picture If you just try to do a freeze frame you’ll miss an awful lot because a lot of people will be thinking thoughts that were relevant 10, 20, 50, 100 years ago And, so I thought I’d just start with a little reminder of where we’ve come from If we go back to 19th century medicine, say 1850 to 1950 physician culture was one of autonomy, independence Nobody interfered with my decisions And even physicians who were students of mine said, I was taught don’t depend on anybody else, you’re responsible Among other things in this culture, there was a strong opposition to group practice and doctors are sometimes penalized In fact, the famous Russell Lee, who founded the Palo Alto Clinic over here was expelled from the Santa Clara County Medical Society for starting a multi-specialty group practice Later on I could explain to you the economic reasoning that lead to that But that meant loss of hospital privileges and, and a lot of other bad things the, the healthcare, the medical payment of those days was fee-for-service, with the doctor and the patient negotiating the fee You know, I’ve often thought, you know, when my kid is lying bleeding on the operating table, this is not the time when I wanna pull out my pocket financial calculator and negotiate with the doctor on, on what the fee is gonna be But fee-for-service has meant and still means a strong incentive to, to resolve all doubts and uncertainties in favor of doing more and more costly services Well, also, back in that era, few people had health insurance And that was okay because doctors really couldn’t do much anyway [LAUGH] also, the doctor owns his own records and doesn’t share information with others And the, the view that, it’s my patient and turf battles over you know, what part of the body I own I remember I’m giving a talk like this years ago to Stanford trustees and one of them was my Stanford classmate Bill McCall Who went on from his all-Americanism on the football field to become an orthopedic surgeon And he broke out laughing, he said, yes, you know, the podiatrists and the orthopedists are fighting over who owns the ankle >> [LAUGH] >> Also in this era, the focus was on acute care That is, you have a problem, you come in The doctor listens to your story, diagnoses, treats you, and that’s it It’s over, good bye And also, research showed very wide variations in medical practice You know, people thought, oh, if you’re a doctor, then you know the right thing, and there is one simple single right thing to do and that’s what you do But I remember my friend, Jack Linberg did studies up in Vermont, where they broke up the state into about ten different hospital referral areas, and looked to analyze to see what was the per capita incidence of tonsillectomy in children And it varied tenfold Just huge variations and then he went on to make a career documenting wide variations in medical practice In other words, doctors don’t all do the same thing with the same kind of patient Partly as he ascribed it, because of medical uncertainty Oh this was, this heading was meant to be hospitals, but I’ll talk about hospitals Generally there were free-standing community hospitals, mostly nonprofit,

and the orientation of the hospital administrator was to fill the beds in order to cover the overhead I remember years ago I was on the board of a hospital in Santa Monica and I was sitting there taking it all in and the occupancy was down And people were talking to the hospital administrator in just the same terms that I remember as a limited partner in a real estate venture We talked to our manager, what are you gonna do to get the occupancy up? And I was thinking, non evilly, gee, you know, that’s that’s funny We ought to be happy that people are, are healthier and fewer of them need to be in the hospital And hospitals in those days began to compete for doctors with technology and, and facilities I remember my friend, Dr. Paul Elwood saying, what is it, hospitals don’t have patients, hospitals have doctors, and doctors have patients Well, moving forward, then to the 20th century Large scale health insurance came in at about mid-century Really World War II was the, the big watershed for that And one of the things that that meant was, when people are insured, they don’t care what it costs, or whether it’s necessary or not They just want more of everything, cuz somebody else is paying for it And so, previously, medical spending was restrained by the patient’s ability and willingness to pay Now that that they got insurance, well that’s gone So in, especially in latter half of the 20th century, there was a huge explosion of medical knowledge in technology Exemplified, for example, by the fact that in the year 2000 25,000 articles were published reporting randomized controlled trials that’s around the world Just a huge number and so the second half of the 20th century there was this big struggle to introduce spending restraint, you know? Healthcare shot up from 5% of the GDP to 18% and how can we slow that down? So the consequences of all of that for the 20th century were, first it cost too much Like, 18% of the GDP, straining public and private finances A lot of bad quality care You know, people think oh, well, we got the best healthcare system in the world That’s not, obviously, if you look at it up close I was reading an article the other day, research indicating that something like 400,000 deaths happened in hospitals per year because of errors and, preventable errors We got to where there was poor access, nearly 50 million people without health insurance because it was kinda priced out of reach And employers, and Medicare, essentially locked in their employees, or their beneficiaries into what I call open-ended-fee-for-service That is the traditional model of paying for doctors And most people didn’t even have a choice That is most employed people, they come to work, and the employer says, well this is our health plan and that’s it Instead of