Monday, November 7, 2016

It would be a vast understatement to say that the excitement is building toward the U.S. presidential election and down ballot results. While health care policy was not a prime focus during the election season, it has garnered attention recently, especially with Affordable Care exchange premium increases. The federal budget deficit and entitlement spending are also recurring themes of presidential politics. On July 12, 2016 the Altarum Institute Center for Sustainable Health Spending (CSHS) held its annual symposium in Washington, DC. It was the sixth such meeting organized by CSHS, and the fifth year supported by the Robert Wood Johnson Foundation.

This blog highlights themes from each of our expert presenters. The full monograph, and complete video of the event are available at:


Altarum CEO Linc Smith introduced the meeting by tracing the arc of themes discussed in the previous symposia, and issuing a plea for the speakers to be provocative (and they were!). What would panelists be discussing at the 2017 sustainable health spending symposium? “The Obama administration’s time in office will certainly be reflected upon as a historic pivot point in terms of health policy and probably in terms of health spending—whichever way it plays out—with the correlated developments including expanded coverage, new payment mechanisms, major provider and insurer consolidation and many new market entrants. These dynamics will clearly affect the trajectory of spending going forward.”

Ceci and DougCeci Connolly, CEO of the Alliance of Community Health Plans, framed the first session as “the budget and future policy landscape,” asking the speakers to provide analytical perspectives sprinkled with a dose of politics. She guaranteed a lively question and answer period by compelling the presenters to address big issues such as: “In a wealthy, vibrant society, perhaps spending 20% on health care is not the worst outcome.” She noted that health sector jobs are high-paying and valuable—aren’t they? She forcefully raised the issue of understanding the role of social determinants of health in health care spending. And she asked whether the incoming president would have bigger fish to fry than health care.

American Action Forum President Douglas Holtz-Eakin emphasized the looming federal budgetary imbalance, declaring that “someone must deal with this reality.” He explained that the incoming President’s hands would be tied. “My rule of thumb in Washington is that it is very difficult to figure out what people want to do and are going to do. The best way to figure it out is to appreciate exactly what they must do … We can discuss the details of likely targets, but we are going to see pressure to control spending, there will not be preparation that leads to actual changes in law, and we will end up doing much of it by regulation.”

In his talk, Fiscal Risks and Outlook for the U.S. Health System, Jeff Goldsmith, National Advisor, Navigant Healthcare and Associate Professor of Public Health Sciences at the University of Virginia, covered extensive territory to explain the historic health spending slowdown, and to predict the future. He highlighted three factors: the lack of recent technological change; the effect of the 2008 crash on “boomer” doctors; and the insurance affordability problem. “It is not bullish for any industry if half the country cannot afford to use its product without massive public subsidy or financial hardship.” He predicted an end to the recent provider “pricing pause,” a likely recession in the first term of the new president forcing substantial cuts in health programs, and little confidence in the cost-effectiveness of programs emanating from the CMS Innovation Center. Nonetheless, he was optimistic about the potential for “robust primary care models” and aggressively addressing social determinants to control health costs.

Joe Antos, the Wilson H. Taylor Scholar in Health Care and Retirement Policy at the American Enterprise Institute, distinguished between fiscal reality, political reality and actual reality, all in the context of understanding health spending trends. He fixed the spotlight on growing federal budget deficits and the resulting increase in the percentage of federal debt held by the public relative to GDP—a direct result of Medicare’s demographic future. While acknowledging that “the ACA has permanently changed the landscape,” he noted disappointing exchange enrollment, skyrocketing premiums and high patient cost sharing. Yet, given the importance of cost control, he stated, “The objection to cost-sharing from the public is its visibility, and that very visibility is the charm to a hard-hearted economist!”

Following the early morning political economic fireworks, Eugene Steuerle, the Richard B. Fisher Chair at the Urban Institute, brought additional analytical rigor to the discussion of how we should characterize excess health care spending. After deriving the mathematical formulas, his bottom line was, “when you come to conferences and talk about how much health costs are growing, start with the share of per capita income growth that is going to health, not that silly excess cost growth variable [the percentage points health care is growing above GDP growth].” He demonstrated that health costs in general, not Obamacare, dominate the future of federal spending.

Charlie and PanelMelinda Buntin, Chair of the Department of Health Policy at Vanderbilt University’s School of Medicine, functioning as both moderator and presenter, began the second session, Health and Healthcare Cost Factors, by remarking, “I think health care cost growth is one of the singular challenges of our era.” She identified three spending factors: coverage, price and utilization and transitioned to focus on recent Medicare data. “…accounting for the number of people covered, their age and gender composition, and the prevalence of their diseases—we should have seen even higher spending.” She underscored the critical role that flat prices have played in controlling Medicare per beneficiary spending.

In the Innovation Dilemma, Amitabh Chandra, the Malcom Wiener Professor of Social Policy and Director of Health Policy Research at the Harvard Kennedy School of Government, brilliantly described the tradeoffs between society’s desire for innovation (new drugs, devices, and surgical procedures) and our reluctance to pay the accompanying prices. He surveyed types of innovation and explained the complex interaction between payment policies and technological developments and their adoption. Patients obviously prefer a system that eliminates ineffective treatments, but “the reality in medicine is that rarely does it not work; it often works only a little.” We are left with the eternal value question of “…is this innovation really worth the price that the manufacturer is charging?”

CSHS founding director, Charles Roehrig, played to his sweet spot of coverage, spending, jobs and sustainability, in light of his continuing work to track the U.S. health sector. He also presented his highly regarded (recently updated) framework on understanding the long-term sustainability of health spending—The Triangle of Painful Choices. Further, he noted that to properly understand recent spending trends, a focus on high-cost prescription drugs (e.g., Hepatitis C medications) is required. There appears to be a relationship between recent health spending growth and increased insurance coverage from the Affordable Care Act, even at the state level. Yet, this analysis is confounded by the lags associated with becoming insured and accessing care. Nonetheless, as the nation moves beyond coverage gains, there is hope that spending growth could return to its historically low levels.

In Cost Factors Do Not Equal Health, Tom Getzen, former executive director of the International Health Economics Association, and emeritus Professor at Temple University, asks why the U.S. has been less successful at controlling health care costs than our developed country peers. He emphasized cultural and structural factors. “We had more trouble with cost control [than other OECD countries] because we … wanted the latest and greatest technology and we were willing to pay for it.” “In the U.S. health system ‘plumbing,’ we do not have a single tap. When the plumber comes into my house, he turns off this tap, and throughout the house the water is off. With health care, we have a zillion different taps, thus controlling costs is that much more difficult.”

This second panel concluded with a discussion of several interesting issues including: the first ever article in the Journal of the American Medical Association by a U.S. President (including the commentary by Amitabh Chandra); decomposing the health spending slowdown into cyclical and structural components; analysis of new health sector jobs; the continued role of National Institutes of Health research funding and the potential for new (and costly) innovations; governmental price setting vs. the need for expanded redistribution; and audience questions from Larry McNeely at the National Coalition on Health Care and Ed Salsberg from George Washington University.

Joanne Kenen, POLITICO Pro’s health care editor, moderated the final panel Increased Coverage, Reduced Costs, Greater Efficiency. She quipped that with so much depressing commentary presented thus far, meeting participants “should be glad there is mental health parity!”

Robert Berenson, Institute Fellow, the Urban Institute, argued Why MACRA Actually Compromises the Quest for Value-Based Payment. He briefly described the Medicare Access and CHIP Reauthorization Act, and the Merit-Based Incentive Payment System (MIPS). Of his 5 main points, perhaps his most important (and entertaining) one was, “Pay-for-performance (MIPS) is conceptually suspect, operationally challenged, and does not seem to work in broad application.” Along the way to defending this assertion, he noted that he had discovered a serious misquote of the famous Deming phrase “if you can’t measure it you can’t manage it.” What Deming actually said was “It is wrong to suppose that if you can’t measure it you can’t manage it—a costly myth.”

ZekeEzekiel Emanuel, Vice Provost for Global Initiatives and chair of the Department of Medical Ethics and Health Policy, University of Pennsylvania, addressed The Promise of Novel Incentives for Organizations and Doctors to Achieve Higher Quality & Efficiency. He stressed the importance of changing the processes of care and lowering health care prices. He elaborated by stating his belief that “changing those processes will require changing non-financial incentives to doctors and partially appealing to their intrinsic motivation.” This is the very same motivation that propelled these doctors to survive “the severe process of natural selection in college, medical school, internship and residency.”

While the theme of Katherine Baicker, C. Boyden Gray Professor of Health Economics, Harvard University, was Coverage, Costs and Value, her emphasis was on the emerging lessons from the Oregon Health Insurance Experiment—about which she has conducted seminal research. She highlighted both expected and surprising results: that Medicaid recipients would be price sensitive (the former); and that they would increase their use of the emergency department (the latter). She closed by saying “The issue we have not seriously wrestled with in the public arena is which benefits should be covered with public dollars and which should not.”

The final questions and answers session addressed the big issues of promoting a culture of health and proliferating corporate wellness initiatives. Joanne Kenen closed the formal meeting with her personal observations: MACRA will likely have “a massive effect on how health care evolves in a few years;” system changes have made a significant difference in cost control; and our country must commit to providing appropriate mental health services and making progress in reducing low-value care.


Spending Outpacing Wages

Uwe Reinhardt, James Madison Professor of Political Economy, Princeton University, slated to be our final presenter, was unable to attend the meeting. He and Tsung-Mei Cheng submitted his planned presentation, The Next Debate in Health Care: Transforming the Ethical Structure of U.S. Health Care. It built on a blog by Drew Altman that highlighted spending on deductibles outpacing wages, and on Reinhardt’s earlier work on the political debate over systematic health reform. He concluded by lamenting that “It is only recently that the American public seems to have lost faith in the wisdom and beneficence of the nation’s policymaking elite. We shall see how far that elite can push rationing health care by income before the American public becomes fully alert to that policy.”

All postings to the Health Policy Forum (whether from employees or those outside the Institute) represent the views of the individual authors and/or organizations and do not necessarily represent the position, interests, strategy, or opinions of Altarum Institute. Altarum is a nonprofit, nonpartisan organization. No posting should be considered an endorsement by Altarum of individual candidates, political parties, opinions or policy positions.



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