University of Washington School of Law
Transcript: Health Reform 2009: Proposed Treatment Plans for a Complicated, Conflicted Patient
October 12, 2009
So, welcome everyone to this discussion of health reform 2009. It might
seem like this topic is endless, like haven't we been talking about it
for months? In many ways, it really is just about to get started.
There are five major pending bills, and the last one should be voted
out of committee tomorrow. At which point, it will go before the full
House and the full Senate to debate in probably a robust and conflicted
way all of these different issues that have been floating around and
try to agree on two bills and then merge them. It's a great time to be
talking about this.
plan for today is that I will talk for about 25 minutes about why
health reform. What are the problems facing ailing Uncle Sam and what
are the proposed treatments in the major bills before Congress right
Then we have a variety of experts from the School of Public
Health and the School of Law who will pick up and talk for a few
minutes each on specific areas of controversy in the legislation. Then
we welcome questions at the end.
Just starting out, so this
ailing patient; what are his chief complaints? Basically, costs,
access, and quality. Health care in this country, the costs are too
high, the access is too limited and the quality is too variable.
to a quick review of systems, what evidence is there to support these
complaints? This is the cost curve. You'll hear a lot of talk about can
we bend the cost curve? This is what it's referring to. This graph
shows the rise in health care expenditures per capita in this country
from 1990 through 2018 projected.
This year, it's projected that
we'll spend about $8000 per person on health care. That's about 16.2
percent of our gross domestic product. You can see this curve is rising
faster than inflation, faster than incomes. It's also substantially
higher than any other wealthy country. It's about twice the average of
the 30 OECD - Economically Developed Countries - and much higher than
the nearest, most expensive countries; Norway and Switzerland spend
substantially less than we do.
Costs are high and they're having
significant, arguably unsustainable impact, but only on individuals.
Corresponding with this rise, health care premiums have almost doubled
in the past 10 years. So now the average cost of a family policy in
this country is $13,000. About what somebody working full-time, minimum
wage, would make over the whole year.
Difficult for individuals
to afford. Also for businesses who bear a substantial portion of
premiums for employees if they do provide insurance. And also for the
government. It's not often remembered, but even in our country, about
45 percent of health care expenditures are spent by either the federal
or the state government; largely Medicare/Medicaid.
really a big burden on government budgets. So, it costs. Then turning
to access, where do people get their health insurance? In many ways,
health care reform has become health insurance reform.
shows where people get or don't get their health insurance. Most people
under age 65 get insurance through their employer. We have a heavily
employer-sponsored, dependent insurance system.
About 15 percent,
45 million people in this country, don't have any insurance, private or
public. An increasing share gets their health insurance on the
individual market. That's where you don't have an employer, large
group, getting it for you. You buy it individually.
the coverage is not as good, often more expensive, and that's where you
have those concerns, especially about pre-existing condition limits,
recession, they come up especially in that market. That's the access
Then in terms of quality. Our quality data overall,
despite how much we spend, is not very impressive. We are ranked
middling in terms of outcomes data for most major measures - life
expectancy, infant mortality, treatment of curable diseases - a
middling fashion compared to other developed, wealthy countries.
do have some pockets of very, very high quality, both regionally and
also certain areas, certain types of cancer treatments, we're way up
there. Innovation, in terms of pharmaceuticals, devices, surgical
One challenge in the quality arena is to improve
access and reduce costs, but not sacrifice our real areas of quality.
To keep that in mind as we consider what the possibilities are.
are the goals of treatment? These goals have been set out by President
Obama, also by the democratic leadership in both the House and the
Senate. What are they trying to accomplish in this major, historic
health reform process?
One, universal coverage. That means that
everybody, or nearly everybody, has some form of health insurance -
public or private. Every other wealthy, industrialized country provides
universal coverage. That's one of the key goals of this process.
to bend the cost curve under the idea that, it's just going to get more
and more unsustainable unless we can bring costs down a little bit or
slow the rate of growth. So, to bend the cost curve, to do it for less
than $1 trillion. That's become this magic number. Whatever, has to
cost less than $1 trillion over 10 years.
It's got to be budget
neutral. Whatever is spent to achieve these goals has to have
corresponding savings or revenues to make it balance out.
no radical surgery. That is, the patient has no stomach for a
single-payer system, no stomach for a Canada or a British system. Those
ideas really aren't on the table right now. Got to maintain, in some
fashion, our current, multipolar systems.
What are the proposed
treatments? These are drawn from - as I said, there's five major bills,
three in the House, two in the Senate. The one you've probably heard
the most about is the Baucus Bill, and that's in the Senate Finance
One reason why it's gotten so much attention is
because it is, in many ways, the most conservative, spends the least
amount of money and, therefore, is considered perhaps the most likely
type of reform package to get 60 votes in the Senate, which is the
magic number to avoid a filibuster.
