I recently had a chance to talk to Don Berwick, MD, a pediatrician who went on to serve as the administrator of the Centers for Medicare and Medicaid Services in the Obama administration. He is currently the president emeritus and senior fellow of the Institute for Healthcare Improvement which he founded. In addition to his many other accomplishments, Don is an honorary Knight Commander of the British Empire recognized for his work with the British National Health Service in 2005.
What follows is a transcription of our interview, modified for readability. You can listen to the entire podcast here.
The current state of health reform
Pat: I thought we’d start out talking about single-payer today, but before we do that, let’s talk about the current state of health reform today. We’ve had several health reform bills that failed to pass this year. And we know that the administration and Congress have continued to try to undermine the Affordable Care Act (ACA). What is the current state of healthcare in the U.S. today?
Don: Sure. As people know, since the day the ACA was passed, its opponents have been working to try to undo it through a series of votes to repeal during the Obama administration and the early months of the Trump administration.
Those repeal efforts were pretty sweeping. They were trying to use mechanisms that would essentially defund the subsidies that people get in the exchanges, reduce Medicaid expansion back to where it was prior to the ACA and undercut other elements. They’ve already cut the prevention funding in the ACA through other mechanisms. The attempt to pass a repeal and replace a bill failed famously with John McCain’s vote against the most recent version. That has not gone away, it’s continuing and, on the statutory side, what we’ve seen recently is the incorporation of a repeal of the individual mandate which is embedded in the Senate version of the tax reform bill.
Meanwhile, the administration has done what it can administratively to undercut the ACA and in a number of ways most recently. For example, during the open enrollment period in which people can exercise their eligibility for coverage under the ACA, they cut the duration of the enrollment period. They cut the funding for advertising for enrollment by 90%. They shut down the website for enrollment for a 12-hour period each week allegedly for servicing the website.
Pat: Like on Sundays, right, when more people have the time to go to the site.
Don: Yeah. It has a good chance of undercutting enrollment. In fact, enrollment actually was very healthy but probably would have been healthier without that. The other thing that is going on is less diligence in enforcing elements of the ACA regarding the nature of insurance packages and transparency provisions and things like that. So, there are two sorts of battles underway. One is statutory, trying to get something in a law that would repeal a component or all of the ACA that has not gone away. And the second, these administrative maneuvers, which actually do weaken elements of the ACA—and I think there’s no sign of that abating. And, indeed, the current candidate for Secretary of HHS has continued to proclaim his opposition to the ACA.
Pat: It’s interesting that as this continues, the public finally seems to have decided that the ACA is a good thing, after all, as opposed to a bad thing, which a lot of the polls—particularly from a Kaiser Family Foundation—showed that people didn’t like it.
Don: Yes, Pat. Actually, you know the polls for a long time have shown support for what’s in the ACA. For example, people want to make sure that coverage is assured for people with pre-existing conditions. They want their kids covered under their parent’s policies until age 26. They are even in favor of Medicaid expansion so that people with a very low income can get care—those have always had enjoyed quite a bit of public support even though people are rather inconsistent saying “I want this, but I don’t want the Affordable Care Act.” But I think what’s happened now is real public education. The public has become aware of what actually is in the ACA and what it does. They realize that, on the whole, it’s a pretty good law for a lot of people. So, you’re right! The tide has turned in public support. Whether that’ll be reflected in congressional action, we do not know yet now.
Pat: Let’s talk about single-payer. I know that you’re an advocate for single-payer. I think there’s a placeholder bill, but I don’t see that much language associated with it. And I have no idea whether people are actually working on it. Can you fill us in on where we’re at right now with the efforts to transition to single-payer?
Don: Rather surprisingly, it has reached quite a bit of public discourse at the state level in Massachusetts, in California, and in some other states. There’s been quite a bit of public support for exploring the idea. There’s a bill in the Massachusetts legislature right now which would establish a sort of commission to study the effect of single-payer in Massachusetts on cost and quality. One of the versions of that bill says that if the findings of that inquiry were positive—that is higher quality and lower cost—then the legislature would then proceed to implement a single-payer or to take steps toward it in the state. That’s pretty surprising.
I think that one of the most important things I do first in exploring the question is to define what single-payer actually means. There are a lot of misapprehensions about it even among single-payer advocates and there are a lot of different versions of the idea.