doing, let’s say, what we do at Stanford for our employees on healthcare, is we say well, we’re gonna offer you a menu of five or six different health plans that you might pick And we will pay for the, the university will pay for the low price plan which around here is usually Kaiser Permanente We think that’s very good quality, if you want something that costs more, you pay the difference That’s the basic idea of managed competition so, more consequences in the 20th century, a huge amount of waste A National Academy of Sciences report estimated some 30 to 40% of healthcare spending in this country is waste That is, it just does not benefit the patient More and more consciousness of the fact that we have an extremely complex system, just wildly complex in, in, in it’s many aspects You just think there are thousands of different insurance plan designs, and different employers, so forth And so, think of the poor Palo Alto Clinic, they’ve, these people with huge number of different health plan designs So they’ve gotta figure out now for each person, what is it that the insurance

pays so we can bill the insurance, and what is it the patient pays? And so you have very large clerical staffs in these organizations And physicians overwhelmed by new medical information Just not possible for the ordinary single doc now, to keep up with it all That’s one of our problems Then, let me just move forward to 21st century medicine I think the future is becoming integrated delivery systems That is, with an ethos of, and a culture of teamwork, shared responsibility for patients Instead of the doc thinking it’s my patient Now a team of doctors from different specialties, if it’s a complicated patient, need to work together It’s our patient and we need to share information And use our resources as best we can With integrated delivery systems the important thing is the incentives of all the players are aligned with what Dr, Berwick called the triple aim, that is better health, better care, and lower cost That’s, that’s where we need to move the system What else with 21st century medicine Teams develop up-to-date practice guidelines You know, with the 25,000 new randomized trials published each year, you really need a system, a teamwork system to create useable knowledge And to turn the new discoveries into recommendations for the physicians for how to take care of that kind of patient We’re moving into standardization, and simplification A focus on chronic conditions I mentioned earlier, with 19th century medicine, it was, it was acute care Now, about three quarters of the costs of healthcare are for people with chronic conditions With diabetes, congestive heart failure, et cetera, et cetera, depression And a very promising development, in my view, that’s starting to come into play now, is some of the large benefits consulting firms have created a benefits exchanges Aon, Towers, Mercer have done this So they contract, let’s see Aon contracted with Walgreen’s that they will put before each patient, each worker, a menu of maybe five or six different choices And the employer will make a fixed defined contribution, and like Stanford then the employee will make his choice And I think that’s just crucial, to me that’s the highest priority thing is just breaking out of the, of the situation where people don’t have choices and into a kind of market, market model And that’s, that’s starting to happen now Okay, that brings us to the Accountable Care Act, Affordable Care Act, which happened in about 2010 A good thing there are exchanges which we’ve all heard about because the implementation was so grievously blotched But for people who don’t have employers to broker, to arrange their health insurance they can go to the exchange Now, I think exchanges, as I was saying earlier, are a very good and important and necessary idea My regret that I expressed to the Obama-nauts was, that ought to cover everybody, not just people who don’t have an employer At least we ought to have every firm up to, say, 200 employees I sometimes wonder, why not? [LAUGH] I mean that’s the American way, to give people responsible choices Anyway, so that’s, that’s a prominent well known feature of the of the Affordable Care Act Also, other features, they enacted what’s called the Cadillac tax, an excised tax of 40% on the excess of family premiums, over $27,500 a year That sounds wild but I mean, normal projections isn’t where things are going, is we’ll be there by 2018, when this thing kicks in And a lot of employers are starting to work hard, including Stanford How can we avoid that tax, how can we keep the premiums down? They also, to pay for the expanding coverage, they reduced Medicare hospital patients, essentially, payments, essentially with Medicare The government was saying each year we’ll increase your payments by the amount of

inflation and the cost of doing hospital business plus 1% Well they took the 1% away Probably fine They created what are call, called accountable care organizations Auh, to modify the incentives for doctors and hospitals caring for Medicare patients The idea with the Accountable Care Organization is, again, to bring some teamwork and com, cooperation into the, into the situation by doctors and hospitals accepting responsibility for moderating the growth in per-person expenses And if they can hold the cost to less than the projections, then they get half the savings Now I’ve been rather skeptical of that because I think the incentives are far too weak It’d be better if we just had a market, and they said, here you are, guys If you don’t really, you know, give patients a good deal, high quality, good service, and so forth, you’re just gonna lose your business Instead, it was, if you don’t slow the growth in spending, you won’t get this bonus Sometimes the way I put it is, is, there we are in the board room with the doctors and hospitals and someone in the back of the room who is skeptical says, You mean to tell me if we