Jacob Hacker earned his Ph.D. in political science from Yale in 2000. He published his first book on the Clinton administration’s failed proposal for universal healthcare as a graduate student in 1997. His “Healthcare for America” plan is the basis for Senator Barack Obama’s health care proposal, and Hacker has written on healthcare issues for the opinion pages of almost every major American newspaper and magazine.
What are your thoughts on McCain’s healthcare plan? Would the $2500 per-person or $5000 per-couple/family credit be enough to get coverage, considering that the Kaiser Family Foundation recently found that the average health insurance premium in 2008 topped $12,000, with employers picking up three quarters of that amount?
I think it’s a really bad proposal. And it hasn’t garnered McCain a whole lot of support—either among voters, who seem to trust Obama a lot more on health care, or among business leaders, who came out against the proposal recently. Business leaders fear that it would cause more employers to drop health insurance.
The plan is premised on the idea that people should not get health insurance from their employers. Most of the estimates show there will be very little effect on the number of people who lack health insurance, but it would lead to a big change in where people get coverage. Depending on your assumptions on how price-sensitive people are, maybe 20 million people, 1 in 8 Americans with employer-sponsored coverage, would get shifted into the individual market, where coverage is lot more costly and a lot harder to find if you have any need for it.
I guess you could say this might be a good policy for people who are young and healthy, but even they are going to have problems if they have health problems in the future. I don’t think McCain has had any traction with the proposal because, frankly, it just isn’t workable and it’s not going to achieve the goal of broader coverage. It’s a real loser.
Obama has claimed that his health care plan would cut costs to families by about $2500 a year. Specifically, Obama said the use of electronic health records (EHRs) would create up to half of those savings. Could Obama’s healthcare plan really do much to speed up the adoption of EHRs, or reap such large savings from it?
No one knows exactly how much savings he could achieve through these different measures. I think what they mean with the $2,500 figure is the average savings to the system as a whole, savings which ultimately come back to us in lower taxes, premiums, and out-of-pocket health costs. The average savings per person would be something like $625.
The reality is that under reform different people would get different amounts. People who are really healthy and have very generous employer sponsored coverage now might receive fewer savings than people who are less healthy or low-income or don’t have generous employer sponsored coverage.
The idea is that Obama’s proposal will create systemic savings and the question is really how the savings would be distributed. The important thing is that the proposal is built on the principle that everyone will be made better off by controlling the growth of health costs.
One of the big issues with our present system is that we have a lot of problems with lack of coordination of care and duplicative treatment and missed treatment. Some of the things that Obama has put in this proposal are very concrete in terms of how they would fix these problems to save money. The evidence is also strong that the proposal would reduce administrative costs.
Over the long term, health care costs are the biggest threat to our government budgets, family budgets, and our business budgets. Obama has realistic ideas about how to slow the growth of health care costs. Without standing behind any particular element as the key to cost control, I think the overall package has a lot of good ideas for how we could control costs.
What about the “Iron Triangle” in health care—the idea that when it comes to cost, access, and quality, you can’t improve one without worsening one or both of the other two?
I just think the idea is false. We spend an enormous amount, far more than any other nation but we don’t seem to be getting dramatically better quality out of that. Countries that have universal health insurance have had better success at controlling costs.
We’re the only country in which people are at severe risk of medical bankruptcy. That suggests that while there are certainly tradeoffs—if you cut spending too much, you might impair quality, for example—we really are so far below the grade on all three of these dimensions that we’ve got a way to go before we start worrying about the iron triangle.
What are the biggest differences between your Health Care for America plan and Senator Obama’s proposal?
They’re very similar, but there are three main differences:
One, my proposal would apply to all employers. All employers would have to either provide basic coverage or help pay for coverage through a new national insurance pool. Obama has said his proposal would exempt small employers. Two, my proposal requires that all Americans show proof of coverage; his only requires that children be covered. Three, Senator Obama has said that he would expand Medicaid and SCHIP [State Children’s Health Insurance Program], and under my proposal people younger than 65 who receive benefits from those program would get coverage either through their employers or the new national pool. Under Obama’s proposal they would keep Medicaid and SCHIP.
In the face of the impending financial crisis, do you think it will be possible to have meaningful health care reform? Note that both of the candidates have evaded the question of what they would give up in terms of spending in their first term.
Certainly what’s going on with the overall economy is going to make health reform a more pressing concern for America. It highlights for people how tied their health insurance is to their job and their pocketbook. It certainly makes reform more urgent.