The Baucus Bill is supposed
to be voted out of committee tomorrow. There are four other bills with
a variety of different measures in them. The four others have already
passed out of committee. I'm going to list several of the elements of
these and I've divided them up into your less controversial
prescriptions and the more controversial ones. Keep in mind that
nothing is not controversial.
it's just all relative. Some of the less controversial elements that
are common to the bills are: One, to expand access to insurance, try to
get more people covered. There's a variety of ways to do this. One is
to prohibit pre-existing condition limits. Can't have those.
Guaranteed issue means that an insurance company has to sell a policy
to anybody willing to pay for it. No lifetime limits, no annual limits,
no rescission if you didn't disclose something because there's no
pre-existing condition limits. Changing what the policies can legally
there are requirements on what at a minimum they have to cover. So,
minimum baseline coverage would also be part of the effort to expand
And this idea to create insurance exchanges; this gets at
the idea that individual insurance is typically much more expensive
than big group purchased insurance. If we have exchanges, that way
individuals and small groups can come together and get some of the
benefit of a large group and also create a place where there can be
easy comparison amongst plans. These don't exist and they would either
be state-wide or perhaps regional insurance exchanges.
of course, because the average family policy provided through an
employer now costs $13,000 a year, there has to be subsidies for middle
and low income people to afford to buy a policy, realistically.
then also another way to expand access is to expand Medicaid. Medicaid
is a Federal-State program, which varies significantly from state to
state. And this change to expand Medicaid to cover everybody below a
certain income level - typically it's 133 percent - would have the
effect of bringing in a lot of adults, especially a lot more childless
adults, a lot more men would be on Medicaid than are now. So, expand
Medicaid, which has significant costs for the states, so then you will
have to have the Federal Government picking up some of that portion.
a variety of measures that aim to improve the efficiency and quality of
care. And there are a whole bunch of test programs and pilots and
various incentives to try to encourage better coordination of care, so
we don't have so many separate silos of a physician, a hospital and a
nursing home. But, to somehow to improve the coordination and try to
ensure that more efficacious care is provided, there are a variety of
measures with that focus.
And also to try to boost primary care.
There's a shortage of primary care in this country. And then as always,
more money to root out fraud and abuse - fraudulent billing,
So, these are some of the key and less controversial aspects.
turning to some of the more controversial prescriptions; whether to
have an individual mandate? You might recall that President Obama as a
candidate did not favor this. He now this.
This is the idea that
if insurers have to sell to anybody - with no pre-existing condition,
no life-time limits, no annual limits - you don't want people waiting
to buy it until they're sick. You need to have an insurance pool that
spreads the risk out. And to that economists and insurance companies
argue persuasively you have to have a mandate. Everybody has to buy
insurance or else it messes everything up.
So, whether to have an
individual mandate, what the penalties should be and who should be
exempt from it is a big issue. And certainly the amount of subsidies,
what's an affordable amount for a person or a family to spend, is very
Whether to have an employer mandate? I mentioned
one of the goals is to somehow maintain our current heavily employer
dependent system. But, what if employers decide not to provide
coverage? This is the idea that they have to and if they don't they pay
a penalty. The Baucus Bill does not include an employer mandate and the
others do. So, that will be a big point of contention. And how much the
penalty should be? And who should be exempt?
And of course how to
pay for it? A trillion dollars over 10 years is a lot of money, and
I'll talk in a minute about what the different elements are for how to
get that amount of money. And then there are a bunch of contentious
issues that don't get at the whole structure of reform, but are very
important to certain populations and we're going to see discussed a lot.
abortion one, for example, and we're going to talk about these in a
minute, but the abortion one deals with a federal law that currently
exists which prohibits federal money being used to pay for most
abortions. So, states that do pay for abortions under Medicaid do so
using only with state dollars. You can't use federal dollars.
what to do about private insurance plans that receive a subsidy from
the Federal Government? Some people argue forcibly that if you get a
federal subsidy the plan cannot cover abortion. The other side argues
that right now most private insurance plans do. So, that's going to be
And the medical malpractice one is an interesting one
that relates to federalism. In our Federal-State system, medical
malpractice is a state issue. And these reform bills have various
proposals to try to change the medical malpractice systems in states to
reduce those costs, both of defensive medicine and of premiums. So,
those are some f the big contentious issues that we're going to hear
talked about a lot in the coming weeks and months.