cut our revenue by a million dollars, then, we’ll get to keep, we’ll give, they’ll give us back 500,000 Well, why don’t we just keep the whole million? [LAUGH] There’s a problem with the incentives I think, I think one of the problems is that people who designed this law didn’t study economics very much, at least, they don’t >> [LAUGH] >> And finally, there was the Independent Payment Advisory Board which was to 15 wise persons we sit back and if Medicare spending grows too much, then they could essentially make recommendations that would have the force of law, without checks and balances and so forth That hasn’t happened so far and it probably won’t My guess is nobody’s gonna want that job Now what have they done? I’ve talked about the big problems of access, cost, quality What what does it do for these problems? Well one good thing is they encourage and subsidize the adoption of information technology Another is to penalize hospitals for me, medicare cases for readmissions within 30 days A generally accepted marker of a, of a poor treatment Generally speaking, I would say, with our very large quality problems, the Affordable Care Act didn’t do much For access to care the act provided Medicaid for individual adults with incomes up to 1.3 times the federal poverty line And for people with incomes higher than that through the exchanges, there would be subsidies for people with incomes all the way up to four times the federal poverty line That’s, for a family of four, that’s like $94,000, $9,400 Guaranteed issue, guaranteed renewal That is today, if an insurance company is selling an insurance plan to the public, they have to take all comers, the sick and the healthy So guaranteed renewal, you can’t take away the pol, policy when the person gets sick And an individual mandate, that is a law that if you don’t have health insurance, you have to pay what economists call a free writer tax That is, if you don’t have health insurance, you know that when you get smashed up on the freeway, and you get taken in the emergency room By law, for many years, the hospital has to take care of you, at least stabilize you And so there’s been growing concern about free writing I mean a lot of people are, there’s a kind of health insurance there But the Affordable Care Act is definitely reducing the number of people who are uninsured, from something like 50 million to 30 million With complexity, I think it just made the whole problem worse I mean, the thing is bewilderingly complex What about fragmentation? Well, I talked about an accountable PR organization The team of physicians and hospitals that contract their Medicare, the slow cost growth while maintaining quality And then they can keep half the savings I think Accountable Care Organizations are an important step in the right direction I just regret that that they didn’t make the incentives stronger,

because they need to be It’s a step toward an integrated health care delivery system You hear a lot of complaints about counter productive taxes To pay for all this they imposed a 2.3% excise tax on drugs and devices and the device manufacturing companies complained that we are starting to pay taxes on the revenues even before we make any profits on the, on the product And so it’s been, I think, justly criticized as being anti innovation Similarly, there’s a tax on, on insurers that this is kind of an obscure point, but nobody likes insurance companies, so we’re gonna make them pay Well, the problem is the tax falls heavier on insurance companies at their risk Then half of employed people are then employers who are, or the employers self-insured There’s no insurance company maybe to process the claims Anyway, it’s a tax that works against risk bearing, which I think is a mistake, because, what we need is to get insurance companies bearing the risk and then to making deals with doctors and hospitals to share the risk, to transfer the risk for the cost of care to doctors and hospitals And I think the employer mandate is anti-jobs It’s my first reaction when I saw the whole thing was, if I was the CEO of a company, I would say don’t hire anybody Wait till, because it takes away the ability, of course, all employers, like, 98% of employers of more than, then 200 people do provide health insurance but it takes away their flexibility, their ability to modify it to save money, because it’s all under federal regulation So, summary comments Getting everyone covered is an important goal I believe in that I really think it’s wrong to, to have a situation in which many people don’t have access to healthcare because, especially children, because they, they can’t afford it And we really ought to have universal health insurance And the Affordable Care Act is a serious attempt to get there I hear some people criticize it and say we want to repeal it and replace it, and now that I am listening, do I hear what the replacement is going to be? And that’s why, you know I have some friends who want to, you know, I’d like to hear little more about I mean, the Republicans, I think, could, could improve their whole story if they would get together and come out with a credible and coherent alternative I think that the whole thing is far too complex, and it keeps changing Nancy Pelosi famously said along the way, we’re going to have to pass this law in order to find out what’s in it [LAUGH] And, and I’m pretty good friends with our benefits manager, who, because I am, I chair the advisory committee and from time to time we say well, four years have gone by and we still don’t know what’s in it You know, the president is changing it all the time Slipping this deadline and that And I think that there’s some serious over reach I think we could of had universal health insurance in this country without passing a law that forces Georgetown University and Notre Dame University for, as employers for example to provide what they consider to be abortifacients That is, abortion causing drugs We just didn’t have to take that issue on in, in this prob, problem Professor Uwe Reinhardt of Princeton described it as an ugly patch on an ugly system, that’s, referred as a complexity and so forth And I think it’s too bad that they didn’t break the link to employer-sponsored insurance, and go for a simplified, really universal health insurance Which, for example, in the late, you know, latter part of the, last decade, Senator Wyden from Oregon and Senator Bennett from Utah purposed, as did the comity for economic development, there are ways you could do it I mean there’s just a lot wrong with it adds to the cost and complexity, etc, of employer based health insurance We’re all used to it But it is that the, at the heart of, of, why we have these problems

