Do Americans Have the Political Will to Tackle Healthcare Costs? A Q&A With Gail Wilensky, PhD

February 13, 2020
Interview by Allison Inserro

Volume 26, Issue 02

To mark the 25th anniversary of the journal, each issue in 2020 will include an interview with a healthcare thought leader. For the February issue, we turned to Gail Wilensky, PhD, an economist and senior fellow at Project HOPE.

Am J Manag Care. 2020;26(2):56-57. https://doi.org/10.37765/ajmc.2020.42390

AJMC®:

When AJMC® launched in 1995, it was shortly after the Clinton healthcare plan had gone down in Congress and 15 years before the Affordable Care Act (ACA) was enacted. Now, more Americans have health insurance, but struggles with price, cost, and access remain. What will it take for the United States to bring down the cost of care and widen access?

Gail Wilensky:

Doing something different from what we’re doing now: Either more aggressively trying to control costs directly, or putting in place a more competitive environment than we now have experienced. If we keep doing what we’ve been doing, which seems to be what most Americans are most comfortable with, we’re likely to have results very similar to what we’ve had.…Bringing down the cost of healthcare is extremely challenging; at least slowing the growth rate to the level of the economy, or less, should be possible, although that’s not so easy either. We have just learned from numbers being reported from CMS for the national health expenditures that in 2018, we actually did see healthcare spending relative to the economy drop slightly—still robust spending growth, but because we are in a strong economic period, a little less than the economic growth—and so the share of spending on healthcare dropped from 17.9% to 17.7%. That doesn’t necessarily mean it has been easier for people who have high deductibles to be able to access the insurance that they have.

AJMC®:

Right, we saw one survey that said about 50% of people are skipping care or prescriptions because of the out-of-pocket costs.1

Wilensky:

That’s a much higher number than I’ve seen, but it is definitely a problem for some people some of the time and the question of what can be done to help them is…not an easy question to answer. There are opportunities to set aside funds that can be used to cover some of the costs of high deductibles, the various types of tax-preferred accounts. But for people who are low-[income or] low- to middle-income, that may not be enough to attract them or to be able to be of use to them. I think the kinds of strategies that it would take to actually lower healthcare spending are likely to be politically very unpopular. It would have restrictions on access in terms of a very open-ended healthcare system, allowing most people to go where they want when they want as long as they have coverage. And it would take some amount of time for people in the United States to accept some constraints. Those of us who were around in the 1990 period remember how much pushback there was when managed care was first being introduced by employers as a strategy to slow spending, and people realized that they would either have to stay within network or, if they wanted to go outside of network, pay an increased coinsurance or co-payment, and they didn’t like that at all. That’s a relatively mild way to try to lower spending, but for Americans who are not used to that, not a very popular one.

AJMC®:

That system is used in other countries, right?

Wilensky:

Yes…there are all sorts of ways that we could try to either slow the growth rate or even lower the growth rate. But it would mean doing something different from what most Americans are accustomed to doing. And that’s really the challenge, getting people to agree that they’re comfortable with making some significant changes to how we access care.

AJMC®:

Speaking of care, do you think value-based care has a future, or—without some other shift, like the one that you’re talking about—is emphasis on value just nibbling around the edges of this problem?

Wilensky:

Well, the concern I have is [that] we frequently label value-based care [as] care where only a very small portion of the payment is actually related to value. So some of the [potential shift] might be related to value. If we were talking about a much more aggressive way to impact spending—in terms of either not funding or funding at a very differential level areas that were of questionable appropriateness, clinical appropriateness, or clinical value—I think we would have a chance to have a much bigger influence. Again, there better be a real heart-to-heart realistic talk with the American public to make sure they understand what they’re buying into if we were to move to that kind of system. In general, no politician has been willing to have those kinds of tough discussions with the American public. We’ve designed a very open, innovative healthcare system for those who are insured, which, thanks to the Affordable Care Act, is the vast majority of people in the country, a good 90%. Many of them are able to access care, especially if they stay within their networks, at reasonable costs. People who have either esoteric illnesses or who have high deductibles without having a way to cover them are in a different position and are not faring nearly so well.