And of course
whether or not there should be a public option? This was thought to be
dead because it's not included in the Baucus Bill, but apparently it's
coming back. And there's some word that the House will pass a bill that
does not include a public option, but the Senate won't pass one that
And what the public option idea is is that within this
insurance exchange that has all these different private insurance plans
somebody could choose from, should there be a public plan? Say like a
Medicare. Medicare is a single payer system for those over 65 and some
Should there be a public option for people under
65? That will probably be the lowest cost option, very low
administrative costs. So, is that a backdoor way to change the whole
system to a single payer, not well-funded medical system? Or is it a
way to keep the insurance companies honest? So, that's going to be a
Paying for this treatment. I broke it into different
categories. One big category is savings in Medicare and Medicaid. Two
huge federal programs and there are a variety of proposals to save
money in those programs. That's where you hear complaints from people
on Medicare: they're trying to kill Medicare.
Reduce payments to
Medicare Advantage plans and these are private plans that provide
managed care, provide all the Medicare services, to beneficiaries. And
they got a huge boost from the Medicare Modernization Act a few years
ago that effectively pays them about 112 percent of what the government
would pay if these people stayed in traditional Medicare.
reason for that was to encourage vibrant private competition and to
make sure we have lots of Medicare Advantage plans, many people now
argue that it's kind of a give away to private industry. And so there
are significant cuts to those programs, savings in the pharmaceutical
benefit, some shift in reimbursement, including the creation of a
separate commission to look at how Medicare reimbursement works. So, we
have a lot of savings from Medicare and Medicaid.
revenue sources within health care. I mentioned that if there's an
employer mandate there'll be a penalty. So, that's some money for the
Federal Government. A tax on what are called "Cadillac Plans," very
generous health insurance plans, under the theory that they actually
encourage wasteful health care spending. Many unions oppose this tax
because some small companies with older workforces actually have very
And there is tax code changes that will bring in
some money. And then of course the big controversial area is whether to
raise taxes generally? The proposals to add a surcharge for people, I
think its individuals making more than $280,000 a year have a surtax.
And then some sin taxes - pop, alcohol, junk food.
And then also
the idea of if we do bend the cost curve that will end up saving the
Federal Government's money, as well as everybody else's.
it all balance out? All these different ways to increase access, and
hopefully improve quality, and all the different ways to pay for it
over 10 years: does it balance out? And a big answer was provided last
Thursday when the Congressional Budget Office said the Baucus Bill does
balance out. In fact, it would reduce the deficit by several billion
dollars anyway. But, that's going to be a big question: do we have the
savings and the revenues to pay for all of these different elements of
the reform plan?
Particularly where if the Baucus plan leaves
some 17 million citizens and legal residents without insurance... So,
17 million is a big number. The other bills would cover more people but
at a much higher cost. So, what's the trade-off? What do we mean by
universal? Is universal less 17 million citizens, universal? That would
be a big question.
I'm almost done here and I'll turn it over to
people on the panel to chip in on different elements. Since we're at a
law school, it's important to mention that there are a lot of big legal
issues that are going to come out of this debate. Certainly can't
ignore constitutional - where's the constitutional authority to do the
individual mandates or to require the states to do something rather, to
require the states to act. Is the commerce clause big enough for this?
The federal spending power? Interesting.
And general issues tied
to Federal-State balance. Whose responsibility is it for whatever
aspect for these various proposals? And certainly, there will be a lot
of proposed changes in other laws. For example, there are several laws
that effectively provide barriers to some of the innovation that's
proposed in these bills - anti-trust issues, tax, fraud and abuse.
Those will be some legal issues that we'll be hearing about, probably
in the implementation phase.
And then certainly, just a political
question: is it possible to get a good bill out of this divided,
fractious family? And what will it end up looking like? Whatever
passes, certainly it's going to increase government spending and power.
Certainly increase insurance coverage and security. People will know
that if they lose their job, there will be somewhere else to get viable
health insurance. Whether it'll bend the cost curve or help improve our
quality outcomes is a big question.
I hope you have a bunch of
questions, but save them until the end because now we'll turn to
experts from the School of Law and the School of Public Health. Experts
both in health reform generally and also as to specific issues.
Pat, are you going to go first?
I can go first, sure.
Pat Kuszler is from the Law School.
Well, we all [inaudible 0:21:11] this up and decided to each take an
issue that was of particular interest to us. My issue is the individual
mandate. Many of you who are past the first quest of youth may remember
that back in the nineties, individual mandate was also discussed during
the health reform debate of the nineties. And it was pretty similarly
dismissed as a possibility. At the time, I think that America didn't
have the stomach, so to speak, for such a mandate. But, now it's a
prominent part of the health reform debate.
