Chip Kahn, industry lobbyist and President of the Federation of American Hospitals, on the impact of health reform in America.

Mark Masselli: This is Conversations on Health Care. I am Mark Masselli.

Margaret Flinter: And I am Margaret Flinter.

Mark Masselli: Well, Margaret, Health Care Reform era is officially underway.
The Patient Protection and Affordable Care Act is now the law of the land as the
President has signed the original bill, and on Tuesday, he signed the
Reconciliation Provisions. I don’t know about you but everywhere I go, people
are very interested in the details of the bill and asking how the provisions will
impact their families, businesses, and the country.

Margaret Flinter: There is a lot for people to get their arms around and
understand, and I have been looking at how different groups are doing it and I
think the White House has it right. They basically said to the country you
probably belong to one of five groups, people who have insurance now through
their employer, people who are uninsured, people who buy their own insurance,
people on Medicare, and small business owners. Depending on which group you
are in, you have very different concerns. If you have employer-sponsored
insurance, you’re probably going to see the least change, but at least now you
don’t have to stay at a job just to keep the insurance because you can buy it in
the marketplace. Small business owners, the White House site makes it clear,
you are not required to provide coverage but you will get tax credits if you do
provide it for your employees and you can't have your rates skyrocket because
one or two employees have a bad illness. Medicare, for all the talk and the fear,
they really come out pretty well. And the uninsured who of course were the focus
all along, the 32 million people who will get coverage do in lots different ways,
some because of expanded eligibility from Medicaid, some because they stay on
parents’ policies till age 26, some because they get subsidies. Insured, like
politics perk, its all personal.

Mark Masselli: Margaret, even with the clarity of those questions and the clear
intent of the bill, there still seems to be people in the insurance industry that were
confused, particularly on one very important benefit that sets out to cover
children with preexisting conditions immediately. Some lawyers from the
insurance plans questioned when this coverage began. But under intense
pressure from the White House, the President of the American Health Insurance
Plans announced that the insurance industry will fully comply with the regulations
immediately. Senior citizens will also see some immediate benefits in their
coverage. They will no longer have to pay out of pocket for annual screenings
and wellness visits, and the gap in the prescription drug coverage known as the
donut hole will get some needed jelly. Seniors who purchase Part D Medicare
will get a $250 rebate this year to fill part of the gap.

Margaret Flinter: All welcome news for seniors, Mark. Now, you and I have been
pointing out over these several months that there is an awful lot in the bill that

nobody is talking about, and even in these last weeks, still haven’t heard much
about it. I am talking about the investments and workforce training for health
care, for doctors, for nurses, for primary care providers, and the funding of new
models of care from Accountable Care Organizations to Nurse Managed Health
Centers, also the investment in Public Health & Prevention. It just looks like it's
going to take a while before people focus in on these more broad long-term
investments in improving the country’s health, don’t you think?

Mark Masselli: Speaking of improvements, we are excited that the White House
is floating the name of Don Berwick, Founder of the Institute for Healthcare
Improvement to lead the centers for Medicare and Medicaid services. He is one
of the country’s leading authorities for health care quality, improvement, and
safety.

Margaret Flinter: Well, I think that Dr. Berwick is an inspired choice because it
really puts the focus on transforming care, preventing errors, eliminating ways,
and nobody is going to argue about that being the best way to control cost. So,
so far, that seems like one decision that everybody could be happy about. We
are not seeing a lot of happiness though among the Republicans or in the Tea
Party Movement. We are seeing lots of angry backlash to the Health Reform
Plan. Republicans continue to cite the American public’s opposition to the
legislation, though that depends on which poll and pundit you pay attention to.
And we have long ways to go until the November elections. While there is a lot
of talk about repeal or repeal and reload as their appellant recently said there is
also a lot of time for Americans to get to know and understand and maybe like
what they see in terms of this reform. We know change is frightening to people.
It's going to be really important for them to see if the things that matter most to
them like keeping their own doctor stay the same.

Mark Masselli: Margaret, you are right. Well, opinions in the short run will be all
over the map. The final judgment on what people think will take time to
consolidate. But one positive sign was that a Gallup/USA TODAY poll, taken at
the night Health Reform passed, showed a more positive reaction with 49% of
Americans saying that Congress passing of the Health Care Reform Bill was a
very good thing.

