Uwe E. Reinhardt, Professor of Economics at Princeton University and one of the nation’s leading authorities on health care economics

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

Margaret Flinter: And I am Margaret Flinter.

Mark Masselli: Margaret, last week’s much anticipated Health Care
Summit organized by the White House had all of the key Democratic and
Republican lawmakers in attendance but I don’t think it accomplished
much in the ways of increasing bipartisan support, but it did provide an
opportunity for both sides to lay out their position. It's fair to say little
progress was made on finding common ground and none on moving the
bill forward. So it appears that the Democrats will have to act alone in
attempt to pass Health Care Reform this session.

Margaret Flinter: Mark, I thought it was apparent from the start of the
summit. The Republicans and Democrats were not going to come to an
agreement on a bill. The Republicans chose Senator Lamar Alexander of
Tennessee to make their opening remarks and well he started o ! with
some more emphases. He told the Democrats the only way forward was
to scrap their existing bill and start over on new legislation. That was not
an auspicious start to breaking bipartisan deadlock. And at times, the
facts that were cited by members of both sides of the (Inaudible 1:19)
were in direct conflict. The President gave no quarter and was quick to
correct Senator Alexander and others when he thought they were taking
liberties with some of the facts.

Mark Masselli: Republicans strongly opposed the use of reconciliation
but President Obama sees it as the only option since Republicans were
not willing to compromise. White House Spokesman Robert Gibbs said
that President Obama was elected to make progress on issues that had
confounded and vexed Congress in the political system for years, health
care being one of the bigger ones. In his defense of moving health care
forward, Gibbs mentioned in article in New York Times on the cost of
doing nothing in reference to quote by Karen Davis President of The
Commonwealth Fund and a previous guest in our show. Davis said
people think if we do nothing, we’ll have what we have now, in fact what
we will have is a substantial deterioration in what we have.

Margaret Flinter: And that’s a very sobering and realistic thought from
Dr. Davis. So, Mark, while we are waiting for the final phase of this
chapter in the long story of American Health Reform, we will continue to
focus on what the best minds and the most interesting experts think
about the best path forward. We are excited about our guest today who

is going to share his thoughts on these challenges that America faces in
advancing Health Care Reform. Uwe Reinhardt is recognized as one of
the nation’s leading authorities on health care economics. He is the
James Madison Professor of Political Economy and a Professor of
Economics and Public A ! airs at Princeton University. He has been a
member of the Institute of Medicine and the National Academy of
Sciences since 1978.

Mark Masselli: No matter what the story, you can here all of our shows
on our website Chcradio.com. You can now 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.

Margaret Flinter: And as always, if you have feedback, email us at
Chcradio.com, we would love to hear from you. Now, before we speak
with Professor Reinhardt , let’s check in with our producer Loren Bonner
with the headline news.

Loren Bonner: I am Loren Bonner with this week’s headline news. Last
week, President Obama held his bipartisan summit on health care.
Despite almost seven hours of back and forth between Republicans and
Democrats, the resulting e ! orts appeared to have made little di ! erence.
The discussion did more to reinforce long-held views rather than change
them. At the heart was the fundamental di ! erence between the two
parties on the role the government should play in health care.
Congressman Paul Ryan said the President’s plan to get the government
involved in health care is something Republicans can't stomach.

Paul Ryan: We don’t think the government should be in control of all of
this. We want people to be in control. And that at the end of the day is
the big di ! erence.

Loren Bonner: Before the summit, President Obama unveiled the health
care plan that would extend coverage to 31 million people who are
currently uninsured and would cost $950 billion over the next 10 years.
It would introduce a new insurance regulatory body and would be
financed by a mix of Medicare cuts, tax increases and new fees on health
care industries. Republicans said they would only support scratching the
bill and starting over. House Minority Leader John Boehner said if the
Democrats are serious about a consensus, then they need to restart the
process.

John Boehner: We can't do it within the framework with 2,700-page bill.
That’s why the bill needs to be scraped, we need to start over on those
things that we can’t work together on to make health care less costly for
the American people.

Loren Bonner: After the summit, President Obama acknowledged that it
might not be possible to reach an agreement with Republicans on a
health care bill.

President Obama: I don’t know frankly whether we can close that gap.
And if we can't close that gap, then I suspect Mitch McConnell and Harry
Reid, Nancy Pelosi and John Boehner are going to have a lot of arguments
about procedures in Congress about moving forward.