And if we look at these individual mandates there are a couple of big
legal issues that come out and some even more important policy ones.
First of all, when we take a look at the big bill that is going to be
voted on tomorrow - the Senate Finance Committee's bill - as we look at
the individual mandate, it doesn't kick in for some years. And it's
relatively minimal. For example, it maxes out at $750 per person in
the penalty for not purchasing insurance or getting into an insurance
pool in some way, shape or form is relatively minor. It's $0 in 2013
and then very gradually it goes to a maximum of $750, which as you know
from the price of the policies that Sallie's talked about, it's
probably just a tiny little drop in the finance bucket. Moreover, even
if we take a look at some of the more aggressive bills, the penalty for
not adhering to the mandate, goes up to about $900.
In fact, up
until a couple days ago, the Senate bill had a $900 mandate, net $900
penalty, but it was watered down because the idea was that it would be
more palatable to Conservative Democrats and Republicans with less of a
mandate. What does that mean? That means that people who are not
required to purchase insurance or who are required and believe that
they'd be better off going bare for a period of time, will choose to do
These would be young, healthy people who would simply not
purchase coverage, probably until the penalty got high enough until it
hurt. And as I said, the penalty may be so low that it may never hurt.
This huge subset of healthy population will not engage in the system.
And as a result, we will not have the Law of Large Numbers on our side,
and so we will not be bettering our situation in terms of universal
access, or in terms of the financial basis on which our plans will
The other thing that's tricky about this, as you take a
look particularly at the Senate Finance Committee bill, there's
virtually no employer mandate. And most of the other bills have very
weak employer mandates. And the problem here of course is if employers
are not required to provide coverage, what will they do if there's an
They will stop providing coverage, though we
have the potential that employers may decide, "Well, as long as there's
an individual mandate, why should I pay for coverage if I don't have
to? I will simply become an employer who doesn't offer health coverage."
may actually have a larger subset of the population in that territory
of persons who are touched by the mandate but may not choose to
participate in it. One of the criticisms of the current bill is that
the mandate is so watered down that it's not going to impact and
actually the costs will not be contained and nor will the universal
coverage idea be substantially furthered. Some experts say as many as
25 million may remain uninsured.
The other issue worth touching
on for the law people is this issue of constitutionality. There's been
lots of talk about how the individual mandate is unconstitutional.
Several very good constitution scholars have looked at this and on
basis because of the breadth of the Commerce Clause, because of the
breadth of the Tax and Spending Clause, because of the fact that this
touches on what we call on non-fundamental kind of right - indeed if
there's any kind of right at all, to be uninsured - there is pretty
clear that an individual mandate would survive a constitutional
scrutiny, if it were tested in the courts.
Let me turn our discussion over down the line here to Steve.
Thank you Professor Kuszler and thank you Professor Sanford for
organizing this panel. I enjoyed your slides particularly. My name is
Steve Calandrillo, I'm the Associate Dean for the Faculty. I apologize
for my voice, I'm getting over a cold. I have young children and I
spend the entire fall season trying to dodge their colds with very
limited success. Thankfully this is not Swine Flu, so I'm covered...
... Or we would be here either. But, I enjoyed learning a little bit
about this. And I've been asked today to speak about the end-of-life
issues and specifically, as you saw in the last cartoon, the death
panel myth. This dominated a lot of the summer conversation, at town
hall meetings. Everybody was concerned that President Obama was about
to pull the plug on Grandma.
So, the recipe of the people for the death panel myth was first, you
need change. Right? Change is scary. Secondly you have death. Right?
Death is scarier. And then you combine change and death with heath care
reform, you have a powder keg ready to explode. And you have a lot of
people worried that Obama and Congress is going to pay for the cost of
this health care reform by ending senior's lives earlier.
is true that the last years of life are very expensive. One of the ways
we could control cost is just kill people six or 12 months earlier. And
that way we'll pay for our bill!
... Right? How are we going to be budget neutral just is to stop
[inaudible 26:50] a year before, they otherwise it's going to end.
So, if you look at the Healthcare Reform Bill, section 1233 is the
section that is in controversy. And Section 1233 allows for advanced
care planning consultations. Representative Dingle referred to the
Healthcare Reform Bill and the idea was to allow for reimbursements.
provision allowed reimbursement to physicians who provide counseling
for their patients, for the Medicare patients, [inaudible 27:18]
decision making; talk to them about living wills and advanced
directives and power of attorneys.
And for the first time, it
would provide some reimbursement to these physicians because previously
there was no provision; under Medicare you do not get reimbursed for
having this type of conversation with your patients.