Margaret Flinter: Well, one interesting opinion on the passage of Health Reform
came from David Frum, Conservative Speech Writer, who laid there the
Republican strategy in a post titled Waterloo and he blamed the loss over health
care on the Republican Party itself. He wrote conservative talkers on Fox and
Talk Radio had whipped the Republican voting base into such a frenzy that deal
making was rendered impossible. How do you negotiate with somebody who
wants to murder your grandmother, or more exactly, with somebody whom your
voters have been persuaded to believe wants to murder their grandmother? He
expressed regret because negotiations could have aligned the plan more closely
with conservative views and he believed Obama was willing to negotiate. He is

well received by his employer, though the American Enterprise Institute promptly
terminated him.

Mark Masselli: Speaking of people with the strong view, our guest today can tell
us more about how the willingness to negotiate and communicate with all sides
prove to be an effective tool for President Obama’s Health Care Reform package.
Chip Kahn, President of the Federation of American Hospitals, is a Washington
insider who has worked both sides of the aisle. He worked as a lobbyist for the
Health Insurance Association of America during the Clinton Administration’s effort
to pass Health Reform in the early 90s. And when they were locked out of
negotiation, he was the man behind the Harry and Louise ads that played a
major role in killing that effort. This time around, he supported Reform under
President Obama’s plans and notes that the White House doors were open and
they were always interested in listening if they always didn’t agree.

Margaret Flinter: Well, that will be a very interesting perspective. And no matter
what the story, you can hear all of our shows on our website Chcradio.com.
Subscribe to iTunes to get our show regularly downloaded. Or if you would like
to hang on to our every word and read a transcript of one of our shows, come
visit us at Chcradio.com.

Mark Masselli: And as always, if you have feedback, email us at Chcradio.com ,
we would love to hear from you. Before we speak with Chip Kahn, let’s check in
with our producer Loren Bonner with headline news.

Loren Bonner: I am Loren Bonner with this week’s headline news. President
Obama has signed into law the Reconciliation Act of 2010, authorizing some
necessary changes to the Senate Bill he signed into law last Tuesday. At the
official ceremony at Northern Virginia Community College, the President said the
package enshrines a principle that’s important to all Americans.

President Barack Obama: When you get sick, you have got a society there, a
community that is going to help you get back on your feet.

Loren Bonner: The House of Representatives gave final approval to the health
care overhaul last week after the senate made changes to two provisions in the
reconciliation package and returned the measure to their House for one final
vote. Speaker of the House Nancy Pelosi said these changes make important
improvements to the Health Care Bill.

Nancy Pelosi: More affordable for the middle class, more fairness to the states,
more accountability for the insurance companies.

Loren Bonner: Specifically, these changes include providing more subsidies to
help people buy health insurance and closing the gap in prescription drug
coverage under Medicare, the so-called “donut hole”. Going into effect

immediately, seniors who purchased Part D Medicare will get a $250 rebate this
year if they reach a coverage gap. Although most of the laws won't be enacted
until 2014, states are beginning to grapple with how to pay for providing
insurance to more people. The government will help pay for Medicaid coverage
through 2016, then states have to start picking up the tab more and more. Many
states are having a hard time now funding Medicaid and they worry about how
they will be able do it down the road. 13 states have been together to challenge
the constitutionality of the health care overhaul. After being pressured by Ohio
Republican Members of Congress and Ohio Senators, Ohio Attorney General
Richard Cordray said he won't join the lawsuit.

Richard Cordray: People can have reasonable disagreements about these
competing judgments. In my view, however, this lawsuit in particular does not
have merit and would be a waste of taxpayer --

Loren Bonner: But some states that have already taken steps toward expanding
Medicaid programs could actually come out winning. States like Massachusetts,
Wisconsin, Vermont and New York are ahead of the game because they have
already been covering childless adults under Medicaid. As the law’s provisions
begin to kick in, the federal government will actually pick up most of the burden
that these states are now bearing. Secretary of Health and Human Services
Kathleen Sebelius, who will direct how Health Reform is implemented at the state
level, told Politico’s Mike Allen that she wants to give states as much say-so as
possible but, she said, the cost of the states not doing anything is a far greater
risk.

