Governor Michael Leavitt

Mark Masselli: This is Conversations on Health Care. I a m Mark Masselli.

Margaret Flinter: And I a m Margaret Flinter.

Mark Masselli: Well , Margaret, the New Year is kicking off with some interesting
new tunes coming from states , previously averse to expanding Medicaid under
the Affordable Care Act.

Margaret Flinter: Well , Mark that is something that a number of guests on the
show predicted would happen . Many of the states that held out largely in the
south and the Midwest we think did so for politi cal reasons , but perhaps
economic reasons will trump.

Mark Masselli: Well , there are states like Missouri, Pennsylvania , New
Hampshire and Utah that are considering expanding Medicaid in 2014 or beyond .
And in Virginia , where a new governor has been swo rn in , there is pressure
mounting from the hospital and business communities to expand Medicaid some
400,000 low income Virginians and a lot of money on the table for hospitals and
health care companies.

Margaret Flinter: And the pressure will continue t o mount from the health care
community , Mark , because it’s simple economics , and Kansas Hospital
administrators are joining forces to a pply pressure on Governor Brownback in
that state to reconsider his refusal to expand Medicaid coverage.

Mark Masselli: Our guest today has a unique insight into executing health policy
both at the state and federal level , Michael Leavitt is the former secretary of
Health and Human Services under President George W. Bush and before that , a
three - term governor of the State of Utah.

Margaret Flinter: Governor Leavitt now runs a leading health consulting firm that
helps public and private entities respond to the changes in the health care
industry, many of them specifically due to the implementation of the Affordable
Care Ac t.

Mark Masselli: We will hear from L o r i Robertson , managing editor of
Fact C heck.org .

Margaret Flinter: And no matter what the topic , you can hear all of our shows by
Googling CHC Radio .

Mark Masselli: And as always , if you have comments , email us a t Chcradio.com
or find us on Facebook or Twitter , we would love hearing from you.

Margaret Flinter: We will get to our interview with Governor Leavitt in just a
moment.

Mark Masselli: But first , here is our producer Maria n n e O’ Hare with this week ’ s
Head lines News.

Marianne O’Hare: I am Marianne O’Hare with these health care headlines . C G I
i s out ; Accenture i s in . The company behind the trouble d rollout of the federal
health exchange Healthcare .gov is being replaced in 2014 with Accenture , the
company behind the largely successful Covered California , the exchange
covering the State of California , where more than 400,000 residents have
managed to gain health insurance coverage online. Accenture , though , is not
without critic s . There are continued glit ches for cust omers attempting to sign up
in California . Accenture ha s had billions of dollars in federal contracts in the past
not related to health care.

Another sector that’s still having trouble with those online exchanges is the
Hispanic market . Ana lysts are still seeing numerous problems with the Hispanic
users being able to log on successfully in the Spanish language health care site .
Even more perplexing and disturbing is the high percentage of uninsured
Americans who don’t know there a re tax cre dits they can qualify for that would
subsidize their purchase of health insurance. Almost 70 % of uninsured
Americans don’t know about the tax credits as well as other assistants that would
make coverage more affordable for them.

Pa id sick leave may be th e luxury of the well employed , but it’s now the law of
the land , at least in certain parts of the country . Measures are in ef f ec t in places
like Seattle , San Francisco , going into effect in New York City and Jersey City. A
recent study estimated making j ust two days of paid sick leave available to
workers who would reduce flu co - infection by 40% . Business organizations ,
however , argue the measur es would put und ue pressure on them to increase
payroll expenditures and could impact their ability to do thing s such as give
raises and hire new people.

New York’s governor Cuomo stated his intentions to examine regula tions that
would allow the use of medical marijuana for the terminally ill in New York and
other s with few treatment options . The measure would al low a test run in 20
selected hospitals. Nearly two dozen states have laws allowing the use of
marijuana for medical purposes . And from medical marijuana to Vaporium’s six
E - cigarette bars have opened up in Manhattan providing users with a variety of
fla vors and nicotine vapor inhaling experiences to extensively help them wean off
cigarettes .