Loren Bonner: Speaker of the House Nancy Pelosi said she intended to
move forward on a comprehensive bill without Republicans’ support and
that’s starting from scratch was out of the question. Both Speaker Pelosi
and President Obama said they may still consider of few Republican ideas
in the revised senate-passed bill. Possible areas of agreement could be
on malpractice lawsuits, curbing Medicare and Medicaid fraud,
reimbursing doctors more from Medicaid, and expending the use of
health savings accounts. President Obama said with or without
Republicans, Health Reform must go forward.

Before the Bipartisan Summit, the White House said they would consider
using a legislative measure known as Budget Reconciliation to pass a
health care bill. The three-step process would avoid a filibuster by
Senate Republicans. The House would pass the health care bill approved
in December by the senate and both chambers would agree to a separate
package of changes with a simple majority vote. President Obama’s top
health care o " cial Nancy-Ann DeParle said Sunday on NBC’s Meet the
Press that the White House was ready to move the bill forward using
reconciliation.

Nancy -Ann DeParle: We are not talking about changing any rules here.
All the President is talking about is do we need to address this problem
and does it make sense so have a simple up or down vote on whether or
not we want to fix this problem.

Loren Bonner: Republicans strongly opposed the use of Budget
Reconciliation to pass health care legislation. Senate Minority Leader
Mitch McConnell told the CNN’s State of the Union Sunday that he and
other lawmakers “do not think something of this magnitude ought to be

jammed down the throats of a public that doesn’t want it through this
kind of device.” Other Republicans have said Budget Reconciliation won’t
work because it was never designed for such a significant legislation.
Budget Reconciliation was established in 1974 to make it easier for the
senate to pass bills that would lower the nation’s deficit. Since then, it's
been used to vote on other issues. Thomas Mann, a senior fellow at the
Brookings Institute, said reconciliation has been used 22 times to pass
major reform. He noted that parliamentary objections may be raised and
getting a majority of Democrats in the House may be tough, but
reconciliation has enough precedent history to make it possible for the
Democrats to use it in the circumstance. Mann said that Democrats know
the only way to get Health Reform passed is with democratic votes.

Thomas Mann: It's about a bipartisan rule over whether we will have
Health Reform or not, and it's a Democrats’ root to success and
Republicans correctly see it as just that.

Loren Bonner: It's also going to be an uphill battle to get enough votes to
win a simple majority in both the House and Senate. Speaker of the
House Nancy Pelosi and Senate Majority Leader Harry Reid will have to
persuade as many as half a dozen senators and about two dozen house
members to cast a tough vote. Our guest Uwe Reinhardt is here to give
us some perspective on the challenges America faces going forward.

Mark Masselli: This is Conversations on Health Care. Today, we are
speaking with Uwe Reinhardt who is the James Madison Professor of
Political Economy and Professor of Economics and Public A ! airs at
Princeton University. He is a leading health care economist. Professor
Reinhardt, welcome. I am sure you were watching the Bipartisan Health
Reform Summit closely last week. After almost seven hours of debate, it
looks like Democrats are going to have to forge ahead on their own.
White House o " cials are now saying that they won’t pass the reform bill
through a Budget Reconciliation process by Easter break. But
Republicans have been arguing for an incremental approach scraping the
current bill and just making modest changes directed a controlling cost.
Could a scale down approach work in resolving the cost issue? Or is it
just too bigger problem for a modest solution?

Uwe Reinhardt: Well, the scale down diversion for cost control, I wonder
what it might be, and the reason I say that is the Republicans did have
the White House and the Hill for six years. So if these things were
feasible, the question does arise why didn’t they do it, because it is hard
to imagine that the Democrats then would have opposed cost control.

The reason they didn’t and the reason this small step approach won’t
work is because controlling health care cost should really be understood
to mean cutting other people’s health care income; doctors, hospitals,
pharma companies, device companies. The only way you can reduce
health care spending is to reduce the mirror image of it which is the
health care incomes. And those groups are extraordinarily powerful.
Now, you saw the Democrats, they wanted to cut Medicare spending a
little bit, not a lot, something like 6% only and against the backdrop of
both Republicans and Democrats saying Medicare spending is totally out
of control. And what they wanted to do is take away from the insurance
industry the extra 14% of health benefit they have got from Medicare that
traditional Medicare beneficiaries don’t get. That seems in someway only
fair. So, that’s where most of the money came from. The other one came
from the fact that if you had universal coverage, you didn’t really need to
give hospital the so-called disproportionate share money to cover the
uninsured. So there wasn’t really a lot of cutting. There were simply
things that shouldn’t have been spent to begin with. And immediately,
the Republicans said oh don’t do this, you will devastate the elderly, you
are going to kill granny, and so on. So you see how hard it actually is to
do cost control. So, when the Republicans say they want to have a
stepwise proposal for cost control, I would like to know what they are,
these steps. What they might come up with is to say well, people should
have higher deductibles so that they make decisions on what to spend.
But that’s just codeword for saying we should ration health care by
income class. Maybe we should do that.

