Romneycare, Obamacare, and beyond
Economist Jon Gruber talks about his work with Obama and Romney, about tomorrow's election, and challenges ahead for health reform
November 5, 2012
Healthinsurance.org Curbside Consult is a periodic informal dialogue with medical and health policy experts about pressing issues of the day. For this edition, I conversed by Gchat with Dr. Jonathan Gruber, a professor of economics at the Massachusetts Institute of Technology and director of the health care program at the National Bureau of Economic Research.
Gruber may be the most famous health economist in the United States. He also owns the distinction of being a key health policy advisor to both Governor Mitt Romney and President Barack Obama. He was a key designer and analyst of the Massachusetts’ health reform that came to be known as Romneycare. He later performed some of the same analyses for what be known as Obamacare.
He has noted many times that Romneycare and Obamacare are extremely similar on most issues on which these can be fairly compared. I’ve known Jon for many years. He has won numerous awards, and written countless papers and academic articles. He has also written a graphic novel about health reform.
(I chatted with Jon on Friday, November 2. This has been lightly edited. – HP)
The evolving Mitt Romney
Pollack: Hi Jon. Great to chat with you. You’ve worked with both Romney and Obama. What do you think accounts for Romney’s 180-degree turn on health reform?
Gruber: I see no other possible reason that pure partisan politics. Romney partly fought for health care reform in Massachusetts because it was the type of pragmatic reform based on conservative principles that he felt could launch him to the national stage. Unfortunately he did not reckon with the fact that the Republican party would turn its back on its own policy positions once they were endorsed by President Obama and the Democrats.
Pollack: What was the day-to-day experience like working with these two men?
Gruber: I don’t want to overstate my experience here – I’ve had one meeting with Romney and two with Obama. But my sense is that with Obama, what you see is what you get. He is just incredibly calm, confident and interested in the big picture of how to get to where he wants to be. Romney was much more interested in the details and seemed to approach the problem more as an “engineer,” trying to figure out how the pieces fit to get to his goal. They were both very impressive, but in different ways.
Pollack: One political irony is that Romney believed that he had no chance to run as that impressive technocrat. Instead of standing on that, he ran to the right in the GOP primary freak show, and then tried to lurch back to the center. One bright spot in the campaign comes from this. I think many GOP political pros might conclude that they blew the election by inducing their candidates to take hard-right positions and by thus alienating big constituencies over immigration, reproductive rights, and health care.
Gruber: I really hope you are right. I think that all the objective political science evidence suggests that the right has moved much farther to the right than the left has moved to the left – e.g. that the right is more to “blame” for the polarization in our political process. My personal hope is that a strong Democratic victory next Tuesday would cause the Republicans to do some soul searching and realize that this has been politically costly for them, and that we can move back to the more centrist policy debates of my youth. I’m not sure a Romney victory would have the same effect – I fear the Republicans might ignore the fact that he won by tacking back to the center, and claim this a validation for the right wing agenda.
Pollack: As the political scientists say, “asymmetric polarization” is a real problem. For sure, many conservatives will say that Romney wasn’t conservative enough. But I’m pretty confident Karl Rove and many others will look at the Latino vote and realize – Hey we have to reach out to the fastest-growing voting bloc in the country. This is important for health policy, since Latinos are so over-represented among the uninsured and because unauthorized residents of the United States pose some serious health policy challenges.
Gruber: I hope you are right. The interesting question to me is whether an Obama victory makes that more or less likely. I’m betting more, but I’m not sure.
Pollack: ACA would be incredibly challenging, even in the absence of political acrimony and state budget problems. How is implementation going?
Gruber: It’s still early; so it is hard to tell. I think that implementation of the “early deliverables” of the law has gone very well: millions of seniors are getting rebates on their drug spending; millions of 19- to 26-year-olds are now covered; free preventive care is now covered, and so on. Implementation of the next step, exchanges, has been rockier. Many states have chosen to play politics with this. It is unclear what they will do if Obama wins. Meanwhile, the federal government has not given many details on its federal exchange. The last pieces of implementation, and the most uncertain, are delivery reforms. We appear to be seeing a meaningful transformation in the delivery of health care in the U.S., but it is unclear how much of that is due to the ACA.
Pollack: What are some key details readers should watch for on the federal exchanges?
Gruber: The single most important issue is a technological one: setting up an integrated system for determining eligibility for Medicaid and tax credits. Many states have deeply outdated eligibility systems that will be hard to intergate with a new federal structure.
Pollack: Here in Illinois, I’ve been told the programs for that stuff are written in COBOL.
Gruber: The same is true Maryland and other states. I’m not sure there are enough COBOL programmers alive to fix all this …
Next step: cost control
Pollack: Cost control seems like an incredibly difficult subject to discuss in a way that honors the complexities and tradeoffs.
Gruber: Cost control is MUCH harder than coverage. That’s why the ACA rightly solves the coverage problem while taking the first steps to move us forward on cost control. The important thing to recognize is that we are NEVER going to “solve” the health care cost problem in the U.S. – so long as we exist as a nation, we will struggle with health care costs that take more of our dollars than we would like. The question is what we can do to slowly move forward and minimize the problem. The ACA takes several important steps in that direction. But (as I illustrate in my favorite image in my graphic novel) on cost control we have to crawl before we can walk and run. To criticize the ACA for not going far enough on cost control is like criticizing a baby for not just starting off running – you need to crawl first
Pollack: I find GOP posture in the current campaign rather depressing. They have demagogued the $716 billion number so mercilessly – even though this was included in Ryan’s own baseline budget. On the other hand, Democrats also seem reticent to confront some very serious issues. This seems like an issue that will require bipartisan cooperation that is going to be very difficult to sustain.