Folks are lining up for things like Blueberry Creme Brulee . The problem is the
New Yor k City Council passed a ban prohibiting the use of E - cigarettes wherever
smok ing is banned which is pretty much every public place in New York. Health
officials are still concerned about the effect of prolonged exposure to the nicotine
vapors. I am Marianne O’Hare with these health care headlines .

Mark Masselli: We are speaking today with Governor Michael Leavitt , founder
and chairman of Leavitt Partners , a leading health industry consulting firm . He is
the former three - term governor the State of Utah from 1993 to 2003 and is the
former secretary of the Department of Health and Human Services under
President George W. Bush , during which time , he oversaw the expansion of
Medicare Part D. He is the former chairman of the National Governors
Association and author of the new book Finding Allies, Building Alliances .
Governor Leavit t , welcome to Conversations on Health Care.

Governor Michael Leavitt : Well , thank you.

Mark Masselli: Governor , one of your more notable achievements during your
tenure as the U . S . secretary of HHS was the development a n d rollout of the
Medicare Part D program in 2006 which ultimately brought cheaper prescriptions
to 48 million American seniors on Medicare , and your philosophy was “ let’s get
the people the drugs they need , a n d we will work out the technical problems
later .” We are looking at a number o f challenges with the rollout of the Affordable
Care Act right now and considering your unique perspective . What lessons
learned or advi c e d o you have that might be applied to the leadership who is
rolling out the Affordable Care Act ?

Governor Michael Le avitt: I think there are many lessons. First is that
preparation is ultimately what allows administrations and , for that matter , any
organization to avoid the kind of problem that this administration has
encountered. The roots of this can go back almost two years ago to a series of
mistakes that I believe we re made . And the first is that they deferred regulation
making , they were going out to make hard choices , and they decided to defer
those choices until after the election , and it’s through the whole process behind .
I think the second mistake was putting someone in charge of the whole process .
In this case , the decision not to have an integration contract or with all of the
systems and to try to do that in house prove d to be a problem.

The third I th ink is that you have to anticipate that there is going to be this kind of
problem and that the importance of having m etrics that can both allow you to
have situational awareness and be able to determine if you are making progress .
I believe the administra tion lacked those metrics. And now going forward , one
thin g the administration did do well when the problems existed , they took
ownership of them and demonstrated a willingness to fix it.

Margaret Flinter: Governor, as we look back to when the law was f irst signed
into being , you have said in the past that one of the necessary elements to the
success of health policy reform was that states had to retain their autonomy in
how they approached it. So we are seeing , in fact , a pretty wide array of
approache s in how states have chosen to comply with the Affordable Care Act .
What are the really notable differences from your perspective as a former federal

administrator , governor and now a health consultant as you look around the
national scene ?

Governor Mich ael Leavitt : The original resign of the Affordable Care Act was
exchanges for each state to make a decision as to whether or not they wanted to
have a state exchange or a federal exchange. Many states who would typically
opt for some kind of state perfor mance objected (8:02 inaudible) that they just
concluded (inaudible) basis of politics they weren’t going to be anywhere around
this. I do think it has demonstrated that those who chose to implement at state
level had better outcomes for the most part tha n those who relied up on the
federal government.

I think it’s also safe to say that one of the dilemmas that the federal government
face was that they were somewhat o ver run by the number of places that they
had to respond to , and I don’t think that was an ticipated in the early design of the
law . States are of a size typically where you can manage the second . There is
often than not th e intense politics that plays out . And frankly , I just think states
are better equipped and have traditionally been bette r equipped to deliver in their
jurisdiction as opposed to the federal government who is having to deal with
different kinds of problems that naturally exist in 50 different jurisdictions.

Mark Masselli: Governor , you are releasing a report Cracking the C ode on
Health Care Cost s from the commission you co - chair with Former G overnor Bill
Ritter . Tell us a little bit about the report , and also why you view states a s sort of
incubators for change and what are you seeing out there in terms of controlling
cost s that are exciting.

Governor Michael Leavitt: I think the sub - theme of the report would be states
can have more impact than you think when you begin to analyze all of the
leverage that states hold to impact health cost s, there are regional markets , and
the country is made up of a network of regional markets . And if you are sitting in
Washington , and you are having to decide how best to function . And so
Washington trying to manage health care cost s in 316 different places where
they are not familiar whe ther or not it’s difficult , but a state can do that .