Isakson of Georgia included this in the Senate bill allowing Americans
to obtain assistance in preparing living wills or durable power of
attorneys. And the purpose with all of these bills and provisions was
to encourage physicians to have the conversation with their patient.
conversations are very difficult to have. What do you want to have
happen at the end of life if you are not in very good health, do you
want a "do not resuscitate" order? Do you want a living will? Do you
want an advanced directive? Do you want to sign a power of attorney so
someone else can make some of these decisions?
These are very
difficult conversations to have. And they often never happen. And then
what happens is you have a loved one, your father or your mother or
grandparent, whoever, who is facing a horrible illness at the end of
their lives and the decision on what to do falls to the nearest family
They struggle with this and they debate, what do I do? Do
I pull the plug? Do I withhold hydration? Do I withhold the feeding
tube? These are extraordinarily painful decisions to make. The idea was
to encourage patients while they are still competent to have a say. So,
empower them and exercise their own autonomy to make it known ahead of
time what they would like to occur in their end of life situations.
this provision was seized upon by opponents of the bills. And the idea
that this provision that allows advanced care planning consultation was
really just a way to encourage patients to end their lives earlier in
order to cut costs. Hence, Obama is going to have death panels lined
up. You know, killing off our seniors earlier than they otherwise would
And I did say at the outset, the last year of life is
expensive. Twenty seven percent of all Medicare costs come in the last
year of life. So, that's the kernel of truth to the issues is that it
is expensive to care for people in their last year of life.
really the critics have just grossly distorted the advanced care
planning provision. I have some quotes here from some of the famous
critics of it.
Betsy McCoy was probably the first to out there in
the mainstream media. She's the former New York Lieutenant Governor,
outspoken critic of the Clinton Healthcare Reform Proposal. She went on
the radio three days after the first bill came out, this event
[inaudible 29:44] planning directed. She has been on the John Stewart
She's been in the "Wall Street Journal." She's all over the
media and this was her quote three days after the provision was
announced. "The House bill will make it mandatory, absolutely required
that every five years people on Medicare have the required counseling
session that will tell them how to end their life sooner. How to
decline nutrition, how to decline being hydration, how to go into
hospice care." "This is going to be mandatory and you are going to be
forced to do this."
John Boehner, a Republican from Ohio released
a statement the very next day urging slippery slope problem that
Americans now face. "Such counseling may place older people in a
situation where they feel pressured to sign end of life directives they
would not otherwise sign. This provision may start us down the
treacherous path towards government encouraged euthanasia if enacted
Now we're all the way down to euthanasia and then
Sarah Palin most famously on her Facebook page, ever the opportunist
wrote, "The America I know and love is not one in which my parents or
my baby with Down's Syndrome will have to stand in front of Obama's
death panel so the bureaucrats can decide based on their subjective
judgment of a level of productivity in society whether my kids are
worthy of health care. Such a system is downright evil."
Limbaugh, Glenn Beck and many other conservative critics added to the
fire and eventually the urban legend was so strong that you saw it
dominating these summer town hall meetings. The government is going to
be pulling the plug on grandma.
It's very disturbing that the
death panel myth got so out of hand. We saw the president in his prime
time speeches trying to put... It's almost amazing that the president
extending from America trying to convince America that he is not trying
to kill our senior citizens. But, he did his best to assure Americans
And you know, the truth of the matter is obviously
nothing in the bill requires that the conversation even occur in the
first place. It's just that you can receive reimbursement for this
conversation once every five years. Nothing requires a patient to have
a DNR order or advanced directive or a living will, ending lives or
refusing extraordinary treatment.
Even if they do enter into one
of these living wills, they have obviously the right to change their
mind at any time. If they are competent, they have the right to tell
their physician exactly what they feel. The idea was just to empower
patients and take some of the burden off families and allow some
reimbursement to physicians.
But, the media firestorm that
resulted was just truly outstanding. And so you saw the death panel
myth really dominate. And it would be easy to laugh it off, but it's
easy to say, well that's just some whack job that the government is
going to pull the plug, but there are real consequences to this type of
distortion of the truth.
The consequences are that the provision
for advanced care planning is going to be stripped from all the bills.
It's not like we could ever make it into the light of day, because
nobody wants to face that type of heat. Nobody wants to take the death
panel myth onto their shoulders and bear the responsibility for it.
fact that the provisions have been stripped from the bills has
motivated critics even further, because they take it as a government
admission that they were telling the truth, that the government really
was trying to pull the plug on grandma and now government has backed
off of doing so. It's only motivated the opposition even further.
as a consequence we see lies and distortion work. Bills change because
of them. So, we can't just laugh this off. This does change what public
policy looks like in America and what does legislation will look like
Patients will know less about their end of life
options. Families will continue to bear the brunt of these decisions
and opponents are even more motivated to come up with every other lie
and distortion they can come up with because they see that works. So,
that's my take. The end of life issues and the death panel myth.