Gruber: I like to think of solving the cost control problem as having to climb two hills. The first is scientific: we need to figure out HOW to control costs without sacrificing health outcomes. The second is political: we need to convince both parties to rally behind a solution rather than against it. Both will be very tough.
But remember Herb Stein’s law: if something must end, it will. WE will eventually deal with this problem. It may just take more fiscal pressure before we actually do so.
Pollack: That’s scary. I worry we will destroy the discretionary components of the federal government first.
Gruber: I hear you. But remember that it would be worse to dive in with the wrong solution than to take time and make sure we have the right solution. The “option value” of waiting is very high here.
Pollack: ACA will produce both winners and losers. Some young and healthy people will pay higher premiums (in return for better and more secure coverage across the lifespan). Some hospitals will win and some will lose with the many changes to coverage and reimbursement. How do we manage public expectations regarding the inevitable glitches and shortcomings of a really complicated new law?
Gruber: Very important point. It is so critical that we manage expectations about implementation – particularly because opponents will jump on any of these “glitches” to argue that the law has “failed.” This is related to my last answer – in health care it is so critical to avoid “black and white” thinking like “this is a failure” or “this is a success,” at least until all the evidence is in. I think we need to remember that Part D implementation was a nightmare for the first few months, and now the program is working smoothly and is popular. This is infinitely more complicated than Part D. So we have to be realistic about the likelihood of glitches.
Pollack: This is where it’s so hard to combine good politics with good policy. One needs to mobilize huge constituencies that are excited to enact big reforms. At the same time, we must work through an incremental political system without harming any of the many protected publics who want to keep what they have. We also face a number of really difficult technical challenges, e.g. churning between Medicaid and exchanges. It will be hard to address all of these things at the same time – particularly when one party effectively owns health reform.
Gruber: I think the resolution to this dilemma will play out state by state – some states will implement the “right” way and others won’t. The advantage of this, I hope, is that the positive experiences of the former category put pressure on the latter category.
Health reform: the next round
Pollack: What was left out of ACA that needs to be included in the – gulp – next round of health reform?
Gruber: There are three different categories here. One is fixes to the coverage provisions of ACA. We had hoped to fix some aspects in (House-Senate conference committee), but conference never happened. These would normally be easy technical fixes, but in this politicized environment, nothing is easy.
So the best example here is the small-group deductible limit. The ACA right now limits total out-of-pocket spending to the HSA limit of about $6,000. Beyond that, there is reason to tell firms and individuals how to structure their insurance. But for some reason, Olympia Snowe’s health LA wanted a limitation on deductibles for small firms, and that was stuck in the bill to make him happy and win her vote. It didn’t work (politically). Then this provision got left in the bill when it didn’t go to conference. No one likes this provision – Republicans should be happy to have it removed and allow more freedom for small firms. But to do so would mean reopening the law and no one wants to do that right now.
The other category is more aggressive steps on delivery reform and cost control. I don’t have great suggestions or answers here – other than to let the experiments embedded in the ACA move forward so that we can actually learn what might work.
The final category is broader public health/behavioral change initiatives – what one might call the “Bloomberg agenda.” This should be a central part of our long run plan to address health care costs and health, but this makes the politics around cost control look easy!
Pollack: I hope the Cadillac tax is actually enacted. So many constituencies that support cost control in the abstract will balk at the particulars, such as taxing high-cost plans.
Gruber: I couldn’t agree more. If you had asked me in 2008 which was more likely, a Massachusetts-style coverage reform or a scaling back of the tax exclusion for employer-sponsored insurance, I probably would have said the former. I was thrilled that the law includes this provision, since virtually every economist says that the tax exclusion is bad policy. I really hope it stays
The final category is broader public health/behavioral change initiatives – what one might call the “Bloomberg agenda.” This should be a central part of our long run plan to address health care costs and health in hte U.S., but it makes the politics around cost control look easy!
Pollack: Welcome to my life as a public health researcher. In the stimulus debate, it was easier to get big dollars to NIH for advanced lung cancer research than to find money to support interventions such as smoking cessation quit lines now being curtailed at the state level.
Gruber: Yeah, like I said, the politics here are the ugliest of all. But the stakes are really high. Effectively addressing obesity would probably do more to improve the health of the U.S. than does expanding insurance coverage.
Pollack: One final question. November 7 can’t come too soon for me. I’ve been proud to be involved in the campaign fight. But I can also feel myself getting angrier and angrier, and doing less listening and learning from others in the heat of a (necessary) partisan fight. Once the election is resolved, are there areas in which Democratic and Republican politicians and policy wonks might come together more productively?
Gruber: I think the debate over the ACA is unique in my lifetime because the opposition to the law barely slowed once it passed – and if anything may have picked up. Many Americans appear to believe that this law didn’t even pass yet! In principle, the election should be the final word on this and we should all get behind reform, but we know that won’t happen.