Margaret Flinter: Dr. Reinhardt, while we are talking about those
consumers, that could lead into a question I had based on something you
have said which I think I have got this right, “Americans are like
blindfolded shoppers pushed into a department store when it comes to
purchasing insurance.” So I think one of the questions for this year is do
you think Americans have at least become better educated and more cost
conscious after all the health care debates this year? And if government
is not able to do anything to change the system, do you think we’ll at
least be better shoppers?

Uwe Reinhardt: How could you be a better shopper? Where do you get
the prices? It is extraordinarily di " cult to get prices. Last year, my wife
took the test out how easy it is, called our Princeton Hospital and asked
what would be the cost for a normal delivery of someone without health
insurance who makes $70,000. And to use that number to say we are
not poor and entitled to poverty or charity discount, you couldn’t get the
number from the hospital, it just wouldn’t give to us. I couldn’t get it

either. So then how do I shop around? If providers don’t give me the
prices, half the time, I don’t know what to ask for. A student of mine
here was charged $2,200 for an MRI. So I called up the radiology group
that had charged them that and asked what do you charge for an MRI.
And they said well what kind, do you know the code number. They
wanted code numbers but how would I know code numbers. I am just an
average consumer. I don’t have a codebook with 7,000 codes in my
hand.

Mark Masselli: Let’s move from talking about cost to talking about
simplification and eliminating ways. We did a piece on our show about
France’s Carte Vitale, a small green card that holds every French citizen’s
medical records, insurance information, and prescriptions and France has
reportedly seen a steep drop in administrative cost related to health care.
Here, we are investing billions in private sector, electronic health records
and systems that so far seem to cost everyone a lot of money. Do you
see any hope for more streamlined system here, more like the banking
and credit card industry than the health care industry? Could we ever use
something like this to streamline our rather complicated system?

Uwe Reinhardt: Well, yes, you could. Taiwan has it, Canada has it, France
has it, Germany has it, all the other nations have that. In these countries,
we don’t have it so why don’t we have it. Well, let’s initially say that
government stays out of it and the private insurance industry should be
doing that. They should create some sort of council to have uniform
cards with uniform coding and uniform claim forms, so that all of these
could be computerized and be like Taiwan or Canada where you just run
a little card like an American Express Card through a machine and the
billing connection is set up. I know, 25 years ago, I gave a talk to a group
of insurers, it was called MEC . They wanted to have such an electronic
base and work together. It came to nothing. So, after 25 years, the
private insurance industry has done ______ 15:21. Then that leaves the
government to say well, the government could develop it and could
mandate it. How do I know that government could develop it? Look at
what Mark McClellan, when he ran the Medicare program, how quickly he
developed a really first-rate electronic website for the elderly to choose
among drug options. So government can do this.

Margaret Flinter: Professor, you have a very global perspective as an
economist and I have heard you talk about the di ! erence in the social
compact between businesses and employees and Europe versus the
United States, which is why employer-sponsored insurance is not a

secure source of health coverage for Americans. Can you tell our
listeners a little more about that?

Uwe Reinhardt: Well, you see the Europeans and Canadians and
Taiwanese have a fundamentally di ! erent attitude towards government.
No one particularly likes it. Teenagers don’t like parent either but they
have their uses, and the Canadians and Germans and the Taiwanese, they
recognize government sometimes is irritating but it's also largely
beneficial. It is after all our own creation in the democracy. Americans
have a very peculiar attitude. So when you have this, it is not possible to
have a compact between government, business and the people.

Mark Masselli: We are speaking with Uwe Reinhardt, Economic Professor
at Princeton, one of the country’s leading health care economists.
Professor, it was no surprise that we saw deep philosophical di ! erences
between the two parties during the summit. Basically, the Democrats
want to give government more control over health care and the
Republicans want to leave it to market forces. But neither party has said
straight out this is a moral issue. We have to provide health care to all
Americans. Author T.R. Reid recently said on our show that that should
the central issue and the President needs to make that commitment clear
and he hasn’t. Would you agree with that?