The basics have to do with the flow of monetary payment for healthcare, which in the United States—more than in most other countries—is very fragmented. The way we pay for healthcare is through all sorts of different channels: Medicare for about 50 million people; Medicaid for about 50 million people; the Children’s Health Insurance Program; the Veterans Administration; the Department of Defense through private commercial insurance; if you’re employed, through the public exchanges; if you are buying insurance as an individual who doesn’t have employer coverage; if you are very low-income or are in a nursing home, Medicaid coverage. It’s really quite a pluralistic system. On the commercial side, of course, there are many different insurance companies. And the result is a pretty confusing system for payment.
Pat: And pretty expensive on the part of people who are trying to figure out how to properly submit and get paid for their services.
Don: Yes, the studies of the costs have revealed some pretty dramatic figures. For example, my colleague Professor David Cutler at Harvard, a couple of years ago, testified before Congress. I think his figure was something between $300 and $400 billion a year associated with the administrative costs, largely relating to this complex billing—every different insurer has its own form and its own coding.
Pat: And there are costs related to benefit design?
Don: Yes. You have to figure out a lot of stuff before you push the paper on the provider’s side. On the patient’s side, I mean people know that they get these massive booklets that nobody ever reads, that describe their insurance policies in small print and fifty pages. And then, when you do actually want to use your insurance, there’s sometimes a lot of hoops to go through where the claims are denied and then you appeal and they’re approved or not. It’s pretty complicated. So, that’s expense without value. It’s not really clear that all of that complexity adds much. The proponents of it argued that it adds competition. There are different insurers and you get to choose among them and so on. But the evidence is that it’s just pretty expensive and pretty confusing.
Pat: Are we really now an oligopoly when it comes to health plans? I mean, when I first started in this business, every state had a number of different health plans. But now, there’s been so much consolidation. We’re really not talking about major competition in most markets, are we?
Don: There are small insurers. But you’re right. The market is dominated by a relatively small number of big ones: United, your local Blue Cross plan, Aetna, Cigna. But actually, within those insurers, there’s a lot of panoply of policies. If you go onto on their websites, you’ll find dozens and dozens of different kinds of policies which are confusing. Even I don’t understand them. I’ve got my insurance policies through the years and they’ve always been rather opaque. I remember one of my kids needed a test. I’m a pediatrician. I know she needed the tests and the insurer denied coverage of the tests and I couldn’t find anyone to explain why or how? It was very hard to figure out. The appeal process was confusing.
The single-payer idea is what it sounds like, which is why not simplify it? Why not have one channel of payment? We do have that. It’s called Medicare. If you’re over 65 and at least for a traditional Medicare, there’s one payer. That’s the system that I was the administrator of for a year and a half for President Obama. When I went to work, there were 47 million Medicare beneficiaries. For the ones in traditional Medicare, about three-quarters of them, my organization (CMS) was the payer. It was one form, one set of codes, that’s it! Much lower overhead cost. Much simpler. Prompter payment, by the way. If you’re a provider, you’re getting paid probably faster by Medicare than by other payers. It’s just simpler. It also could be more accountable, especially if it’s a public function. You have rules. You have to show your prices. You have to show results. You have to share your data unlike with the private insurance systems, which don’t do any of that.
Pat: We have an oligopoly with these huge consolidated health plans. And even though there may be a United California, it’s still under the auspices of one parent company. These guys have lots of money. They’re not going to go away easily. So, how do you envision a single-payer, say government payer—a Medicare-for-all—working? What’s going to happen to all these other health plans? Aren’t they going to fight this tooth and nail if they think it’s going to impact their business?
Don: Oh, they have and they will. This is a big industry. I think there are 1.5 million people employed by insurance companies. They have stockholders. They have executives with considerable pay packages. They have big buildings. They’ve got legacy here. And they believe they add value.They are not silent about this. For most of the history of our nation, they have successfully opposed the entry of the government as a payer and certainly would strongly oppose single payer. That’s the political side of the battle.
Should the public decide that they want simplification, they want the single-payer. They want Medicare for everybody, which is what it sort of amounts to. There has to be a transition, a just transition, that would allow this workforce to end up on its feet through retraining or other methods. The companies, themselves, there may be residual roles. For example, rather than set up an enormous new government function, you might hire some of these legacy insurers to be the administrative vehicles. They have the computers. They have the data systems and it will be possible for them to manage the transactions but no longer as for-profit entities with competing channels of payment.
Pat: I can just say there is a confusion here that I’d like to get to before we move on. For example, a lot of the public thinks that single-payer means a government-run healthcare system as if the government owned all the hospitals and employed all the doctors and there was only one care system instead of your local community hospital.