AJMC®:

Speaking of people with certain types of conditions, the use of specialty pharmaceuticals has skyrocketed as we have these new innovative therapies, and we may even have one-time curative or potentially curative treatments. But, as you’ve mentioned, affordability is an issue and the impact on public budgets can be substantial.

Wilensky:

Those are going to be probably the most challenging, the very-high-cost one-time cures that basically take what could have been a 10-year, a 20-year, a lifetime of spending and cancel the need for it. How you try to fund those in a way that both is fair to the various payers and acknowledges what has been saved by having access to these specialized drugs is going to take some thinking that we don’t have in place yet. Even in countries where the payer who benefits is likely to be the same because of the nature of their healthcare system, you have a big timing problem about how you end up funding it in a year when its impact is felt basically over 10 [or] 20 years or a lifetime. In the US, it may well be that the payer who has been asked to fork over the money to pay for the one-time cure is not actually the payer who will benefit from having the person cured of this disease for the rest of his or her life. When it’s a child who is at risk, that even makes it more compelling, because you have a whole lifetime in which you can have savings that would have otherwise not occurred, [actually] occur. But the question of how do you socialize the payment is not yet resolved.

AJMC®:

You have that tension, between the payer issue and then the lifetime of the patient, and there’s also a tension related to innovation and scientific breakthroughs: continual costs come up, and there is the question of who pays for them. Can innovation and these scientific breakthroughs happen in the same space when that question still is not yet answered?

Wilensky:

Well, it can, as long as there is an adequately open US market, which ends up covering a lot of the cost of the innovation, irrespective of where it’s used.…The United States for a long time has been effectively funding the cost of many of these major expensive interventions for the rest of the world. And as long as the US has been willing to cover the kinds of costs that have been demanded, it is really covering a lot of the [research and development] recovery for the rest of the world. If at some point the US decides it’s had enough or it’s going to limit what it is willing to spend, it’s likely to have a disproportionate impact, because we have been not only paying for our ability to access it, but [also] paying for other countries that have more controlled prices being able to access it, as long as the one big market is still willing to pay.

AJMC®:

Jumping back to discussing the ACA specifically, what do you think have been its biggest achievement and its biggest flaw?

Wilensky:

The biggest achievement, hands down, was expanding access to coverage. There are still about 12 states that have not expanded Medicaid, and those populations that are between where the old cutoff to Medicaid was and the expansion [cutoff] are frequently—not always, but frequently—uninsured. That remains a problem. It was clear that Congress had not anticipated that having states say, “Thanks, but no thanks,” was an option that resulted from the 2012 Supreme Court hearing. The ACA was always primarily focused on expanding insurance coverage and recognized there was little in there other than some of the pilot projects that might help slow spending. The one part that was legislative was the ACO [accountable care organization] provision that was actually in the legislation. But ACOs, particularly by allowing for one-sided risk for as long as they have, are, not surprisingly, not a great savings producer.

AJMC®:

How do you think that will work moving forward, with the emphasis on and demand for 2-sided risk?

Wilensky:

It is obviously requiring a more focused effort on the part of the group. It does seem like you need to expect at some point that it is not just one-sided risk that you aren’t just able to gain if you can beat whatever the expectation was, but rather go at risk. Many groups are uncomfortable about taking risk, and when you see what happens, it’s not surprising that they’re uncomfortable because they’re actually not very good at producing the kind of savings that are required. It’s ironic, because so many people believe [that] so much that we do in the US is of only marginal health benefit, but when we try to get aggressive about slowing down some of the spending, the pushback all around is pretty significant. So again, there are all kinds of things we could do. The question is, will people be willing to make some changes in order to produce them? I mean, we have a great abundance of very expensive high-tech procedures and equipment, which could be [not only] better used economically, but also better used in terms of patient safety, if they were more concentrated [in terms of] who would use them and who was able to access them, as opposed to having people duplicate those services, with some of the centers probably not having the kind of volume that they should have in order to have maximum outcomes.

AJMC®:

What do you think the future will look like for Medicaid work requirements?