So, there we are Thank you for your time and interest and good, good luck with your affordable health insurance [LAUGH] Questions? [BLANK_AUDIO] They, they wanna give you a mic Yeah Right >> Yes Medicare when it first was passed wasn’t perfect either And there have been a lot of changes that made it much better over the years And how can we change the Affordable Care Act to make it better too? what, what would you suggest >> Well >> For single payer or like, Medicare, or do we do something else? >> Well I think first of all, with the subsidies, they are means tested You know? So that the, the exchange has to go to the IRS to get last years tax reported It’s a, and >> [COUGH] >> Taxable income reported and so forth So, I would say the subsidy payments or the premium support payments ought to apply on a flat basis across the income spectrum and not be means tested at that level except for, if you, if you want means testing, which I think is okay, then you would say these premium support payments would be reported to the IRS and included in the recipient’s taxable income So that would reduce some of the cost, cost to the government But that would be one, one major thing Let me just say, if you say what do I think we ought to have, [LAUGH] depressingly it has been 30 or so years since I proposed, published in the New England Journal of Medicine, consumer choice health plan And the idea was, in effect, universal health insurance based on regulated competition in the private sector So everybody, the whole country, oughtta look like what we do at Stanford Which is, we offer, our employees a range of choices where they are responsible for the costs above the cost of the low cost plan And what happens, is, people will migrate to what they see as value for money >> Okay In the, in the interest of transparency, I have to reveal that I’m a retired physician And I’m currently, now, I am a hospital medical administrator So I’ve, we’ve dealt with some of these things One of the problems, even, with the, with the exchanges, and some of the plans, is that people tend to, sometimes, pick the cheapest plan The bronze plan was basically have a 40% deductible and I had to deal with a woman the other day, came to our emergency room who had a $5,000 bill and here she had $2,000 that she was responsible for Now she didn’t have very much money, she complained, oh I thought I had insurance You know, that, that seems to be, it’s a kind of a trap for many people They think they’re insured >> Right >> But they actually aren’t completely insured >> Yeah That’s a very good point I wish I had included that in my prepared remarks Some of this is pretty lousy insurance, you know, with very high deductibles And, for a lot of people, they’re just not gonna be able to afford, the, of the deductible So, I think what happens there, is, there are some people in the political world, for whom it’s more important for us to be able to say they’re insured, then for them actually to be insured In my consumer choice health plan proposal, there’d be a standard coverage contract and there’d be much less deductibles The cost consciousness would come in the premium Yes? >> question >> Was there any estimate made? >> Pardon me? >> How much it’s costing the dot comer, to 20 million people? [BLANK_AUDIO] [SOUND] >> How much- >> Has there been any estimate made of how much it’s costing the nation not to cover the 20 million people >> I expect there probably have been One doesn’t come to mind immediately, but that’s a good question Because those people well, I’ll tell you just an example, I was talking with Senator Bob Bennett who was senator from, Utah and I thought a very good guy, but fairly conservative, but more conservative people in Utah fired him And I remember he was talking to me about this plan that he and Senator Wyden were proposing He said, you know, I say to people, we already have universal health insurance I mean, you can go to the hospital if you’re sick, and be cared for free But the problem with that is That’s a very expensive way of doing it Because those people should have had access to primary care doctor who

would catch their problem early and treat them and keep, keep them from needing the hospital And so I think there is a real cost, to having people without health insurance But it comes in, in disability and work days lost school days lost you know, etc And it’d be a good project to try to add that all up Yes >> So do you think or, how far are we from a, a truly universal health insurance similar to what’s in U.K. or Canada? >> Well, we are at least 30 million people away from that I mean that, you know, it’s, it’s somewhat uncertain, there are varying estimates I just picked that as what the congressional budget office said some time ago The number will vary, there are many states with Republican governors who decided that they’re not going to expand Medicaid up to everybody at 1.3 times the federal poverty line And so, the score would be better if they, as some states are doing now, negotiate with the government saying well, we are willing to expand coverage, but we wanna do it in a more market oriented way or whatever So it’s a, it’s an uncertain and variable