Mark Masselli: This is Conversations on Health Care. Today, we are speaking
with Chip Kahn, Health Care Industry Lobbyist and President of the Federation of
American Hospitals. Welcome, Mr. Kahn. You are known for creating the Harry
and Louise ads when you were working as a lobbyist for the Heath Insurance
Association of America. The TV ads were aimed at ultimately defeating those
reform efforts, but you supported President Obama’s Health Care Reform and at
some point, you became involved in the divided, we feel, coalition which works to
find bipartisan solutions for affordable quality health care and long-term financial
solutions. How did you move from the opposite sides of the aisle? And walk us
through your journey.

Chip Kahn: Well, let me start off by saying that when I was working at the Health
Insurance Association of America back in the early 90s, the association which
represented small and medium size insurers was in favor of Health Reform,
actually even supported an employer mandate to achieve Health Reform and the
universal coverage, but could never get the attention of the administration to
negotiate. And that was why the original ads were done. Ultimately, the ads did
contribute to, I guess, the overall defeat but that was not purpose of the
beginning. I went to work on the Hill for a while and went back to the Association
in the late 90s and began to work again on health coverage, and that’s when I

started working with Ron Pollack at a consumer group Families USA. And we
got together and, for years, worked on trying to get attention to this issue of the
uninsured. And eventually, I came to work for the hospitals here and at the
Federation of American Hospitals. And the issue came to the fore and ultimately
the President succeeded and the Congress succeeded at passing it.

Mark Masselli: How early did they bring you into the discussions in the Obama
Administration?

Chip Kahn: Actually, even after his election, I went in with others to meet with
former Senator Daschle, who at that point was going to be HHS secretary, and
we began to talk about the issue. But I guess the rubber hit the road at the
March ‘09 summit where a few hundred other people were brought in to begin to
discuss with the administration Health Reform, and I as representative one of the
hospital groups, other hospital groups worked very hard all spring and ultimately
came to an understanding with the administration in July and we were big
supporters of the whole process and the President during most of the period of
the Health Reform.

Margaret Flinter: Chip, you’ve worked over your career for a number of
Republicans and probably as the dust settles now on the legislation, have some
thoughts on the Republican strategy that in retrospect wasn’t effective in stopping
health care legislation. In many people’s eyes, the Republican Party became the
party of no negotiation, no compromise, and ultimately no win. What are your
thoughts on that strategy and what's the hard lesson learned for the Republican
Party?

Chip Kahn: Actually, in the spring of ’08, I went to a small conference that was
held out in Minnesota, and at that point, I said to all these health policy people in
the room, this is going to have to be bipartisan because at the end of the day, to
figure out a way to finance Heath Reform as well as all the other details are just
not going to be something that most Republicans can be for. I mean this was
frankly a big tax bill as well as a Health Reform Bill. And so I don’t think the
Republicans could ever have been for something of this size. Actually, I sort of
take issue with you, we don’t know yet whether the Republicans’ position was the
right one in terms of the electorate. We will find that out in November. I think
they really had no choice because the Democrats, for many reasons, were not
either in a position or were unwilling in the senate to really negotiate. And so
there really wasn’t a middle ground. I mean the issues that President talked
about, I mean if I put on my Republican ad, buying across state lines, medical
liability, those are important issues. But where the rubber hits the road here is
that there is a 3.8% increase in payroll taxes for Medicare for unearned income.
There is a 0.9% increase. There are a number of taxes and I can support those
because I think we have got a find to way to pay for Health Reform, but I don’t
think Republicans ever could have.

Mark Masselli: Conservative thinkers like David Frum have obviously come out
with his thoughts that well he really hates the Bill. He thought that it could have
been less worse if maybe people had engaged with Baucus and the like, and you
just don’t really buy that.