Don: Some countries have chosen government-run healthcare in addition to a single-payer. But the single-payer argument isn’t about care, it’s about the payment. And I think it’s helpful for people to become really clear about that. It’s a different matter to say the government will run your healthcare than to say that there will be a single-payer environment for payment of healthcare.
Do we need a uniquely American solution?
Pat: A lot of the arguments [against single payer] are: Do you really want your healthcare to be run like the Department of Motor Vehicles or some other kind of government-run entity that we all equate with limes and inefficiency and all that kind of stuff? So, I think that’s a very important point. We’re the only country in the developed world that doesn’t have universal coverage. There are a lot of models and they’re all different. Canada isn’t the same as the UK and isn’t the same as France. Which of those systems do you think works particularly well? And interestingly to me, are any of those models acceptable in America or are we going to have to have something that’s just unique to us?
Don: We’ll inevitably end up with something unique to America. We don’t know other countries that have our history or our current structure. We have to move from the status quo to a new future. Also, although we’re the only developed democracy in the West that doesn’t have universal coverage, virtually every other country guarantees healthcare as a human right. We don’t but we need to.
Not all chose single-payer as the route. Germany, France, Switzerland have multi-payer systems. There are a lot of different insurers. The government is the insurer of last resort. It always will cover you if nobody else will. Other countries like Sweden or Denmark or Scotland or England, there is a single-payer—the government in all those cases. They differ also though. Sweden’s single-payer is at a county level and there are, I think, 21 or so counties in Sweden, and each is its own payer. There’s a County Executive as if that was their CMS head at the county level. England does it at the national level; so does Scotland at a much smaller scale. There are 50 million people in England, only 5 million in Scotland.
My point is there’s a lot of variation and I think one of the great things we can do in this journey toward the American answer is to study these different environments and notice their strengths and their weaknesses. My own favorite probably is the Swedish system. It’s at the county level. There are 300,000-400,000, sometimes a million, people in a county. General taxes support the healthcare. Because it’s at the county level, it’s very close to the people. So, the Swedish system tends to be very responsive to community needs. England, on the other hand, covers ~50 million people and there’s a much more complex way in which the payment reflects the needs of communities. But I think the point is let’s learn from this variation and then let’s invent the American version that works for us and our history.
Pat: I have a question and this is a personal question because I’m a member of Kaiser Permanente, which, of course, is an integrated delivery system. They have the health insurance, the hospitals, and the providers. From a consumer point of view, it feels like everybody is all under one umbrella. I have Kaiser Permanente (KP) because I was a Kaiser physician and physician executive, and it’s a part of my retirement plan. But I’m actually really really happy with it. What would happen to me, if single-payer comes into effect?
Don: Hopefully, if it was done correctly, KP would survive as a provider of care. So, number one is there’s no reason why that entity, as a care delivery system, would go away. On the contrary, I would claim a single-payer that went looking for a delivery system to offer to the beneficiaries would lunge at the best of KP. A single-payer environment could make KP available to everyone if they wanted it.
The other side of one of the reasons why KP is pleasant to you as an environment to both get care in and to be a doctor is because it is a single-payer for its enrolled population, which is about 11 or 12 million people. But it is a single-payer private sector organization that is one channel payment. And as you know though, because KP is able to work with a pot of money to provide care for its population, it can do wonderfully inventive things. That’s why it’s so good at prevention. That’s why it has one of the best track records we know for proper screening procedures. That’s why it’s able to focus on wellness and thriving for its population. That’s because it has a budget that it can then allocate correctly to try to meet the needs of its people. It’s not perfect, I’m sure. But it’s a much more flexible environment.
Pat: KP has both the insurance arm as well as the provider’s arm, so they’ve been able to align the benefits with the way the care is delivered. So, for most of us KP members, we don’t see bills for one thing. Most of the time, you get the care you need. I recently had developed a rare eye condition and I needed a referral to Stanford. It was handled seamlessly. But the only thing that I ran into was they evidently gave me only three visits to Stanford but they never told me that. That’s the only minor flaw that I saw in the whole thing.
How do we transition?
Pat: So, I would hope that if we transition to single-payer. I know that all of my friends who are not at Kaiser Permanente but are in for-profit health plans would tell you that their experience is 180 degrees different from what I’m experiencing. I would like everybody to have a more integrated consistent kind of experience [like I do]. But the question really is what are the actual steps to go from what we have now into a single-payer assuming we’d be able to get that passed through at Congress?
