Dr. Uwe Reinhardt, Princeton Health Economist

( Music)

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

Margaret Flinter: A nd I am Margret Flinter .

Mark Masselli: Well Marg a ret , it is a new year , and it's also flu season. It turns
out this one is reaching epidemic propor tions in many parts of the country.

Margaret Flinter: Well that’s right, Mark, and in spite of an aggressive flu vaccine
campaign as we have every year, many folks have not he eded the warning . It
just seems no matter how much we emphasize the need for t hat annual flu
shock, millions of Americans just opt out, and that leads to more flu coinfection ,
and this year ’s strain is particularly virulent.

Mark Masselli: The Centers f o r Disease Control report that the flu strain H3N2
has dominated over the H1N1 strain which the vaccine was targeting . So even
some who receive d the flu vaccine may not have gained the full protection hope d
for.

Margaret Flinter: The vaccine is produced earlier in the year based on
projections of which strain of flu virus will dom inate in the coming flu season, but
the fact remains th e flu vaccine is the best viable line of defense, and this year’s
vaccine will mitigate the symptoms of flu.

Mark Masselli: We should put this in context against the Ebola epidemic,
Margaret, which f rightened so many people in this country with only handful of
cases here fortunately . Conversely , the flu has already killed several thousand in
this country , and the flu season is only just getting underway . Already 43 states
are reporting widespread ou tbreaks , and the death toll is rising.

Margaret Flinter: Well, one thing that we do have now is of course so many new
electronic tools at our disposal to track the spread of flu . The CDC’s FluView is
available on the ir website ; Google has a flu trac ker; you can see in real time and
real numbers where outbreaks are at their worst. And I think in the future, it
won’t be uncommon for folks to get alerts on the ir smartphones when they are
entering an area with a higher inciden ce of contagious diseases.

Mar k Masselli: If you haven't got ten your flu shot, it's still not too late, and for
those who have gained health coverage for the first time o n the Affordable Care
Act , the flu shot is complete ly covered , one of many health benefits of expanded
coverage und er the health law.

Margaret Flinter: And that’s something our guest today knows quite a bit about .
Dr. Uwe Reinhardt, a long - time Professor of Economic s at Princeton University ,
is one of the nation’s leading health economists.

Mark Masselli: He is an expert on health reform, Medicare funding , physician
compensation, a whole host of issues impacting the cost of deliver y of heath care
in this country and around the world. He will be sharing his views on the
Affordable Care Act and the changing landscap e of expanded coverage for
millions of Americans.

Margaret Flinter: L ori Robertson , Managing Editor of Factcheck.org stops by .
She is always on the hunt for misstatements spoken about health policy in the
public domain . But no matter what the topic , yo u can hear all of our shows by
going to www.chc.radio.com .
Mark Masselli: And always , if you have comments , please email us at CHC
Radio at www.chc1.com
, or find us on Faceboo k at Conversations o n Health
Care , or on Twitter at CHC Radio, we love hear ing from you .
Margaret Flinter: We wi ll get to our interview with Dr. Reinhardt in just a moment .
Mark Masselli: But first , here is our producer , Marianne O'Hare with this week’ s
Headline News.
(Music) Marianne O'Hare: I am Marianne O'Hare with these Health Care Headlines .
What a difference a year makes . Things continue to run rather effortlessly on the
Federal Insurance Exchange, HealthCare.gov , with millions of new custome rs
signing up for coverage before the turn of the year, some 1.9 million for the first
time with close to five million Americans re - enrolling in a health plan for the
second year in a row all before the turn of 2015. Enrollment closes February
15

th
, and e xperts on both the state and federal exchanges feel they will exceed
their targets for sign up this time around.
Looking at some of the states that ha d enormous problems with their state - based
exchange s during the first open enrollment , again , we see a di fferent scenario
from last year . Maryland , whose program was so dysfunctional, people had to
sing up by hand , scrap ped their system and adopted the one use d by
Connecticut so effectively in the first open enrollment . They have since signed
up more than 1 60,000 customers in Maryland with little or no complaints.
Meanwhile , uncertainty is clouding the future as a Supreme Court decision looms
this spring on the legality of the tax subsidie s for those buying insurance on the
federal exchanges in those 37 sta tes where no state exchange was created. The
case King v . Burwell is set to be heard on March 4

th
. Meanwhile , HHS Secretary
Sylvia Burwell is saying she believes that the subsidies will be held up by the Supreme Court . About 87% of those who purchase d i nsurance on the
exchanges so far have qualified for some kind of subsidy.

Flu is reaching epidemic proportions in some states, 43 states across the country
reporting extensive flu outbreaks statewide. The CDC warns not enough
Americans are protecting the mselves with flu shots. This year’s strain is
expected to lead to more hospitalizations and deaths than in year s past.