Wilensky:

The answer is that I don’t know. They’re being challenged, right? I am somebody who has cautioned people about being too aggressive in trying to kill [the requirements] off. Not because I think they will actually make much difference—because I think most people, [although] not all, who can work on Medicaid are working. It is important, however, to have the middle-class taxpayer comfortable [in understanding] that that’s the case. I think sometimes people don’t appreciate that the groups who are just above the Medicaid cutoffs, who are working every day to provide for their families and may not love their jobs but are doing them anyway, need to be comfortable that people who are being supported are doing what they can do to help themselves. So I actually look at Medicaid work requirements, assuming that they are being applied in a reasonable way, as [being as] important to keeping support among the middle-class taxpayers as anything that [the requirements] might do for the people who are actually subject to the requirement. I do think that having people who can work [actually] work is good for both the individuals and for the people who are being asked to fund the program.

AJMC®:

Another topic that is under litigation as we record this is Texas v Azar. [Editor’s note: The Fifth Circuit Court of Appeals ruled 2-1 on December 18, 2019, to strike down the individual mandate and send the case back to the district court.2] What do you think the way forward for Republicans would be for healthcare coverage, depending on how that court rules and how the Supreme Court would rule?

Wilensky:

I can’t imagine that this is going to get any more favorable a ruling than it’s gotten when it’s come up in the past. I honestly don’t know why the 20 Republican [attorneys general] thought this [litigation]—to go ahead and challenge this—was going to be a good idea, other than the fact that it’s probably politically popular in their states. I can’t imagine the Supreme Court now overturning this legislation. It is a problem for Republicans, because while they have agreed, particularly when they’ve not been in power, about repeal-and-replace as an effective model, it turns out it is much harder to get agreement about what you would like to have replacing [the ACA], among Republicans, to say nothing of the kind of political support it would take to actually make the replacement occur. It is very hard, with no precedent that I know of, to actually take away a benefit that has been around as long as this benefit has. Now I just think they would do themselves a big favor to focus on however they want to try to move forward with other parts of healthcare, including what we’re going to do to make Medicare viable for the ever-retiring baby boomers.

AJMC®:

The future of Medicare for someone of that generation is certainly looking a little shaky.

Wilensky:

Oh, for sure, yes. Grim was the word that came to my mind…

AJMC®:

So is that another question of political will?

Wilensky:

Yes. This is a problem we’ve known about since I was running the program in 1990, because the people who are now aging into Medicare were already around, they were born. We could see what those numbers were looking like. You had the baby-boom generation, followed by the baby-bust generation, which was a 2-part whammy: A large number of cohorts were born between 1946 and 1964, who started retiring January 2011 and will continue to retire or go into the retirement-age [bracket] until 2030, but they were followed by an unusually small set of cohorts. Thereafter, in a program which is transferring resources from the currently working to the currently unworking, which is what we do typically in Medicare, that produces a double hit. We can alter benefits, we can increase financing, we can try more targeted changes; we’ll probably require some combination of changes to make it financially viable. It would have been far wiser if, when [former US Representative] Paul Ryan was first talking about this in 2008, 2010, with a decade phase-in, we had actually done that. The longer we wait, the less time we have to phase in to whatever we do next. But it is not just the trust fund, which will be depleted of funds now estimated in 2026, [although] that could change a little one way or another, but also the drain that the Treasury’s going to feel from the growth in Part B spending for physicians and Part D spending for outpatient prescription drugs, which aside from premiums and co-payments comes from the general revenue of the Treasury.

AJMC®:

Would you like to say anything else?

Wilensky:

Well, just to sum it up: We could have a different expenditure experience, but it’s going to require aggressively changing how people in the United States have been used to receiving care in some or multiple ways. Getting them to understand that, and to buy into that, is no small political requirement.REFERENCES

1. Mending healthcare in America 2020: consumers + costs. Wolters Kluwer website. go.wolterskluwer.com/Mending-Healthcare-2020.html. Accessed January 22, 2020.

2. Caffrey M. Federal appeals court strikes down ACA individual mandate. The American Journal of Managed Care® website. ajmc.com/newsroom/federal-appeals-court-strikes-down-aca-individual-mandate. Published December 18, 2019. Accessed January 22, 2020.