OK, now I'll turn it over to Professor Rivin.
Hi, my name is Beth Rivin and I'm going to spend the next two or three
minutes commenting on immigrants and the health care reform.
The anti-immigrant mood in the country has greatly shaped the health
care reform debate about immigrants - legal and illegal immigrant in
the country. As a matter of fact, it's very confusing because some of
the debate is not clearly separating the issues between legal and
proposals now being considered by Congress would prevent or put up
barriers for legal residents and non-residents of the US from accessing
affordable care and needed health care coverage.
One of the
proposals leaves millions of US born children uninsured because their
parents do not have citizenship papers or cannot find them easily in
their house or apartment. This is sometimes a great barrier even for
citizens in the United States.
Now, even if the parents are not
citizens, our laws consider children born in the US as citizens. This
proposal would be actually in violation of our current laws.
migrant labor harvests our crops and migrant labor also works in our
factories and supports our economy. They work hard and pay taxes.
Current health care reform proposals, however, seek to prevent
undocumented immigrant workers from even paying for private health care
coverage in the new exchange on health care program.
be no subsidy for these people who want to pay full price, but they are
still being prevented from doing this and many other proposals.
measures will impair our control of infectious diseases and continue
the growing burden on public hospitals, which do take these patients in
and do care for them sometimes when they are very sick. And this will
increase the cost of their health care.
So, excluding just
illegal immigrants - if you want to look at that group - from the
reform, ultimately jeopardizes everyone's health and perpetuates the
cost of treating uninsured patients that mostly come into hospitals
through emergency rooms.
So, if you stand next to someone, for
instance, who has active tuberculosis because they have not been
treated because they don't have insurance, then the fact that you are
insured will not protect you from that TB. And that goes for all
infectious diseases, including swine flu.
They are likely to
spread infectious diseases and, again, this will be a public health
problem and doesn't stop at spreading infectious diseases. We can also
look at childhood immunizations. If children aren't immunized, then
part of the population doesn't have what we call "herd immunity." It
means we're all able to more easily get that disease, and we see this
So, it would be a great risk to not have illegal immigrants accessing health care.
system, by the way, currently provides undocumented residents with
health care. They are coming into the emergency room and they're coming
with late-stage disease. So, the cost of treating these people who are
coming to emergency rooms are high and that impacts the overall health
care curve, as Sallie was pointing out in the slide.
hospitals and other providers are required to treat all patients who
come to the emergency room or other facilities and who need emergency
care. So, by not covering illegal immigrants as just one group and not
looking at all immigrants which may be at risk in some of the
proposals, we are not only being unjust, I would argue, but we're
choosing the worst option for everyone in terms of public health and
Thank you. My name is Larry Kessler, I'm the chair of the Department of
Health Services in the School Public Health. I want to thank my
colleagues for inviting us up here and I want to thank you. I
understand from my colleagues that this is a seminar you're electing to
come to. That must mean that you're interested in health reform and
possibly you're interested in health.
I'm going to make five quick points and then I'll get off the stage so
you guys can ask us some questions. Number one: All this talk is about
the medical care system, which is not necessarily about health. The
biggest health care problems we face in the United States are almost
not about our medical care system.
enormous epidemics of chronic disease, diabetes caused by things like
obesity, are about cultural and public health issues in this country
and not about the medical health care system.
Having said that,
that is what health care reform is about, so I'll talk a little bit
about the medical care system and what it means. And first, I'm going
to address some of the comments made by Pat before about the individual
This tells you what this is about. The nature of the
debate about an individual mandate forcing you and me to have insurance
coverage means it's about insurance carriers, means it's about the
business of insurance. And it means it's about a machine that probably
takes around - depending who you talk to, between 18-30 percent of our
health care dollar merely to process paperwork: people in systems,
people out of systems, which is largely wasted money that you don't
find in most other modern health care systems elsewhere.
individual mandate, the reflection of a political reality, this is
about insurance care systems, including the mega systems of Medicare
and Medicaid - most of which are administered by health care insurance
carriers. The government systems are not completely government, never
have been, never will be.
Third, a lot of this debate is about
different pockets of the disenfranchised. Pat just talked about illegal
immigrants. Well, other people we're talking about are college students
with pre-existing conditions. If anyone in this room has Type I
diabetes, when you leave college, good luck getting health care. You
can't get it on some employer system.