Chip Kahn: Frum represents a small minority if you want to talk about
Republicans, I mean I think, as I said, Republicans really had no choice, there
was nothing in this with them and they would have had to vote for compromise
on very significant taxes and other kinds of policies regarding the government
role that would have been totally unacceptable to them. I think there was one
opportunity though for the senate to come to some kind of compromise with at
least 5, 7, 10 Republicans, and that would have been if Senator Kennedy had
survived. And let me describe it because in some way it’s counterintuitive. First,
Senator Baucus didn’t have any cover on the left in the Democratic Caucus. So
he had trouble finding a middle ground with Senator Grassley, the Iowa
Republican, that would have been acceptable to the other democrats. Kennedy
could have provided cover for Senator Baucus. And second, Senator Kennedy
was very close to Senator Hatch and I think he is the one person that could have
found some kind of middle ground with Hatch. And if Grassley and Hatch had
had that kind of position to work with Baucus, you might have gotten some kind
of at least number of Republicans in the senate to go along. Fortunately, Senator
Kennedy was really not part of this whole process and the outcome was a
partisan bill.

Mark Masselli: Today, we are speaking with Chip Kahn, President of the
Federation of American Hospitals. Now that the Reform Bill has passed, we
need to sort of understand the impact it’s going to have in different sectors of the
industry and you represent the Federation of American Hospitals. How do you
see reform impacting your hospitals and how might it change their behaviors over
the next 10-year period?

Chip Kahn: In the ‘14, ‘15, ‘16, we are going to see just a tremendous ramp-up
of coverage across the country. And from the standpoint of hospitals, it will make
a material difference. I mean it will mean that many people today who avoid
health care will be able to come to the hospital if they need service. Or if they
were part of those and came to the hospital and couldn’t pay and received care,
it removes the financial questions from that issue of coming to the hospital. Now,
they can just focus on getting well and we can just focus on getting them well. I
think for hospitals, it's going to really help in terms of a rebalancing because
hospitals are a 10% or 15% uncompensated care, some of that’s bed debt, some
of that’s charity care. And if most of that would be paid for, then it's going to
make it a lot easier for hospitals to keep their doors open and have the right
balance of revenues to provide the kind of services people expect.
Unfortunately, Medicaid, the Program for the Indigent, Medicare, the Program for
the Elderly and Disabled, neither pay hospital sufficiently for the services they
provide. So, having that uncompensated care area covered in the sense where

now it's zero move to where it will be with coverage, we really make hospital
finance more workable into the future.

Mark Masselli: So, when you look at this issue of hospital financing, you see that
really their margin will increase because they’ve basically been subsidizing the
uninsured or uncompensated maybe bad debt, do you see then the growth
occurring on the for-profit side?

Chip Kahn: Let me say two things about that. One is that, it all depends on what
happens with Medicare and Medicaid. I think that hopefully, if we get enough
coverage, that’s going to really close the uncompensated care gap. But I have
great concerns about the future of Medicare/Medicaid payment. Obviously, there
was Medicare payment reductions in the Health Reform and I am very worried
about deficit reduction sapping more.

Mark Masselli: Is this federal level or both the state, because the states really
have a huge share, proportionately of the Medicaid dollars in their budget?

Chip Kahn: Right, but what's going to end up happening is federal government is
going to fund actually the lion’s share first few years all of these new peoples, but
they are going to be paying at the rates the states pay. So, if taxes pay that,
that’s what the people who are now covered by this Medicaid, but the new
covered lives in taxes are going to be paid at the Medicaid rate. And if it picks up
new people, that’s great. Although if there is crowd out of people who are on
private insurance for one of the reasons because some of these people are going
to be employed, that’s a bad thing because you are going to be replacing
Medicaid with private insurance. I think though, from the standpoint of investor
on, that all the changes and there is going to be a real push for integration and
there are a number of demonstrations that are going to be funded and pushed to
try to push for bundling of post acute care and physician care, I think over time
that systems are going to win whether they are local, regional, or national. And
so, I think that my guys will grow and that, not that many individuals, free-
standing hospitals anymore, although there are many in rural America. I don’t
want to say they are dinosaurs, but I think they are on the way out, in that,
whether it's ascension and some of the catholic systems, whether ACA or
community, I think a lot of those hospitals are going to become, particularly rural
hospitals are going to become part of bigger systems. I think the issue is really
systems, not so much for-profit, nonprofit.