Health care reform is on balance going to be producing savings. It certainly will cost money to get it started. The federal government is going to be taking costs pressures off families and employers.
In the long term, it’s the growth of Medicare and Medicaid spending that poses the biggest risk for our budget, and these reforms have real promise to restrain that growth over time.
Health care is a grave economic threat to Americans. Our economy would be much stronger if people weren’t constantly worried about losing health coverage if they changed or lost their jobs. There are some aspects of reform you might have to put off and you might have to go more slowly. But you can make a very strong case that [reform] is an even more urgent priority now.
What is it about the American political system that has prevented universal coverage? Do you think the American focus on individualism and self-sufficiency stands in the way of universal coverage?
I think it should be kept in mind that this proposal is not turning upside down the entire U.S. health insurance system. It moves us from a system with employers solely are responsible for people younger than 65 who are not poor toward a system where employers, the government and individuals all have responsibilities and rights. It’s moving to a system of shared responsibility.
This is the most realistic way to get to universal health insurance. One of the principal reasons we’ve seen failure is that we came to rely on employers to provide these benefits between the 1930s and 1960s. When the federal government finally had the political opportunity to step in, the only realistic option, our leaders believed, was to fill in the gaps [with Medicare and Medicaid], because most non-elderly Americans had insurance from their employers.
The political challenge today therefore is not just to get over fears of government but to fight fear with fear—the fear that reform will make your coverage worse with the very real possibility that your good coverage is going to disappear if there isn’t reform. You have to say to people who are happy with what they have, “Look, your coverage may seem good now but it’s rising in costs every year and it may not be there down the line.”
More important, you have to fight fear with hope. Not only do we have to show people that there are risks in our present system even if you have coverage, but we also need to provide people with a simple, clear, compelling picture of what reform will look like. I think that Obama’s taken the right approach, which is to offer something that builds on the present system but fixes its most glaring defects.
A fundamental problem with the American health care system is its high costs. These costs have been attributed to the high rate of specialized compared to primary-care doctors, as well as our emphasis on and demand for high-technology medicine that leaves little money for cheap, preventive primary care. Does Obama’s plan include any methods of reducing costs, other than increased information technology? How difficult would it be to change these more entrenched aspects of our system?
The way our financing is done today really drives a lot of these features. Financing is so fragmented that there is no payer who has incentive or ability to try to get value for dollar. By providing better payments under this new national program and Medicare to primary-care physicians, I think that over time we’re going to see a move back towards a more primary care-oriented system.
As far as high-tech goes, I don’t think that we’re as off the charts as you might think . Many countries also have heavy emphasis on high-tech care too. But we certainly spend much more on specialists than other countries and our primary-care infrastructure is in crisis.
The agenda for change that we need is one that says we’re not going to solve all problems in the system overnight. I think the most pressing problem is that there is rampant insecurity. We need to protect against catastrophic costs and provide good affordable coverage to everyone, but leave flexibility in any new framework to try to figure out how medicine should evolve and how our delivery system should evolve. You don’t want to have a system that locks in a particular set of strategies. You want patients and doctors to be partners in improving care and determining the direction of care.
Does your plan require overturning the stipulation currently in effect, that the government cannot negotiate for lower prescription drug prices with drug companies?
I think it’s totally ridiculous, and Obama does too. The Medicare drug benefit had two elements of it that should be among the first things that should be reversed. One is the fact that it doesn’t allow Medicare to provide the drug benefit directly or bargain for drug prices and two is the subsidies for the Plan D (prescription drug benefit) plans. Those subsidies mean 12% greater payments than the costs. It doesn’t make any sense.
Senator Obama has mentioned you as someone he would like to see in his administration. Would you accept a position if offered?
The only way to realistically answer questions like these is to say that you would of course consider any offer a huge honor. For me what’s really important is that we have major action on this issue. I’m willing to do whatever’s necessary to ensure all Americans have access to health care.
What is your opinion on the political discussion of healthcare issues during this election cycle?
I think the print media has been fairly good this cycle, especially after the primary campaign was over. They grasped the major differences, and the commentary has been fair and independent. I don’t think the broadcast news has been as good. They have just not been as interested in the policies of the candidates. They’re really just interested in the horse race aspect of the campaign. But this isn’t an issue you can just cover as a political food fight. You have to really look at the details of what’s being proposed and how they might affect Americans. You have to have people reporting on these issues who know how health care works. I don’t know what to expect this time around. Assuming we have another big debate there has to be a big effort on the part of those interested in this issue to educate journalists to see their responsibilities clearly. Their responsibility is not to be an advocate for any particular point of view but to clearly show how the competing proposals will affect ordinary Americans.