Or, about very poor people.
Or worse, strangely enough, not about the very poorest of society who
have a safety net, it's the near-poor. For decades, those are people
who work two and three minimum wage jobs, basically can't make a
living. They are just skating on the edge and they wind up in the
interesting cracks in our medical care system. And, by the way, also
tend to have incredibly poor public health issues as well.
is about values; it's about what we value. And in this culture of our
very medicalized system, we value access. Meaning, any time we want, we
can pick up the phone and our local - not our primary care doc, as they
might in Japan or France or Spain. But, you get to pick up your phone
through the orthopedist, the neurologist - you name the specialist.
That is what this is about.
And wanting care at the extremes and
wanting any diagnostic test and/or any procedure at the expense of
whoever else pays for it. And so it's about our values and the culture
is pretty inculcated into our medical system in society that we don't
want to be told by anybody what we can and cannot get.
going to turn to the last issue for just a few seconds and comment a
little bit about the CBO report. They're wrong. The system that's being
created by this health reform bill is not going to have enough
structure and power to change the medical care system to stop providing
unnecessary and wasteful care.
You can take a look at one of the
best websites, the Dartmouth website, with atlas of variations in care.
You take a look and you can tell within our country where there are
people practicing efficient and effective and generally low-cost care.
But, it's the rare exception and not the common rule.
bill that's created now is not going to change the medical care culture
here and so the CBO, which estimates some of these costs, they're going
to be way wrong because it's not strong enough to change the
medicalization of the culture here.
And finally, I'm going to
address something from Steve. He is right. There are no death panels in
terms of end of your life counseling, but there are death panels in
another way. And there should be. It's called "comparative
effectiveness research." What's happening is the folks at the Office of
Management and Budget, led by Peter Orszag, recognize that we spend a
third of our health care dollar with things that the rest of the world
Why? Expensive, not proven, or poor value. And so what
that means in this country is if you want an unusual procedure or an
unusual diagnostic practice, you can get it even though dollar for
dollar it's a bad buy. Most other countries won't provide it.
you can get really outrageous kind of medical procedures on the off
chance that something will work. And sometimes something does work. And
sometimes we don't even understand what works. That is really where the
rubber is going to meet the road if we're going to change health care
We're going to find practices and procedures that aren't
added value or not add them. Someone is going to complain because their
ox is going to get gored, but it will be the right thing to do.
I hope there are some questions out there. So, who would like to...
In the back.
Yes, in the back.
Yeah. So, my understanding is that during the Korean War, for example,
under Republican administration, the top tax bracket was 90 percent.
The very rich paid 90 percent of their income. I'm not too certain
about taxes, but now that's down to 40 or so, or less maybe. Most of
them even avoid paying that much.
So, my question is - to me it seems like that's the easy answer to
this, is just generate more tax revenue. To what extent do you think
tax lawyers are responsible for this situation?
It's not tax lawyers, that's conservatives in Congress. You're right;
it was 91 percent until JFK's administration. Then it became 70
percent. JFK reduced the top marginal tax bracket from 91 percent to 70
percent, and I believe our current top marginal bracket is 35, expected
to go up to 39.6 or so.
But, yeah, we're still far below where we used to be, but taxing is so
opposed to American values. Right? Nobody likes taxes. But, you're
right. I actually like the idea of the tax on the super-wealthy.
didn't know it was all the way down to 280,000. One of Obama's first
proposals, or maybe this was in the House bill, was to go after people
earning over a million dollars, and now I guess it's down to 280. I
mean, Obama has drawn the line at 250. That's what he's drawn it for
income tax purposes, and maybe it'll be similar to that.
actually think the marginal value of a dollar to the wealthiest
Americans is much less than the marginal value of a dollar to the
non-wealthiest Americans, and that's a sensible way to make public
policy. But, it never goes over well because everybody thinks they're
going to be in the wealthiest one percent of Americans.
something like 60 percent of the public votes against the estate tax
even though only half of one percent would be subject to it. So, I
think it's a political problem.
It is a political problem. It's pretty much political anathema to
suggest that tax increases could cover our health care problem.
I think that in some ways it's true that it couldn't cover our
difficulty with health care because, as Larry so eloquently mentioned,
we medicalized so many of our social problems that there's no amount of
money in the world that would cover what we actually think of as
it's also true that when you look at other nations, they use their tax
base more effectively, tax the wealthy and support their universal
health care systems largely through that method.
Do you think that high might be more palatable for there to be a tax on
the wealthy if it came with the public option?