number But take 30 million as an approximation Yes Back here >> How does your, I think you called it the Community Health Plan and or the Widen Bennett Plan, break the linkage to employment or not and how do these plans address free riding? >> Well, let’s see, they, in that model, your insurance would not be linked to employment In fact I even what’s wrong with employer sponsored health insurance? It locks most people into open-ended fee for service because employers don’t have a very good re, record of, of offering choices Means you lose your job, if you lose your job you lose your insurance Employers use it to compete for employees by making their, the insurance ever more generous You know, we pay for everything Come to work for us and we pay for everything, etc including, nobody understands their health insurances Probably if I asked for a show of hands here and said, how many of you, have actually read your health insurance contract [LAUGH] Actually read it [LAUGH] Take a show of hands And iff somebody raise their hand I say, did you understand it? [LAUGH] So, a consumer choice health plan I had in mind is relatively simple standard definition of the insurance contract, it wouldn’t include a very high deductible eh, but you wouldn’t look to the, your employer anymore You would look to the, the exchange where you, you’d get a subsidy Now, what I proposed was that, like Stanford your, the low-price plan would be paid for And if you wanted something more expensive, then you’d have to pay the difference, and that would bring market forces to bear And Wyden-Bennett a, a similar idea now, what about free riders? Well, the Affordable Care Act does have what economists refer to as a tax on free riders So if you don’t, you could have health insurance free, mister And if you don’t, then you know, you’ll, you’ll have to pay this tax Now I, I do think that the free rider tax on the Affordable Care Act is, is gonna be problematic and difficult to collect and enforce and so forth But, that, that, that’s the best answer out there >> Dr.Antoven I, I have the microphone, [INAUDIBLE] >> Oh, okay >> Thank you Great talk I’m I’m married to an MBA I’m a physician, and I have a question that’s been talked about in the doctors lounges and in the boardrooms of hospitals You so casually referred to the 30-day readmission rate as a marker of care somehow And a, are you aware, or do you have a comment on, that we have no control over the noncompliant patient, the mentally ill patients, and those with chronic diseases, who leave against medical advice

Or they bounce out, don’t take their medicines, and they come back within 30 days And we care so much about those patients, but we have no control over their behavior once they leave >> Well, it is a challenge, and I just think [LAUGH], and I think you have to work on it The problem The problem comes from, I think, a large part, that when the patient leaves the hospital they ought to be part of the delivery system that right away picks them up and puts them into the ambulatory care system And works with them to make sure that they have their medications, and that they take their meds and, and you know, do whatever they can instead of, you know, in the hospital, I’ve experienced like, like wife has baby and in a wheel chair, we take her to the hospital door And the car pulls up, and they put him in, and then, [SOUND] you know, goodbye [LAUGH] With, without a lot of careful preparation for what’s supposed to happen after they leave the hospital It’s there are gonna be some 30 day, within 30 day readmissions for the many reasons that you [COUGH] enumerated But it’s important to work on those post hospitalization problems [BLANK_AUDIO] Yes? >> How many, how many years before it becomes evident to Congress that there’s a, a big flaw in the act, whether it’s cost containment or some other portion of the act and Congress has to do something new, and then what will they do? >> [LAUGH] well, one thing is, one thing is Obama and the Democrats have no shortage of critics who are pointing out the various flaws And so it’s hard to pick up a newspaper without reading about one or another of the flaws in the Affordable Care Act and I, I’ve mentioned a few, When, when, whether and when the Congress will act to fix them, it, beats me But, I would say the direction they ought to go is to make it more universal, more cost contained One of my big complaints about about the Affordable Care Act is I think nobody should just be offered open-ended fee for service fully paid I think, like Stanford employees, you, you outta have a subsidy that pays a fixed dollar amount, pays your way into a good quality integrated delivery system or whatever is out there And then, you have an incentive to choose the economical system And will we ever get there? I don’t know You know, we might, probably not in my lifetime Dr. Beethoven? >> Yeah >> [INAUDIBLE] >> I, >> Oh, okay >> Thank you for your decades of wonderful work in this area, I’m delighted to hear you today I’m an OB GYN physician I just wanna try to encourage you to open your mind a little more about the reproductive health issues I see women in those decisions And, you know, in America we are free from religious persecution, that’s how America was founded And I think that if we agree that women deserve reproductive health, we’ve agreed that women deserve that, and that needs to be apart of our health insurance regardless of religious organizations having their own personal points of view So I encourage you to change your thinking on that >> Well, one good thing about, [APPLAUSE] one good thing about about breaking the link between employment and health insurance, I, I probably should have Next time I do this, I’m gonna put that on the slide Is then, the employer is not involved in the issue of the contents of your health insurance, and I just don’t think it’s, that it’s a necessary or appropriate thing to have the employer involved in that It ought to be just you know, out there on its own merits So yeah, that, that, that would be one, it’s, it’s just, seemed to me it was unnecessarily seeking or bringing about conflict that didn’t need to occur Yes? >> [INAUDIBLE]