And a governor , a governor has not just the capacity to run the leverage of state
government , but has a bully pulpit . So the report calls on governors to step up
and be a big force in shaping health ca re costs in their state , and it encourages
governors to be the leader , t he ability to direct state employees plans which are
often the largest employers , the ability to bring information together . In this
report , it details a number of things that governo rs can do to take charge of this
problem within their own states.

Margaret Flinter: Certainly , the Accountable Care Organizations have gotten a
lot of attention . Where do you see the real magic in these scenarios around
these new delivery system s for ca re ? Is it the payment incentives , the range of

services th at patients get ? What’s the real game changer in some of these
innovations from your perspective?

Governor Michael Leavitt: The first is major shift in who bears risk , and the
second is the bas i s upon which we compensate for services , moving away from
a fee - for - service basis more to wards a risk - base d payment or a population health
where a provider or a group of providers are paid a specific sum of money and
then required to compete in the marketp lace based on their ability to provide the
best care for that amount of money. Big shift in risk moving from just insurance
compan ies bearing risk to providers actually accepting risk, and I think we are in
a period right now where people are just trying to see if this works or not . And if
it does , I think you can ( 11:20 i naudible) .

Mark Masselli: We are speaking today with Governor Michael Leavitt , former
secretary of the Department of Health and Human Services under President
George W. Bush and former three - term Governor of Utah . Governor Leavitt is
the author of a new book Finding Allies and Building Alliances in which he
promotes a collaboration to achieve meaningful change in public policy.
Governor, it sounds like a good prescription for many of the Ls in Washington ,
but we are not seeing a lot of collaboration in DC right now . And you note that
their recent government shutdown and the ongoing sequester has been some
damaging to the public trust and the integrity of the federal government . What
are your thoughts on how we get pas t the political grandstanding and what are
some good solutions out there ?

Governor Michael Leavitt: Well, I believe that one of the reasons that
government has become so ( 12: 09 inaudible) the federal government wa s tryi ng
to do too much . We talked earlier about the role of state , and I think it goes back
to this report . There is a level at which problems can be solved , and you are
trying to do at all in one place in Washington , DC . First of all , the politics
becomes s o bitter, and it becomes so infested with special interest s that a ctually
just giving them the root of problem solving is difficult . That happens better in
state government s , and it happens better in local governments . And so to the
degree that there is a government necessary , that the construct of having
problem solved at a more local level always produces a more cooperative
outcome.

And many of these problems , in fact I would say most of these problems , cannot
be solved by any one person or any one org anization . They require collaborative
solutions where people get together. The book is really a collection of
experience s and the lessons that I and other people have learned from solving
problems that way and if we can get better at it. But the first r ule is you have got
to be in a position where people are willing to work collaboratively , and in many
aspects, the federal government was just set up around checks and balances of
pension . So I think the first rule is move the problem to a level where it can
most be or best be solved many times (13:36 inaudible) the federal government.

Margaret Flinter: Governor, I would like to ask you about one thing that I think I
am afraid is going to have to be solved at the federal level and with collaboration ,
and you recently published an (13:36 inaudible) piece in which you really spoke
to the need for the overhaul of Medicare reimbursement formula , the so called
SGR or Sustainable Growth Rate formula. You say the time is right fiscally and
from a policy standpo int to fix this system that really has caused so much
distress for providers across the country , a nd it appears there might be some
consensus and willingness to collaborate in Washington now on fixing the SGR
problem. What’s the forecast for repeal and re placement of the Medicare
reimbursement formula?

Governor Michael Leavitt : This is somewhat (14: 09 inaudible) problem to many
people , but it's a serious one , a nd so let me describe what it is. When a
physician performs a service, they are provided a fee , and that fee is determined
by a bureaucratic process in Washington where as the fee is assigned to every
service , a nd it's different in different areas , which causes all kinds of problems . It
can be twice as much in Florida than it is in Minnesota , whic h it just doesn’t make
a lot of sense. That’s, first of all , the root of the problem is that it's based on a
system that’s artificially complex.