I think it’s a really bad proposal. And it hasn’t garnered McCain a whole lot of support—either among voters, who seem to trust Obama a lot more on health care, or among business leaders, who came out against the proposal recently. Business leaders fear that it would cause more employers to drop health insurance.
The plan is premised on the idea that people should not get health insurance from their employers. Most of the estimates show there will be very little effect on the number of people who lack health insurance, but it would lead to a big change in where people get coverage. Depending on your assumptions on how price-sensitive people are, maybe 20 million people, 1 in 8 Americans with employer-sponsored coverage, would get shifted into the individual market, where coverage is lot more costly and a lot harder to find if you have any need for it.
I guess you could say this might be a good policy for people who are young and healthy, but even they are going to have problems if they have health problems in the future. I don’t think McCain has had any traction with the proposal because, frankly, it just isn’t workable and it’s not going to achieve the goal of broader coverage. It’s a real loser.
Obama has claimed that his health care plan would cut costs to families by about $2500 a year. Specifically, Obama said the use of electronic health records (EHRs) would create up to half of those savings. Could Obama’s healthcare plan really do much to speed up the adoption of EHRs, or reap such large savings from it?
No one knows exactly how much savings he could achieve through these different measures. I think what they mean with the $2,500 figure is the average savings to the system as a whole, savings which ultimately come back to us in lower taxes, premiums, and out-of-pocket health costs. The average savings per person would be something like $625.
The reality is that under reform different people would get different amounts. People who are really healthy and have very generous employer sponsored coverage now might receive fewer savings than people who are less healthy or low-income or don’t have generous employer sponsored coverage.
The idea is that Obama’s proposal will create systemic savings and the question is really how the savings would be distributed. The important thing is that the proposal is built on the principle that everyone will be made better off by controlling the growth of health costs.
One of the big issues with our present system is that we have a lot of problems with lack of coordination of care and duplicative treatment and missed treatment. Some of the things that Obama has put in this proposal are very concrete in terms of how they would fix these problems to save money. The evidence is also strong that the proposal would reduce administrative costs.
Over the long term, health care costs are the biggest threat to our government budgets, family budgets, and our business budgets. Obama has realistic ideas about how to slow the growth of health care costs. Without standing behind any particular element as the key to cost control, I think the overall package has a lot of good ideas for how we could control costs.
What about the “Iron Triangle” in health care—the idea that when it comes to cost, access, and quality, you can’t improve one without worsening one or both of the other two?
I just think the idea is false. We spend an enormous amount, far more than any other nation but we don’t seem to be getting dramatically better quality out of that. Countries that have universal health insurance have had better success at controlling costs.
We’re the only country in which people are at severe risk of medical bankruptcy. That suggests that while there are certainly tradeoffs—if you cut spending too much, you might impair quality, for example—we really are so far below the grade on all three of these dimensions that we’ve got a way to go before we start worrying about the iron triangle.
What are the biggest differences between your Health Care for America plan and Senator Obama’s proposal?
They’re very similar, but there are three main differences:
One, my proposal would apply to all employers. All employers would have to either provide basic coverage or help pay for coverage through a new national insurance pool. Obama has said his proposal would exempt small employers. Two, my proposal requires that all Americans show proof of coverage; his only requires that children be covered. Three, Senator Obama has said that he would expand Medicaid and SCHIP [State Children’s Health Insurance Program], and under my proposal people younger than 65 who receive benefits from those program would get coverage either through their employers or the new national pool. Under Obama’s proposal they would keep Medicaid and SCHIP.
In the face of the impending financial crisis, do you think it will be possible to have meaningful health care reform? Note that both of the candidates have evaded the question of what they would give up in terms of spending in their first term.
Certainly what’s going on with the overall economy is going to make health reform a more pressing concern for America. It highlights for people how tied their health insurance is to their job and their pocketbook. It certainly makes reform more urgent.
Health care reform is on balance going to be producing savings. It certainly will cost money to get it started. The federal government is going to be taking costs pressures off families and employers.
In the long term, it’s the growth of Medicare and Medicaid spending that poses the biggest risk for our budget, and these reforms have real promise to restrain that growth over time.