Meanwhile , 2015 may turn out to be the year of the wearable device . The
Consumer Electronics Show in Las Vegas showed a vast array of medical apps
and wearable devices that do all kinds of data tracking , extensive kinds of
diagnostics that can determine things like ear infections, do EKGs on your
smartphone , and track your sleep patterns , a quantified patient movement getting
more tools to keep track of all that personal health data. Last year , 47 million
Americans used some kind of tracking device to log exercise , completed miles
run, calories consumed, all of which is expected to positively impact health over
time . And need to lose 10 0 pounds or so ? Study shows a positive health impact
of bariatric surgery can linger for decades as morbidly obese achieve normal
weight after the gastric bypass surgery. Study shows it extends the length of life
significantly in many patients over time .

I am Marianne O'Hare with these Health Care Headlines .

(Music)

Mark Masselli: We are speaking today with Uwe Reinhardt, James Madison
Professor of Political Economy and Professor of Economics and Public Affairs at
Princeton University . Professor Rein hardt is considered one of the nation’s
leading experts on health care economics. He has been a member of the
Institute of Medicine since 1978. Professor Reinhardt is a t rustee of Duke
University and Duke University Health Systems, and is a member of num erous
editorial boards including Health Affairs , the New England Journal of Medicine ,
and the Journal of American Medical Association. He earned his PhD in
economics from Yale. Dr. Reinhardt, welcome back to Conversations on Health
Care.

Dr. Uwe Reinhar dt : Pleased to be back.

Mark Masselli: So lots of good things have been happening with the Affordable
Care Act , and certainly the online portals , and yet the landscape is fraught with
change. There both sort of political and potential legal problems lo o m large on
the horizon. We have many states who are still refusing to expand the Medicaid
and setup the stand - based insurance s , and we certainly have the Supreme Court
soon to take another crack at the ACA. As a leading health economist, you have
been a ble to analyze the ACA from a uniquely informed v a ntage point. So how
do you think it's going overall?

Dr. Uwe Reinhardt : After the first rough introduction in 2013, I think it's running
much more smoothly , in many ways reaching its intended objective w hich was
very simple , to give the peace of mind and access to health care that comes with
having health insurance which is enjoyed by 85% of the population as a matter
almost of right, and only 15% or 50 million were excluded from that social
contract. So in that regard, I think it's doing what it was supposed to do.

Margaret Flinter: Well Dr. Reinhardt , you have described the Affordable Care Act
as maybe the best we could have done under the circumstances . But contrary to
public opinion, you have also said you think it's a surprisingly simple law perhaps
relative to just how complex the American health care system is, and I think you
have gone on to say that at best it's a ban d - aid on a broken health care system .
Can you elaborate for us on just what m akes this t ask of health reform in this
country so utterly challenging , and what didn’t the ACA accomplish?

Dr. Uwe Reinhardt : Well long before there was talk of President Obama or ACA,
I remember giving a talk at a Congressional retreat , where I showed them the
complexity of the American health insurance system. So we have a single pa yer
system f o r the elderly , except the 25% of those who choose to go into private
health care plans. We have 50 state Medicaid programs , they are also single
payer governm ent - run programs like Canada’s. We have purely socialized
medicine . We have that reserve d for the American veterans. It's called the
Veterans Administration system, and most Americans don’t realize that it is the
most socialized approach to health care you could have, and that’s where we
have put the veterans . And then we have a complete mismatch of systems
under the private employment - based health system, then we have the individual
market, and then there is QMB, Qualified Medicare Benefits , SLMB, Spec ial
Medicare Benefits and so on, and it look ed like a Mondrian painting.

Now I ask ed these Congressmen “If you want to reform any piece of this
patchwork , you are going to touch all the other patches, and you have to in your
legislation think how does the ‘ no proposal ‘ link to all these other ,” and that is
why every single health reform plan is a huge mes s , why, because the system is
a huge mes s . The entire American health insurance system by international
standards is a huge b e wildering , incomprehensible mes s, and to try to fix it
without touching all these pieces, you can't . And therefore , any bill , other than
the bill that doesn’t do anything which has been the alternative so far , will be
complicated, and in that sense, the ACA is actually simpler than the existing
system.

Mark Masselli: You know, as we look back at the sort of formation of the ACA,
there were lot of chefs in the kitchen helping with its creation. One of the chefs
was Dr. Jonathan Gruber, an MIT economist, who h elped craft the
Massac husetts Health Reform before advising the White House and the ACA ,
and you have lauded Dr. Gruber a s one of the great minds in health economics.
But he recently found himself in the (inaudible 10:59) if you will, for some of his

recent comments . Certainl y the words ‘ stupid ’ and ‘ Americans ’ came together in
that, and you were just talking about the real complexity I think even for the
informed. But you took on this issue in the Health Affairs blog and tr ied to sort of
look at the difference between maybe ignorance and stupidity , maybe you can
inform our listeners what you were trying to get out in your blog.