The second part of this problem is that Congress could see that when people
wanted to make more money , what t hey do is they just do more procedures. So
they had no way of (14:54 inaudible). So they said , “Well, we will just pay less
for each procedure ,” and so they just every year will reduce the cost of what we
pay to those procedures by 5%. Well, what happen ed was they just got more
procedures . The lower the price the more procedures they got. And so they had
artificially put in the place that every year , 5% roughly would come off of these
procedures. But then at the end of the year, they would say , “That’ s not going to
work because people are going to either do more procedures or they are just
going to drop out of Medicare and not treat people. ” And so they would just go
back and pay for that year the 5% that the law require s them the drop.

Over time, we just ha ve this enormous hold in the amount of money that it will
take to pay for that, and it's just a crazy system , and it needs to be fixed. And the
economics of this have come to the point that it's the cheapest to solve right now
than it's been in a long time , and it's not just plugging the whole economically ; it's
fixing the system . They need to fix it because it's never going to get any better ;
they have got to fix the system.

Mark Masselli: Governor Leavitt, you have gone from governance to cons ulting
in the health care intelligence business with your company Leavitt Partners,
utilizing strategies you learned while dealing with the intelligence communities ,
forecasting strategies and many uncertainties. And you say we are at an
inflection point in health care in which , the landscape seems to be changing daily
and fraught with tremendous amount of unpredictability. So share with our

listeners , if you would, what kind of changes you foresee ahead and how are you
advising governments and businesses to prepare for these changes in the health
care industry, not just with the Affordable Care Act but with a vast array of
technological advances, looming on the health care horizon .

Governor Michael Leavitt: Well, first thing I believe tha t's important i s for people
to recognize how inevitable change is because it's not being driven by politics ; it's
being driven by economics . And it's not being driven by just U.S. economics ; it's
being driven by global economics. And that starts with the fact that no c ountry
can remain competitive on a global landscape if it's spending 20% or 22% of its
entire gross domestic product on health care , and we are beginning to feel the
impact on the competitiveness. So the first thing is to recognize that change is
inevitab le , and it is moving toward us with a glacial certainty.

The second is to recognize that we are moving from a system that has been
essentially siloed or uncoordinated where everyone is general contractor to a
situation where there will be general contract ors and subcontractors. And there
is a big competition right now in the marketplace (17:40 inaudible) conclude who
would be the general contractor , if you will , in health care, will it be hospitals, will
it be insurance companies, will it be clinic operat ions or will there be others that
will act as general contractor s . Well, everyone wants to be the general
contractor , and so there is a competition that’s going on , and it will be different in
every market.

And one of the conclusions you quickly come to is that no one of those health
entities have all the competencies to be able to deliver health care necessary.
And so we are beginning to see lots of mergers and acquisitions and joint
ventures as insurance companies begin to buy health care providers , an d
providers begin to create insurance companies. And so thinking of your place in
this world as a health care provider, as being the way it was in the past, that’s not
likelihood. So we have to begin to think of new shapes and figure out where we
fit in (18:40 inaudible) health business .

Margaret Flinter: We have been speaking today with Governor Michael Leavitt,
founder and chairman of Leavitt Partners, a leading health industry consulting
firm. He is the former three - term governor of the State of Uta h and the former
secretary of the Department of Health and Human Services under President
George W. Bush. You can learn more about his work by going to
Leavittpartners.com. Governor Leavitt, thank you so much for joining us on
Conversations o n Health Car e today.

Governor Michael Leavitt: My pleasure. Thank you.

Mark Masselli: At Conversations on Health Care, we want our audience to be
truly in the know when it comes to the facts about Healthcare R eform and policy.
Lori Robertson is an award - winning journalist and managing editor of

FactCheck.org, a nonpartisan, nonprofit consumer advocate for voters that aim to
reduce the level of deception in U . S . politics. Lori, what have you got for us this
week?

Lori Robertson: Well, we have heard republican l awmakers claim that 80 millions
to 90 millions Americans with workspace insurance are going to lose their plans
in 2014 because of the Affordable Care Act , but those millions of Americans
aren’t going to lose their insurance. The claim is based on health plans losing
grandfathered status which means the plans were exempted from some of the
requirements of the law because they existed before the law was signed. The
Obama Administration in 2010 estimated that about half of all employer
insurance plans would lose grandfathered status by the end of 2013.