>> [INAUDIBLE] Gotta get the mic Here it comes [BLANK_AUDIO] >> My bad I’m puzzled by the the difference in billing between what the insurance company pays, and what, there’s a number that’s like four, five times as high that appears on the bill which as, as far as I can tell, applies to anybody who can’t afford to pay at all [LAUGH] And they’re the only ones that have to pay that number That, that doesn’t make any sense to me And it’s true of hospitals >> Yeah >> Is that true of me doctors, et cetera? >> Right It doesn’t make any sense It’s crazy Let me explain where I, you know, how could this thing happen? It turns out that hospitals have a very substantial number of patients who got there through the emergency room And, if this is a hospital that is not in the network of the insurance company covering the patient, then the poor guy is, is at their mercy You know, they can just and that they, they make a lot of money that way Cuz, people say, well why do they do that? And nobody pays that Well Some people do pay it, and support people who are there as a result of an emergency, or urgent situation And, and I think that that’s wrong I think I would favor some kind of a law that would say, you can’t charge more than, you know, something like 1.5 times Medicare or, your know, some reasonable limit Otherwise it’s just it’s just extorting people from, you know, it’s taking advantage of the fact that, that people are, are sick and it Especially for a non-profit institution I think it’s particularly in, you know, inappropriate and wrong Maybe this, maybe the thing to do, you know, people have made the point that hospitals engage in a lot of business that for profit companies do also So, the for profit companies refer to the non profit hospitals as not tax paying hospitals We’re investor owned tax paying hospitals Well, so that, that’s been an issue Perhaps the way to get at it would be to say, to change the law to say if you are a non profit hospital then you will not charge emergency patients more than 1.5 times Medicare, or something like that Oh, wanna give him the mic? Oh >> [INAUDIBLE] >> Oh, somebody back there >> Professor Antoven Some have suggested that, due to the intransigence of Congress, the divisiveness, that the inevitable outcome for the country is a Canada style socialized medicine for the masses, has a separate tier of premium care for those who can afford it Do you think this is where we’re heading? [BLANK_AUDIO] >> [BLANK_AUDIO] You know, I, I, I don’t know I think the Canadian system works pretty well for Canadians, but I, I don’t think it would work here I, I don’t see that out there It’s, it’s a good question [BLANK_AUDIO] Will congress act on something? [LAUGH] Oh, only reluctantly and in a complex and confused way [LAUGH] Dr.Burnett? >> The recent, >> This is Dr.Burnett, my friend [LAUGH] >> Recent study by University of California showed that hospital led, healthcare delivery systems controlled by physicians were at least 20% cheaper than hospitals that didn’t, medical delivery systems controlled by hospitals And the, there are many ways and positions even in the beeper service system, can be peer reviewed and under control And have some future limitations on costs there, I don’t see any in hospitals, and I Think about the affordable care act And having the group of hospitals and physicians

It’s still going to be dominated by the ones that have the capital which are the hospitals There fearing, there’s not lots of hospitals per population in many areas of country And how do you, what do you think is a solution, to make this more efficient a system from the hospital side, not just from the medical side? >> That’s a very good question I’d like to say, Doctor Burnett has been a pioneer in this area In phys, he’s a physician leader, in physicians getting organized to bring down the cost, and improve the quality, and so forth Bob, I just read that article yesterday The author, Jamie Robinson, is a good friend of mine, and I could, and through the Integrated Healthcare Association I’ve kind of seen that research progress And what had happens is the hospital owned Medical groups cost 1.41 times the non-hospital It’s a very remark, marked difference, now, my reaction to that was, well you know, the problem is with hospital administrators, their whole orientation has been heads and beds Keep the, keep the hospital full to, to be able to Pay the overhead costs which is usually large And keep the CT Scanners, scanning And keep all that stuff to bring in revenue and the whole orientation of the efficient delivery system, is lets do everything we can to keep the people healthy and keep them from leaving the hospital And see if we can empty those hospitals beds It’s kind of a completely different orientation and mindset And so, I don’t think that hospital administrators have the right to mindset an ethos to be leaders in in the healthcare systems And it, it ought to be physicians Like, like you and your colleagues who pioneered in creating physician organizations Over here >> Yes My question’s sort of a follow up But with a little different spin The United States has far and away the most expensive care per capita of any developed country And we have the worse outcomes on average >> Right >> And all those other countries, where they spend less money and they get better outcomes basically are single payer systems And for the life of me, I cannot understand why there isn’t more serious, you know, consideration of a single-payer system in a capitalist country where we should be concerned about keeping the cost and getting better outcomes >> Well, I guess it’s partly a problem that I, I have an attitude which was Developed, I, I spent four years as an assistant