Don: I can’t answer the question politically. As we said earlier, there’s going be a lot of opposition. Technically, we have very good thinking going on in the country now about how to do this. Senator Bernie Sanders, as you know, has proposed a single-payer for the nation and he has a very active group now working on the questions about the step-by-step processes through which you could migrate from the multi-payer system to a single payment? The state of California is doing the same inquiry. So, we’re going to have some really good analyses in our hands of the steps to take.
One such approach could be the expansion of Medicare. We have this government system; it is very highly valued. It’s one of the most popular government programs in our nation’s history. You could increase eligibility for Medicare step-wise. Lower the age of entry. Right now, you have to be 65. What about 55 or 45? You could create Medicare for children. In other words, you could take steps that would incorporate larger and larger groups of the population under the Medicare umbrella.
I would say, back to your story about KP, one of the really important points here is to make sure that the functions of that enlarged payment system have all the aspects you just talked about at KP that it really values integrated care, that it creates smooth flows, that it’s agile—all of that’s possible. In my opinion, far more possible than in a disaggregated, multi-payer commercial environment.
Pat: If we did Medicare for all, which seems to me the simplest approach because you talked about how we need to phase this in and there would be an easier mechanism to phase it in by just expanding various age groups, would you see that there’d still be a role for private Medicaid like the Medicare Advantage plans or do you see those going away and everybody ends up in more traditional kind of a Medicare program?
Don: That’s a tough call. I think that there’s some advantage to having the Medicare Advantage option that allows people to choose a coverage that is much more integrated coverage than it is in the traditional system. You’re getting out of the fee-for-service system. But frankly, I would rather see all of Medicare migrate away from fee-for-service and toward the kind of population-based payment that you have at Kaiser Permanente. So, in a way, the attributes of Medicare Advantage (coverage of coordinated care) would be persisting without the presence of the for-profit individual insurance companies. There’s no reason why a single-payer, the government, or a quasi-governmental, single-payer couldn’t act like a really really great health plan.
Pat: This is interesting that you talked about what the role [of existing insurers] would be. These are huge institutions that won’t just collapse and disappear. There has to be some kind of role as you described already, given how many people work for them. If you phased it in over a long enough period of time—thinking, for example, about United and the work that they’ve done to develop Optum, which is a whole series of services—do you see them developing a conceivably governmental run, single-payer program that could be contracted with? Is that one possible way that you could ameliorate some of the concerns of the plans in terms of remaining viable entities?
Don: I don’t know. I don’t really believe it would ameliorate their concerns. But I think, we could preserve that kind of pluralism that offers options for coverage of highly integrated care systems. Remember, what we’re trying to do here is help our nation evolve into care delivery that’s actually patient-centered, under the control of patients, highly coordinated, seamless, and lower cost at the same time. Higher quality and lower cost. With a single-payer, we’d want to go looking for that. The single-payer would be an advocate for the public, a buyer in the market saying what we want is team-based, coordinated, prevention-oriented, patient-controlled care for everybody. It becomes a smart purchaser.
How can people get involved?
Pat: Let’s finish up by talking about how can people can get involved in helping to move the single-payer agenda along?
Don: I think the first thing to do is exactly what you’re doing now which is inform yourself. If you’re a person who is intrigued by the idea—simplifying the way we pay for care so it can be more sensible—then study up. Learn what the vocabulary means. Look at the difference between single-payer and single provider of care. Ask the same questions you’re asking about coordinated care. What would be the benefit structure under single-payer? What do you want to be covered under a single-payer?
I think then, it’s a political matter. I think this is a time when the federal government is not apparently going to step up into this realm but states are curious. So, find the representatives and senators in your state legislature who are showing some interest in this and go help them. Talk with them. Speak at hearings. Invite them to speak in your community. Let’s have an era now of public discourse in education to support the legislators who are interested in moving in this direction. And then remember, this is going to be a learn-as-we-go process. I think that it’s very important to remain open-minded as we try. Hopefully, some states will begin to try moves toward this and so we can learn to see which models are more favorable than others. But nothing beats becoming an informed participant in this debate right now.
Pat: I want to thank you very much, Don. I hope we’ll be able to have you come back to continue the conversation.
Don: I’d be glad to do it anytime Pat. And thank you very much for letting me join you.
This interview is from my bi-monthly American Journal of Managed Care podcast. You can listen to the podcast by clicking on the link above or via any of these podcast services: