Outlook | Perspective
June 30, 2017 at 1:48 PM
by David Cutler
In arguing for the Senate health-care bill, Majority Leader Mitch McConnell (Ky.) reportedly warned his fellow Republicans that if they didn't pass it, they'd have to work with Democrats to shore up the Affordable Care Act's insurance exchanges. It's true that abandoning ACA repeal would be a big psychological blow for a party that has campaigned on little else for the past four election cycles. But giving up on repeal would open the possibility of meaningful action on health care that could gain the support of a bipartisan congressional majority — and would be popular with the public, too.
Republicans are never going to get Democrats to agree to massive cuts to Medicaid. And the single-payer health-care model favored by many Democrats won't get anywhere in the current Congress. But health care is about more than insurance coverage. And, looking at health care more broadly, there are two areas where Republicans and Democrats enthusiastically agree: the need to address the opioid crisis and the need to lower medical spending.
The opioid epidemic — which encompasses addiction to prescription painkillers, heroin and synthetics such as fentanyl — is the major public health issue facing the country. Nearly 100 people per day die of an opioid overdose, and experts predict a continued increase without policy intervention.
In a national opinion poll conducted last year by my colleagues at Harvard's T.H. Chan School of Public Health, 51 percent of respondents said abuse of painkillers was an extremely or very serious problem in their states, and 52 percent said the same of heroin. Two in five respondents said they personally knew someone who had abused prescription painkillers. And, especially noteworthy for this discussion, the level of concern and the reports of personal experience were similar for Democrats and for Republicans, for people in cities and for people in rural areas, and for high-income households and for low-income households.
There is also general agreement on the steps that should be taken to address opioid abuse and addiction.
Encouraging physicians to prescribe fewer opioid drugs is one part of the strategy. Many people first become exposed to opioids through excess pills of friends and family members. Despite a modest decline in opioid prescriptions in the past five years , there is still about one opioid prescription per U.S. adult written annually.
Strategies to reduce the fatal consequences of drug abuse are a second component, including improved outreach and information, needle exchange programs, and increased access to overdose-reversing medications. In the law enforcement realm, there is an urgent need to shut down major sources of illegally supplied drugs, such as heroin and fentanyl. (There is notably low public support for incarceration of those who abuse opioids.) The federal government has started on these policies but has been held up by inadequate funding.
But by far the most costly part of the necessary opioid strategy is increased access to treatment. People with opioid addictions need mental health and substance abuse care, as well as additional physician and hospital care. ACA repeal would limit access and reduce government funding. Estimates suggest that in the absence of the ACA, it would cost $183 billion over 10 years to address the epidemic. The revised Senate bill floated at the end of the week, in an effort to win the support of some moderate Republican holdouts, includes only $45 billion for the opioid epidemic. Thus, the Senate plan would amount to a significant shortfall in funding for treatment.
Consistent with the importance of the issue, in the Harvard poll noted above, 45 percent of Democrats and 37 percent of Republicans thought the government should spend more on treatment programs for people addicted to prescription painkillers; only 17 percent of Democrats and 16 percent of Republicans thought the government was spending too much.
The situation is similar with respect to reducing medical costs.
Polling by the Kaiser Family Foundation has found that significant portions of the public report having difficulty affording premiums and deductibles and paying medical bills. And Americans, regardless of party identification, think reducing how much individuals pay for their care should be the "top priority" for lawmakers. (In contrast, "repealing the 2010 health care law" ranks relatively low for both Democrats and Republicans.)
Conservative and progressive politicians have started singing the same chorus on costs. "Our goal is to give every American access to quality, affordable health care," House Speaker Paul Ryan wrote in a March op-ed that sounded a lot like the case President Barack Obama made for the Affordable Care Act.
The ACA included several provisions intended to lower medical costs. Medicare payments to some providers were reduced, and various demonstration programs were created to experiment with value-based payment. The law had some success. Cost growth slowed after it went into effect, with studies showing at least part of this was a result of the ACA changes. But the job is not remotely finished. Growth slowed less than many hoped, and spending increases have begun ticking up again in the past three years.
It is vital, however, to distinguish between cost shifting and cost cutting. The Republican proposals engage in cost shifting. Healthy people pay less when they do not have to pool with the sick, but sick people pay more. Premiums fall when coverage is allowed to be less generous, but out-of-pocket costs rise. Federal spending declines when Medicaid is cut, but states or private payers have to pick up the tab.
To truly cut costs, we need to either have fewer sick people or make illness less expensive. There are ways to do this that both parties support.
We can start by tackling the enormous administrative expense of health care, which accounts for about one-quarter of medical spending. Consolidating the plethora of reporting requirements would be a welcome step, as would automating bill payment and pre-authorization requirements. In other industries, administrative costs have fallen when the dominant buyer requires standardized processes as a condition of doing business; think about Walmart in retailing. In health care, the federal government could easily play this role.
Exorbitantly high prices are a second area where federal policy is crucial. From pharmaceuticals to physicians to hospitals, market power is associated with higher prices for consumers. Congress could do a great deal to address this: legislating that uniform quality metrics be applied to all plans and providers to save on the administrative hassles of multiple quality-reporting systems; requiring plans and providers to simplify and publicly display their prices; denying extra payments to organizations that scheme around federal Medicare rules. And, as both Hillary Clinton and Donald Trump talked about during the presidential campaign, Congress could allow Medicare to negotiate drug prices with manufacturers, bringing prices in the United States closer to those in other countries.
Finally, Congress could address the incentives that encourage too much care. Studies consistently show that people receive care well above what is recommended by medical guidelines and even above what informed patients want. There are a litany of changes that have been proposed to address this overuse, including medical malpractice reform and payments that reward better overall outcomes instead of the number of services provided.
An agenda focused on medical spending could pay major dividends. Estimates suggest that one-third or more of medical spending in the United States is not associated with improved health. Eliminating this waste would be the equivalent of a $1 trillion tax cut annually — a program the likes of which the country has never seen.
Some of these policies could be enacted if the ACA is repealed, but substantial cost savings would prove elusive. The history of international health reform is that cost control takes place after coverage is made universal, not before. Canada spent the same share of its GDP on health care as the United States did, until it implemented universal insurance coverage; after that, the trends diverged. Massachusetts followed its successful program to insure nearly all residents with an equally groundbreaking effort to reduce medical spending . In the few years since, the state has gone from cost growth well above average to below.
There is good reason for this. When a significant share of the population is uninsured, goverments, insurers and providers are scared to reduce spending materially; they rightly worry that every payment cut will harm those without coverage. How many legislators will be willing to push for payment reform for rural and inner-city hospitals when those hospitals are preoccupied with a looming 25 percent Medicaid cut?
Expanded coverage also helps with prevention. Before the ACA, about one in four people was uninsured at some point during a year. It is virtually impossible for physicians and patients to manage chronic disease well when patient access to physicians and cost sharing for medications changes so frequently.
Finally, the certainty that would be provided by keeping the ACA would encourage insurers to work on cost savings. Many observers have noted that insurers are wary of entering the ACA's exchanges because Washington keeps changing the rules of the game. The same would be true with respect to embarking on new cost-containment efforts.
On both substantive and political grounds, therefore, the course is clear. Congress should accept the ACA as law and turn its full attention to the public health and cost issues that stand in the way of serious health improvements. The pill may taste bitter at first, but the therapy could work wonders.
Read more from Outlook:
Alexis Pozen: Five myths about health insurance
David Cutler: Should healthy people have to pay for chronic illnesses?