Margaret Flinter: Chip, let’s take a little crystal ball gazing for a moment. Over
the last few days, we heard that Dr. Don Berwick, President of Institute for
Healthcare Improvement, may soon take the reins of the largest payer in the
country, the Center for Medicare and Medicaid Services. Now, he is certainly
somebody well known to all of us in health care as a champion of safety and
quality and transforming care at the bedside, also safe to say, pretty focused on
structuring systems that incentivize providers by paying them for delivering safer,

higher quality care. What are your thoughts on that appointment and how do you
think America’s hospitals might be changed as a result of it?

Chip Kahn: Well, I am encouraged. Don is the real leader. Actually, we had Don
speak at our October meeting last year and my organization is very focused on
quality for many years since I have been here and involved in the development of
the Hospital Compare program where hospital’s performance on measures is
reported publicly by Health and Human Services. In this Bill, in Health Reform,
there is a pay-for-performance provision for hospitals that goes in effect over the
next few years, as well as a number of other provisions that will make a material
difference in terms of the kinds of information that will be collected and be
available to consumers and to clinicians and hospitals to help them improve. So
I am very encouraged. Don really understands what's wrong with our health
care. There are so many things that are right but what's wrong with our health
care, particularly in hospitals, and he will be very focused on realistic ways to
improve care.

Mark Masselli: When you look around the country and the world, what do you
see that excites you in terms of innovations and who should our listeners of
Conversations be keeping an eye on?

Chip Kahn: I think that this whole movement to spread the use of electronic
health records is really key. That wasn’t funded in Health Reform, it was funded
in the Stimulus Bill, and someone over at Health and Human Services
Department, David Blumenthal is in-charge of that program. And I think that’s
one of the most important things that’s happening right now. And the big
question, which is unanswered, is not just whether all the hospitals and
physicians are going to have electronic records for their patients, but whether or
not we can achieve what's called interoperability so those records will talk to
each other no matter where you go to receive care. And I think if that is
achieved, there will be so many side benefits from that.

Margaret Flinter: And we would certainly agree with you on that based on our
organization’s experience with electronic health records. Today, we have been
speaking with Chip Kahn, Industry Lobbyist and President of the Federation of
American Hospitals. Thanks so much for joining us, Chip.

Chip Kahn: My pleasure.

Mark Masselli: Each week, Conversations highlights a bright idea about how to
make wellness a part of our communities into everyday lives. This week’s bright
idea focuses on another of the many ways that internet is helping patients lead
healthier and more fulfilling lives. Although one in every 11 minutes online is
spent on social networking sites, like Facebook, Twitter and personal blogs, most
people use them to stay connected to friends and family. But increasingly,
patients with serious chronic illnesses are using online social networking as a

lifeline to the external world. According to the Center for Disease Control and
Prevention, over 100 million Americans suffer from some kind of chronic illness,
anything from arthritis to cancer, frequently confined to their homes for years.
This sickest portion of the chronically ill often withdraw from social contact. But
with the help of the Internet, these patients have begun to reclaim the health
benefits of consistent social interaction. One patient Shawn Fogarty, who has
MS and is a cancer survivor, said it's literally saved my life just to be able to
connect with other people. The evidence for social engagements, positive effects
are bound. A recent University of Michigan study of adults over 50 found that
people who reported more social relationships were likely to live longer lives.
Well, many chronically ill patients do use standard social networking sites like
Facebook and Twitter. Other sites designed specifically for the chronically ill are
growing in popularity. The options now are bound. Sites include PatientsLikeMe,
CureTogether, and HealthCentral meant for both illness-specific dialogue and
general social interaction, these websites offer a variety of services where
patients can talk about anything from straightforward illness treatment to funny
stories about the day. With round-the-clock access, the internet provides these
previously isolated patients with an unprecedented amount of freedom to connect
with the world around them, and regardless of what websites they frequent, there
is no question that the internet is helping the chronically ill to lead healthier, more
fulfilling lives. Now, that’s a bright idea.

Margaret Flinter: This is Conversations on Health Care. I am Margaret Flinter.

Mark Masselli: And I am Mark Masselli, peace and health.

Conversations on Health Care, broadcast from the campus of Wesleyan
University at WESU, streaming live at Wesufm.org and brought to you by the
Community Health Center.