In fact, most workers were already on non - grandfathered plans in 2012 according
to the Kaiser Family Foundation ’s annual employer survey. Many workers may
not have even noticed their plans have been modified and lost their
grandfathered status. Employers change their plans frequently. Small group
plans face more requirements once they are no longer grandfathered than large
group plan s . So small business es with up to 50 workers are more likely to feel
the a ffects of losing that status. Some , in fact , could be sent to the exchanges by
their employer.

The non - partisan Congressional Budget Office has estimated that employer -
based insurance would decline by a net seven million in 2018 compared with
what would have happened without the law. 11 million would lose an offer of
insurance ; three million would decide to get insurance from another source , and
seven million would gain insurance at work. And that’s my Fact Check for this
week. I am Lori Robertson , man aging editor of FactCheck.org .

Margaret Flinter: FactCheck.org is committed to factual accuracy from the
country's major political players and is a project of the Annenberg Public Policy
Center at the University of Pennsylvania. If you have a fact, that you would like
checked, email us at Chcradio.com, w e will have FactCheck.org's Lori Robertson
check it out for you here on Conversations on Health Care.

Mark Masselli: Each week Conversations highlight s a bright idea about how to
make wellness a part of ou r communities and everyday lives. The U.S. boost
among the highest rates of teen birth s in the world’s industrialized nations. And
while those numbers have been declining in recent years, it's still a significant
health issue in this country. Accordi ng to a recent study, the decline in teen birth
rates in this country can be attributed in part of the launch of the popular MTV
show 16 and Pregnant and the subsequent Teen Mom. MTV launch the series in
2009 working in partnership with the National Campa ign to prevent teen and
unplanned pregnancy to show the challenges and harsh realities of teen
pregnancy and teen parenthood.

Researchers at the University of Maryland and Wellesl e y College conducted an
e mpirical study to determine what , if any , impact th e show has had on the decline
of teen pregnancy and birth. Wellesley College Economist Phillip Levine found
that much of the decline in recent years is the result of the Great Recession but
that it didn’t count for all of the decline. They decided to uti lize Google Data
Tracker and Twitter activity around the airing of the shows which develop ed a
loyal following and consistently higher ratings since th e show began in 2009. So
they called the Niels e n Rating Data.

Phillip Levine : We love to see people se arching for things like how do I get birth
control , and it's remarkable how people respond to the show , do things like tweet
and search about things that they are watching on TV as they are watching it and
immediately following. So you see these enormous spikes in activity about 16
and Pregnant t he day the episode airs . You just see a huge spike in activity , and
that also tends to correlate with people doing things like searching and tweeting
about birth control.

Mark Masselli: More interestingly , where the social media conversation
surrounding themes explored on the show, lo s s of freedom, the father s of the
baby often removing themselves from the picture , themes that really drove the
challenge of teen motherhood , home to billions of young vulnerable vie wers.

Philip Levine : So the important point about watching this show is that it really
illustrates the life choices that these girls have made a nd what outcomes it has
on their lives in a way that the reality TV show can do that public service
announceme nt or sexual education teacher or some other form of
communication can’t really accomplish. And in that way, it can have a really
meaningful impact on –

Mark Masselli: Based on the data they compiled, they determined the show led
to a 5.7% drop in teen births from 2009 to 2012, a significant number in the
relatively short period of time. The study really influences on social outcomes,
the impact of MTV’s 16 and Pregnant on teen child bearing can be found in the
National Bureau of Economic research. MTV says this aligns with their goal of
the show which was to utilize their trusted media platform to reach a vulnerable
sector of their audience and educate them about the potential hazards of risky
behavior in a format they understood . Reality TV , a media out let utilizing
airwa ve s to reveal the risk of teen pregnancy , thus creating in a platform for
dialog for teens to address this potentially life changing event , leading to a
significant reduction in teen pregnancy, now that’s a bright idea.

Margaret Flin ter: 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 WESU at
Wesleyan University, streaming live at Wesufm.org and brough t to you by the
Community Health Center.