Because I think the reason taxes are more popular in Canada, for
example, is that everyone who pays them gets services from them. They
associate the fact that we pay taxes with 'I have access to this free
health care even though I'm rich.'
what Americans don't seem to like is the fact that they're going to all
pay taxes that are just going to go for services for some other guy,
for the guy who's poor. Whereas, I would say, it would make a tax
palatable if there was definitely a public option that you could choose
to use even if you were very wealthy.
That won't work because the people who are going to be gored are not the people who would benefit from the public option.
But, if they at least knew that they could use it...
They could care less.
... don't you think that that would make a difference?
They could care less. The people who care about the public option are
people who are at the margins of society who tend not to vote in
numbers, don't tend to have a voice in Congress, don't tend to have a
voice in our State Legislature.
Take a look at the basic health plan in the state of Washington. This
past year, it has been reduced from 84,000 to 65,000 or 66,000. So,
25,000 people all of the sudden have been disenfranchised. And do they
care about the tax bracket at $1 million? I don't think so.
I read that many industrialized countries have private insurance, but
unlike our insurance companies, they're nonprofit. So, in Germany, in
Switzerland, in Japan, all the insurance is private, but nonprofit, and
that makes a tremendous difference because the insurance companies
aren't trying to make money for the shareholders.
That's a great point, and Switzerland is actually a very good example
because they used to have for-profit health insurance companies. And
now it's heavily regulated what they can sell, and they can make a
profit only on supplemental policies that don't cover the basic
So, there are examples out there. And there certainly are examples of
industrialized countries that do not include a public option amongst
their insurance systems.
getting to your point about what if we were all in the same type of
coverage, would that make a difference in somebody's willingness to pay
taxes for it? In Switzerland, they don't have a Medicare so you would
stay on your same private plan throughout your life, for example. There
is no group that then shifts to a different type of coverage.
In sort of a sad paradox, the trend in terms of American health plans
is not been to become more not-for-profit, but to go the opposite
direction. We've had countless conversions from not-for-profit, for
example, Blue Cross systems, that have actually moved to mutual systems
and then on a quick trip to the four profit status. So, we've
To well point.
We've actually seen our health insurance plans going the exact opposite
direction of what would make sense for a more cost effective system.
What's been driving that, that shift?
The desire to make money.
The ability to...
But who's, I mean...
It goes back to Larry's point originally about values in society. I mean, it really does.
The big shift happened in around the 1980s. When Medicare went to
diagnoses related groups with change in payment structure; instead of
paying hospitals for what they provided, you paid them a fixed amount
of money take care of a certain condition. And that was meant to drive
people out of the hospitals faster and keep utilization down, which it
The same time, and it's not a coincidence, companies, like the Hospital
Corporation of American, incorporated and figured out there was money
to be made. This is society; if a vacuum exists, someone will fill it
to make money.
so corporations figured out, health care could be a business and there
was a dramatic change between the mid to late 1970s early 80s, of a
redefinition of medical care as a business.
In a funny way, prior
to then, one of the evils of the system, fee for service, physician's
have always billed for what they provide and they could recommend more
for themselves and, therefore, recommend more for their pocketbook.
That was not considered a bad system in the 1950s and 60s because
physicians were seen as an honest arbiter of your care. And it's, in a
sense, felt particularly at the primary care level were tied to your
That changed, became a business in the 1980s both for the
clinicians who now own facilities that they manage and make money in,
own partners and investments, as well as corporations. And that change
happened very dramatically in the 1980s spurred on by a very odd
confluence of factors.
Yes, way in the back.
Thank you all for being here by the way. I'm in a public health degree
from working at CMS for [inaudible 52:17]. So, everyone said to
[inaudible 52:19]. They also think I want to start paying [inaudible
But, I had two questions [inaudible 52:30] two weeks, so I don't really
know all of the [inaudible 52:33] but it seems to me that in terms of
[inaudible 52:37] whatever it's passed, the district authority like a
place CMS versus, you know, Santa Barbara Constitution [inaudible
52:47] highest level, was it actually [inaudible 52:51]. Seems like it
might be a little bit of a problem. I didn't know if anyone could be
specific [inaudible 52:59] implementation issues that would come about.
And then I guess my, well that was...
Well, in several of the bills there are complex formulas for things
like the premium subsidy if you are someone who is at a certain level
of poverty level. There're complex formulas in terms of employer
contribution if there's an employer-payer provision. And these will
have pretty high transaction cost of setting up should any of them
So, I think that there will be some sort of increased bureaucracy and
high transaction costs that aren't necessarily anticipated at this
stage of the health reform analysis.
It looks like we have to stop right now, but I'll stay after if anybody
has comments or questions. Well, there isn't, so we won't stay then.
We'll stay in the back. Thank you for coming.