Transitions in American Health Care: An Interview with Ezekiel Emanuel

Ezekiel J. Emanuel is the Vice Provost for Global Initiatives, the Diane v.S. Levy and Robert M. Levy University Professor, and Chair of the Department of Medical Ethics and Health Policy at the University of Pennsylvania. From January 2009 to January 2011, he served as special adviser for health policy to the director of the Office of Management and Budget in the White House. From 1997 to 2011, he was chair of the Department of Bioethics at the National Institutes of Health. He is also a breast oncologist. Dr. Emanuel received his M.D. from Harvard Medical School and his Ph.D. in political philosophy from Harvard University. After completing his internship and residency in internal medicine at Boston’s Beth Israel Hospital and his oncology fellowship at the Dana-Farber Cancer Institute, he joined the faculty at Harvard Medical School. He has since been a visiting professor at UCLA, the Brin Professor at Johns Hopkins Medical School, the Kovitz Professor at Stanford Medical School, and visiting professor at New York University Law School. Dr. Emanuel has written and edited nine books and over 200 scientific articles. He is currently a columnist for the New York Times. He appears regularly on television including Morning Joe, Real Time with Bill Maher, and Hardball with Chris Matthews.

The Chicago Policy Review’s Gillian Kindel discussed Dr. Emanuel’s views on current health policy in an exclusive interview for The Review.

There has been a lot of discussion about the significance of the individual mandate as part of the Affordable Care Act (ACA). With the end of June quickly approaching, if the Supreme Court rules against the individual mandate, do you think there’s still hope for the ACA? How could its removal affect the ACA?

The mandate is a part, but by no means the majority or even most, of the Affordable Care Act. It’s an essential piece for access, but it is not essential for delivery system reforms, workforce reforms and many of the other aspects that are really important to transforming the system. This was a very extensive piece of legislation of which access is only one component.

I actually think there are two alternative possibilities. Either the Supreme Court rules 6-3 that the mandate holds and we go and implement the system, or they rule 5-4 that the mandate doesn’t hold, in which case I think there are two serious problems. First is that we will actually have a big constitutional crisis, because the Supreme Court will be seen as very political and its role in adjudicating the Constitution will be highly questioned. I think it will actually undermine its own position, which is already pretty tenuous. Second, I think we will then have a very big experiment, because the insurance exchanges will still go into effect and we will still have subsidies. The Congressional Budget Office has estimated that without a mandate, about 60 million people would buy insurance. Exactly how many we don’t know, but one suspects it’s a good portion of the uninsured where the main barrier is financial, and not willingness or lack of interest.

Then, I presume, different states will respond differently. Places like Minnesota, Vermont, maybe Connecticut and Rhode Island will enact mandates of their own, while other places like Texas and Oklahoma will not develop mandates and we’ll have a very interesting experiment to see which system works better. Do we get a better system in Minnesota with a mandate that can control costs and have higher quality? Or do we have a better system in Texas that doesn’t have a mandate and remains with something like, 18-25 percent uninsured?  How good is their quality?  How good are their cost controls?  I think we will actually have a very interesting set of experiments. I think it’s going to be pretty clear that you’re going to have a better system with a mandate.

In health care, much attention is paid to the tenuous relationships between quality, access, and cost of care. You recently wrote an Op-Ed in The New York Times about the relationship between rising costs and access to health care. Can you provide some recommendations or ideas for effective ways to control costs in the future?

First of all, the United States currently spends about $8,000 per capita on healthcare. The next highest country, which happens to be Norway, is around $5,300 dollars per capita on healthcare. That’s a big difference. You can move down to the Norwegian level, saving a lot of money, and I don’t think there’s anyone who claims the Norwegians ration care. There are others who spend even less than Norway, say Switzerland, who is number three in the world.  I don’t think anyone goes around claiming that Switzerland has to ration care. So there’s plenty of savings in the system without the need to ration care.

Second, no one is talking about going from the $2.6 trillion we spend per year on healthcare down to $2 trillion. We’re only talking about how slowly we go up to $3 trillion. Is it rapid or is it more slowly?  I think there’s plenty of room for saving money without compromising quality and without the need to ration care. There are many good reasons to think that by focusing on and being able to save money, we might actually enhance the quality of care.

Are there specific areas in which it is easier to contain costs? 