Health care is a grave economic threat to Americans. Our economy would be much stronger if people weren’t constantly worried about losing health coverage if they changed or lost their jobs. There are some aspects of reform you might have to put off and you might have to go more slowly. But you can make a very strong case that [reform] is an even more urgent priority now.
What is it about the American political system that has prevented universal coverage? Do you think the American focus on individualism and self-sufficiency stands in the way of universal coverage?
I think it should be kept in mind that this proposal is not turning upside down the entire U.S. health insurance system. It moves us from a system with employers solely are responsible for people younger than 65 who are not poor toward a system where employers, the government and individuals all have responsibilities and rights. It’s moving to a system of shared responsibility.
This is the most realistic way to get to universal health insurance. One of the principal reasons we’ve seen failure is that we came to rely on employers to provide these benefits between the 1930s and 1960s. When the federal government finally had the political opportunity to step in, the only realistic option, our leaders believed, was to fill in the gaps [with Medicare and Medicaid], because most non-elderly Americans had insurance from their employers.
The political challenge today therefore is not just to get over fears of government but to fight fear with fear—the fear that reform will make your coverage worse with the very real possibility that your good coverage is going to disappear if there isn’t reform. You have to say to people who are happy with what they have, “Look, your coverage may seem good now but it’s rising in costs every year and it may not be there down the line.”
More important, you have to fight fear with hope. Not only do we have to show people that there are risks in our present system even if you have coverage, but we also need to provide people with a simple, clear, compelling picture of what reform will look like. I think that Obama’s taken the right approach, which is to offer something that builds on the present system but fixes its most glaring defects.
A fundamental problem with the American health care system is its high costs. These costs have been attributed to the high rate of specialized compared to primary-care doctors, as well as our emphasis on and demand for high-technology medicine that leaves little money for cheap, preventive primary care. Does Obama’s plan include any methods of reducing costs, other than increased information technology? How difficult would it be to change these more entrenched aspects of our system?
The way our financing is done today really drives a lot of these features. Financing is so fragmented that there is no payer who has incentive or ability to try to get value for dollar. By providing better payments under this new national program and Medicare to primary-care physicians, I think that over time we’re going to see a move back towards a more primary care-oriented system.
As far as high-tech goes, I don’t think that we’re as off the charts as you might think . Many countries also have heavy emphasis on high-tech care too. But we certainly spend much more on specialists than other countries and our primary-care infrastructure is in crisis.
The agenda for change that we need is one that says we’re not going to solve all problems in the system overnight. I think the most pressing problem is that there is rampant insecurity. We need to protect against catastrophic costs and provide good affordable coverage to everyone, but leave flexibility in any new framework to try to figure out how medicine should evolve and how our delivery system should evolve. You don’t want to have a system that locks in a particular set of strategies. You want patients and doctors to be partners in improving care and determining the direction of care.
Does your plan require overturning the stipulation currently in effect, that the government cannot negotiate for lower prescription drug prices with drug companies?
I think it’s totally ridiculous, and Obama does too. The Medicare drug benefit had two elements of it that should be among the first things that should be reversed. One is the fact that it doesn’t allow Medicare to provide the drug benefit directly or bargain for drug prices and two is the subsidies for the Plan D (prescription drug benefit) plans. Those subsidies mean 12% greater payments than the costs. It doesn’t make any sense.
Senator Obama has mentioned you as someone he would like to see in his administration. Would you accept a position if offered?
The only way to realistically answer questions like these is to say that you would of course consider any offer a huge honor. For me what’s really important is that we have major action on this issue. I’m willing to do whatever’s necessary to ensure all Americans have access to health care.
What is your opinion on the political discussion of healthcare issues during this election cycle?
I think the print media has been fairly good this cycle, especially after the primary campaign was over. They grasped the major differences, and the commentary has been fair and independent. I don’t think the broadcast news has been as good. They have just not been as interested in the policies of the candidates. They’re really just interested in the horse race aspect of the campaign. But this isn’t an issue you can just cover as a political food fight. You have to really look at the details of what’s being proposed and how they might affect Americans. You have to have people reporting on these issues who know how health care works. I don’t know what to expect this time around. Assuming we have another big debate there has to be a big effort on the part of those interested in this issue to educate journalists to see their responsibilities clearly. Their responsibility is not to be an advocate for any particular point of view but to clearly show how the competing proposals will affect ordinary Americans.
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