secretary of defense and my job was to, to bring cost effectiveness into defense decision making And it’s quixotic task for a young man >> [LAUGH] >> What I learned was things like the ideal weapon system is built in 435 district, Congressional districts >> [LAUGH] >> You know And, and if I look at Medicare, the pork barrel, the log-rolling etcetera, I just don’t see any I don’t wanna sound like a right wing fanatic, but this is, I was listening to democratic administration that I learned this It’s just there are not enough people seriously interested in the total, and holding down the total cost And, and well let me come at it another way I think it was justice Brandeis who said, that our system of government was based, was built, to prevent the arbitrary exercise of power You know, so you think of Madison, and ambition must be made to check ambition So that, so nothing could get done In contrast to the parliamentary system, which is a system that’s very good for managing public programs So Brandeis we’are saying, our system of governing is not built for the management, effective management of public programs A huge difference between the Parliamentary system and the system of checks and balances that we have Just to go on for a moment, I’ve done some work on the British National Health Service at the invitation of the British people to come over And, and they’ve got their problems, I grant you for half the share of GDP, they get better outcomes I think for some, some interesting reasons

And anyway, so I was asked to, how, how could we bring some market forces and competition into the business national health service? So there’s a stature Picked up on my ideas and tried to implement them And so the doctors didn’t like it And I was invited to lecture to the London medical society And this doctor got up and said we live We have an elective dictatorship She can do whatever she wants and there’s nothing we can do about it [LAUGH] And so I said in reply, well, that’s all very well, but I come from a country that doesn’t have any government [LAUGH] It’s all, all checks and balances and so I, I just don’t think it’s, our form of government is built for The affect of management of public programs, we can see that all over the place >> I mean, my husband and I just went on Medicare not that long ago >> Yeah >> That is a kind of a single care system >> Yeah >> I wonder how many people in this auditorium on Medicare would wanna get rid of it? >> Well I think it outta be- >> You know, it’s a single- >> Okay [INAUDIBLE] >> I, I, I think Medicare ought to be phased into a new model, which it, resembles what we do at Stanford for our employees That is, the government, by the way, several bipartisan commissions and groups have recommended that we do this One of the problems with Medicare that we’ve had is that we can’t afford it Other than that, it’s very nice [LAUGH] And so the alt, the alternative would be what are called premium support payments and competing systems And, and I think that’s, that would be the way, the way to go It, it comes back to Doctor Verniscuay >> [INAUDIBLE] >> Oh, Doctor Burnett’s question about what are we gonna do about the expensive hospital controlled delivery systems And my favorite answer would be subject them to real competition, informed consumers, cost conscious consumers And they’d have to Bring in leaders who want to give value for money >> [INAUDIBLE] >> Yes >> Okay I just, I, I worked in the Senate in the early’ 90s, with a bipartis, for Senator Lieberman, in a bipartisan group of senators who were moderates Trying to implement, essentially, your policy in the >> Yeah >> This mainstream coalition Managed Competition act And a key, the key thing that I wanted you to, just bring out a little bit more in this discussion, cause I think it’s really critical for people especially as we go into voting And I will disclose that I, my group at Yale built the 30 day readmission measures, and my husband works for Obama So I have my, my points of view but I hear you saying, break the link to employer to employer mandated plans, and also that what you’re Proposing is subsidized or supported minimum plans with the competitive environment, a managed competitive environment now I just, I wanna make sure that people understand that what I, and I would like you to just contrast, if you can, that what Advocates in congress right now who are advocating changing, or repealing, or, or wholesale change of the Affordable Care Act That’s not what they’re talking about ’cause you’re talking about universal coverage, guaranteed benefit, and managed competition Whereas people who are, you know, running campaign ads right now to pull down the Affordable Care Act are, as you say they don’t really say much But that’s not the direction you’re going You’re going in a very constructive, actually essentially universal coverage direction The are advocating for just wholesale repeal or we’re not sure what And I, I’m wondering if you can draw that conscious because there really is no mainstream Senators anymore, right? It’s a very polarized environment >> Yeah Yeah I want everybody to understand I’m not a adherent of either political party I’m in the party of the plague on both your houses [LAUGH] So I’m trying to avoid being partisan, and I just put, I put the point earlier, very, very gently which was, I have yet to hear from the Republicans, when they say repeal and replace, I have yet to hear, and I’m listening for the replacement and, and, oh, three senators from some place got together and, and put out a plan but it didn’t deal with the big problems So, I, I accept that point that it’s the, I, I think the critics ought to be able to explain This is what I would do Which I’ve done, in writing [INAUDIBLE]

[BLANK_AUDIO] >> So my question is about the accountable care organizations And to me that’s about the only way right now that’s linking, right now on a fee for service there’s no link between the service provided and the outcome >> Yeah >> And the ACO is the only model that will link service and outcome >> Right >> And so it seems like they planned to roll that out or to apply it across the health system is really very limited Can you talk a little bit about what the plan is for bringing A.C.O.s out? And, and it, it’s seems like there’s just this very small fraction rather than this much bigger part that they should be? >> Okay Let me put it this way We’ve got an awful lot of people in the healthcare system that are still back in the 19th century [LAUGH] And I, I told you about the 19th century And maybe it’s because they were taught through the residency people, person during the residency program, don’t rely on anybody else, you know, you’re an individual, your responsible So we’ve got a lot, lot of mindsets from those olden days that have to be changed And I think the idea with the Affordable Care Act, I mean with the Accountable Care Organizations, the idea was to start that process To get doctors and hospitals to collaborate with some responsibility for quality and cost So the ACO’s do have a lot of quality measurement involved And so that was a, a step, as I said in my talk, a step in the right direction I just think that the incentives ought to put it on steroids Yes sir? >> Doctor, is this on? Doctor Antoven I have a business, so I’m an employer And not large enough to offer multiple programs to my employees And I have to make the choice every year of what their healthcare’s gonna be I hate it It’s a, it’s a horrible responsibility, and I can’t wait till we get to these exchanges Where I can just pay the bills, and just let somebody else >> All right >> Choose But I have noticed This is the first year in which our costs did not go up so much that we had to change our program We actually, 8.25% increase in costs is the lowest it’s been in the last 14 years And we are able to keep the very same program fr a second year Though, do you have any sense of what the cost trajectory is, since we’re now in what, the third or fourth year of the ACA >> Okay, that’s a very good question You’re going to get a two armed answer [LAUGH] Starting back In around 2002, it had been, we’d gone for 50 years or whatever, with the growth in the national health spending each year being about 2.5 percentage points higher than the growth of the GDP And starting back about then The gross rate relative to the GDP moderated considerably came down to about 1% and economists have analyzed it in detail and so forth There isn’t a consensus about what brought it about I mean people talk about a lot of things like Expensive drugs coming off patent or maybe just push back another eh, another thing maybe doing it is a lot of employers have gone to high deductibles for their health plans very big increase in high deductibles etcetera, and so the, the growth has moderated I don’t ascribe that to the Affordable Care Act I don’t think anybody else does either It started before the Affordable Care Act Let’s hope it continues But I, I think that I think that high deductibles May help for a while, but I, I think, in the longer run, that, that’s not gonna be the answer because once people you know, like, say you have a $1,500 deductible You can’t even walk past Stanford hospital without being out $1,500 [LAUGH] [COUGH] So there you are in the hospital and they so, oh, you, you’ve You’ve used up your 1500 and you wring your hands and say, oh damn, there goes my 1500, now bring on the technology And then, then you’re back to the cost unconscious situation And so I doubt that high deductibles And there are other problems and so on and so forth, but we don’t have a good answer Yes? >> In the first two years of the Clinton administration, they tried to do something constructive and

were punished viciously at the polls My senator, Robert Bennett who you spoke of, tried to do something constructive about healthcare and was punished viciously, viciously at the polls And it appears that the Democrats, having been punished for Obamacare fairly badly in the recent past, are about to be punished again Does this suggest that there’s any chance that any sensible politician will try to do any of things you believe in? >> [LAUGH] [SOUND] [SOUND] >> Well I don’t know I, I think >> [LAUGH] >> It is remarkable, the negative reaction to HillaryCare Because it wasn’t even implemented I think the non-passing of, of, of, of Hillary’s 1342 page bill I’d been back there advising on it, so I was following it with some interest Is that she and our magaziner and the legislative draftsmen kind of went in to the back room and wrote up the whole thing They had a big task force of 500 people I was back there for a while wondering around the halls of the executive office building, until I gave up And so they presented it to the Congress, and I can just picture the scene, some representative looks out the window and sees the bill sitting there on the On the front steps that says, that’s not my baby And over there some Senator looks and says I’m not the father And that’s very different from the way Lyndon Johnson did Medicare Lyndon Johnson I’m told wrote one page description, this is what Medicare ought to be Wilbur Cohen, my Secretary of Health and Human Services, you’ve taken over to Wilbur Mills, the Chairman of the Ways and Means, and you start working it out And if you agree, if we can get, and, so, you know, all the people in the Congress got to put their fingerprints on it And it sort of grew organically If you agree, then we’ll lock arms and walk forward and say we have Medicare So you have to involve the Congress And it is, it is dangerous territory At the time with, when, with Hillary Care failed, we all said, oh it’ll be another 20 years before they try again And maybe it’ll be [LAUGH] another 20 years Although I have some hope that the private sector through exchanges might be [SOUND] Able to reform the system a lot [MUSIC] [BLANK_AUDIO]