There are. We spend about $360 billion on administrative costs. Some of that is due to the US federal structure, where health insurance is regulated in 50 states and requires filing in many different states. We also have multiple payers, which require a lot of costs, and it’s a very paper driven system, not an electronic system, which adds substantially to costs. There have not been uniform standards and operating rules, like there are in finance, which would greatly facilitate things like billing and claims, processing and payment, which could substantially reduce administrative costs.

Similarly, physicians have to be credentialed by a number of organizations (e.g. hospitals, insurance companies, and various state bodies). Rather than having a centralized place where all the information is stored electronically and allowing each group to pay a small fee to download it, they all exist separately on paper. So by fixing just those things, it’s estimated that without much effort we could save $30 billion.

For instance, if instead of sending checks to doctors as reimbursement, payments were made by electric funds transfer from one bank account to another, there’s $11 billion in savings a year. So administrative savings are a very easy, low-hanging fruit, and most of us think it’s pretty outrageous that we haven’t made any changes. Part of the reason is that it takes coordination and leadership by the government to set these rules. As you might imagine, not every interest group can be satisfied, so there’s no optimal point. Someone is going to be dissatisfied and rather than trying to force the issue and move because of the cost savings, there hasn’t been forceful action, and there should be.

I think part of the reason is that the government doesn’t actually get a whole lot of the savings. Most of it goes to doctors, hospitals, and insurance companies, so the motivation for the government to really push on this is a little less than it ought to be. However, there are savings to be had at lots of other places. I think the big focus has to be on changing the delivery system. Doctors are paid to do certain things — some that are very high margin — and not paid to do other things. I think everyone agrees we have to move off this, because it creates perverse incentives and overutilization of some procedures that aren’t necessarily the ones we ought to be over utilizing.

There has been a lot of discussion of Accountable Care Organizations (ACOs) as a possible solution for controlling costs and managing care. [According to the Centers for Medicare and Medicaid Services (CMS), an ACO is, “an organization of health care providers that agrees to be accountable for the quality, cost, and overall care of Medicare beneficiaries who are enrolled in the traditional fee-for-service program who are assigned to it.”] Do you think there is potential for these to be successful models?

I think there is. One of the things I haven’t been wild about is that they’re still paid on a fee-for-service basis. I think the original regulations as written, (fee-for-service with retrospective assignment) is not an optimal way to get people to really vigorously go in and manage care. But I do think they are promising. I would like to see more partial and full-blown capitated payments. There are successful models where people have made a lot of money on the capitated system because they can manage care well even with very sick patients. I also think it’s important to see a timeline for organizations to move towards, because without timelines and deadlines people have a tendency to procrastinate. Additionally, if there were timelines — so people knew where they had to go, how to develop systems for managing risks and transform their practices away from fee-for-service — I think you’d have a lot more and be able to get a lot more coordination.

How can we better communicate to the general public about health care reform without that discussion devolving into one focused on “death panels”?

The administration has not had a very good communication strategy, and has done a pretty bad job of communicating about health care reform all the way back to August 2009, when it allowed members of Congress to have their town hall meetings attacked without adequate material to respond. My test for this is to ask the average person who speaks for the administration on health care reform. You get a blank stare, a stammer, and they sort of wonder if it’s a trick question. The fact is the administration doesn’t have a spokesperson, and that is a very bad place to be.

The Republicans will certainly make them defend it and I think they have done a very bad job prepping for it. I’m not a communications guru or strategist, but I think what we needed was to have a bunch of doctors and nurses go around the country representing the administration talking endlessly about why [the ACA] is good. If you survey the public about almost all the parts except for the mandate, they actually support it. The reason they don’t support the mandate is because it’s been very badly explained. Most people don’t understand their employer insurance will satisfy the mandate and they get very nervous about potentially paying a penalty and all this complicated stuff. The polls are strong, and we’ve seen over 2.5 million kids get insurance on their parents’ plan because of the legislation, so there are many things that people support.

Looking at other industries as models for innovation, are there any that we can draw on when we look at health care policy and ways to improve delivery or care?

First of all, on the administrative side it’s clear that banking is a very good example regarding transactions around multiple payers, because they’ve been able to solve a lot of the electronic problems. Second, in other countries, there are some hospitals that use Lean technology and production methods to streamline hospital efforts. I don’t think it’s the only approach one would necessarily adopt, but it has been successful. I actually think this is one of those areas where we don’t know the answer, and where studying what works in medicine is probably going to be the big challenge for the next decade. We are going to have a challenge of taking successful models in various parts of the industry and replicating them.

Feature Photo: cc/a.drain