Uwe Reinhardt: Well, he has, on occasion. I remember in the health care
address he gave the Congress last year, there was a short passage when
he did say it is a moral issue. But it is true, he hasn’t generally brought it
up as a moral issue. I don’t know, in general, Americans have never
really seen it as a moral issue, although it is basically an issue of ethics,
of social ethic, meaning to what extent should I be my brother’s and
sister’s keeper in health care.

Margaret Flinter: And Dr. Reinhardt, you have said and I think you were
only partly joking that the administration’s problem is they don’t
understand, you really need to get a high school to explain things to the
American people, that we just can't quite understand large, complex
policy issues like Health Reform. So, here is the challenge. If you were a
high school teacher, what would you say to the American people about
the Health Reform bill or about what we need to do?

Uwe Reinhardt: The first problem is you would ask the people think of
the problems that you have with health insurance. You may not have
health insurance now which is a problem, or you may fear getting laid o !
and then you would lose it which would be a problem. And one way to

solve that is to set up an insurance exchange where you can buy
individually first this health insurance and if you are a low income, we will
give you subsidies to help you buy this product. I think people can
understand that. Secondly, you have to then set up a market where you
can do this. So you can electronically or in some organized fashion see
what insurance options there are, and someone has to keep the insurance
companies honest. That is the second piece of the legislation. That is
there among others. We don’t want the system where if you are sick,
your premiums are sky high. And if you are young and healthy, they are
low. We want even that out. Or if not, we will have to subsidize sick
people more heavily. But somehow we want to help you being able to
buy private insurance. That’s really 80% of what is in this health bill. But
those are the two major issues. Now, if I want to give you subsidies, I’ve
got to have the money. And where do I get the money? I can either get it
by cutting other government expenditures and using those moneys to
help you, or I have to raise some taxes from somebody.

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

Uwe Reinhardt: There are two kinds of innovation. The innovation in
terms of biomedical products, we are really the leaders in that. But if it
comes to sort of innovation in simplifying administrative processes and
some are making sure that no one falls between the crack, I would say if
you look to the Netherlands, to Germany, to Taiwan, to places even in
Canada where they have much lower administrative cost, we could learn a
lot from them in how to run a health system. And it isn’t just left wing
people who say this by the way. The business roundtable who are
probably solid to the right of center in the ideological spectrum, they
came out with a study last year saying, for the money we Americans
spend relative to Europe, we get 23% less value than we should, using
Europe as a benchmark. Now, if someone from Harvard had said this,
Fox would say oh this is just socialist prattle, but this was the business
roundtable saying it.

Mark Masselli: Today, we have been speaking with Uwe Reinhardt,
Economics Professor at Princeton and one of the country’s leading health
care economists. Thank you for joining us today. 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 song, something at the heart of all cultures and a powerful tool that
can be used to convey crucial health care information. In the west, we

receive the majority of our health information in writing. But in many
Third World Countries where the illiteracy rate is high, health o " cials and
community organizers are responding with something most anybody can
understand, song. In Cambodia, for example, many wells and rivers are
contaminated. A group called Resource Development International is
teaching locals about water safety with karaoke Videos. Trucks carrying
karaoke equipment arrive in villages where adults and children gather to
sing along to videos. In this song, they are singing about arsenic
poisoning in the wells.

(Song)

Mark Masselli: The lyrics are saying that the water educator has come to
test all the wells for arsenic in the village. If the well is painted green,
that means that the water is safe to drink. But if the well is painted red,
that means it's contaminated with arsenic and should not be used for
drinking. In Mali where more than 800,000 people are infected with
malaria, a song about prevention sung by local musicians has been
playing on the radio. The song urges people to use insecticide treated
nets. After the campaign ended in 2007, a survey found that 81% of all
households had nets as opposed to 29% just a year earlier. Singers in
Western India have been using street theatre to educate mothers about
immunization, breastfeeding, and new born care. In these song lyrics,
the message is about the power and strength of breast feeding,
specifically they are saying breastfeeding protects the child from disease
and should be done until the child is two years old.

(Song)

Mark Masselli: The project began in 2004, and after the first five years,
researchers found that immunization of children in Western India ages 12
months to 23 months rose from 48% to 78%. Not only a song way to get
a message across but throughout history, it is proven to be an e ! ective
way to learn and retain information. Singing public health care messages
to save lives in developing countries, 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.

Margaret Flinter: 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.