Dr. Uwe Reinhardt : Before writing it , I actually looked it up in the dictionary, and
stupid means unable to learn . That is decidedly not true of th e American people .
We are pretty quick learners. Ignorant means poorly informed , a lack of
information, and there , I would say Americans cannot possibly say they are very
well - informed because ask yourself who would have informed them . Do you
think MSNB C inform s people very well ? Do you think Fox News inform s people
very well ? It's very, very difficult to accurately inform any people about
something as complicated as the Affordable Care Act , or for that matter, cap and
trade or tax reform . To inform t he voter s properly is a monumental task, and
therefore , ignorance isn’t a shameful thing. I am totally ignorant on climate
control. I am not ashamed of that . Why? I don’t have time. I leave that to my
colleagues at Princeton who specialize in climate control . The trouble with
economics in general is that every cab driver think he is a fully trained economist.
They are not , and that’s what I mean by ignorant. The American people are very
poorly informed on the ACA , and Kaiser Family Foundation has ru n survey after
survey showing that Americans are ill - informed.

Margaret Flinter: Well, you know, it's complicated for those of us who live and
breathe health care reform all the time, but there were a few key areas that just
end ed up being points of conf usion, and I think one of the m was around th is
notion of choice , consumer - driven choice , and you have noted that in selling the
idea of health care for all American people under the ACA . We needed that
notion of consumer - driven choice. You have used a gr eat example I think of high
deductible plans that could in fact leave customers vulnerable to much more out -
of - pocket or higher health care expenditures , and you use the term rationing by
income . What do you mean by that?

Dr. Uwe Reinhardt : There has al ways been a f raction of ideological thinkers, but
also among economist s that says “You really want to have the patients ’ financial
s kin in the game of health care because if you cover everything from the first
dollar on, people will over - consumer health ca re because they think it's free. ” So
in particular , the economics profession has always argued people should feel
fiscal pain as they consume health care. Now when you do that though , you
have to realize you are basically saying that you want to ration p art of health care
by income class. Think of a family with $5,000 annual deductible . If that family
has an annual income of $30,000 , they will very often forego health care when
they actually think they need it . If they are a family with $200,000 with $ 5,000
deductible , wouldn’t be fa z e d at all ; their behavior in health care wouldn’t be
change d at all. When we want to go to doctor, we go. Deductible doesn’t deter
us at all . But it would deter a waitress. S o therefore , instead of saying

consumer - drive n health care empowers you , that ’s such deceptive language.
Wh y don’t you just speak English and say, “Yeah, we want to control health care
cost in part by rationing by income class, and that’s what we are going to do , and
rich people , yes, will have bett er access to health care than poor people. ”

Mark Masselli: We are speaking today with Uwe Reinhardt, James Madison
Professor of Political Economy and Professor of Economics and Public Affairs at
Princeton University . Professor Reinhardt is considered on e of the nation’s
leading experts on health care economics. And let’s talk for a moment about the
ultimate goals of health reform , or at least one of them bottom - line would be cost
containment . And you are a firm believer that physician compensation shou ld be
directly tied to performance and quality of care, and now we are starting to see a
shift in the landscape moving towards compensating providers and physicians for
value not for volume . What need s to be done to incentivize and accomplish real
value i n he alth care?

Dr. Uwe Reinhardt: One of them is to control the annual national health
spending, the spending on health care . The other issue is getting better value for
the dollar , reduce d spend , and those actually are separate issues . To get better
v alue for the dollar, if you look back in the last 40 years, we paid for a lot of junk,
a lot of unnecessary care that really should never have been purchased , for
example , MRIs that were really not needed, operations that were not needed ,
and we should no longer pay for those. So that is what we now mean by value -
based health care . Actually, a better term would be not paying for junk anymore
or for unnecessary stuff anymore . That is one issue, so that when we do pay
money for health care, we actually get something that makes a clinica l benefit in
return . I think that’s a reasonable thing to ask, no matter how much you spend
on health care .

The other one is cost control really means saying “We are spending 17% of our
GDP on health care . No other country spends more than 11% , so we should
somehow manage to get by w ith spending only 15% on health care .” That’s sort
of spending control, and that’s a different issue where sometimes you might say
you might want to forego even clinical intervention that has s ome benefit, but
those benefits aren’t worth the cost of the intervention. For example , where a
doctor say s “Well if I had one more MRI , it could marginally change my
diagnosis, but the probability is quite low, but having an extra MRI could sharpen
it a bit .” May be in that case, the extra $1000 that MRI cost s isn’t worth it. That
is cost control , which means you sometimes withhold even clinically beneficial
services, but they are only marginally beneficial.

Margaret Flinter: Dr. Reinhardt , you have s ort of synthesi zed to say we are
heading towards a three tier system in health care with a third of the nation
covered by Medicare or Medicaid, a third that will wake up and wish they were
Canadian , which has a single pa ye r approach to health care , and the n a third

tier , kind of upper echelon that will increasingly seek boutique - like coverage and
more con cierge care, and is it three tiers all with equal potential for quality?

Dr. Uwe Reinhardt: No , it's different degrees of quality . I am really thinking , just
like housing , we have housing for very rich people, we have sort of middle class
housing , and we have housing for the poor , and I think our health system is
lumbering towards th is sort of arrangement where the quality of the health care
experience th at people have in America will vary by income class . If you are very
poor, you will get health care , but it may be in very sparsely equipped facilities . If
you work for a corporation , it depends how rich you r paycheck is . Then of
course , if you are rich , and there is a growing number of fairly well - to - do people,
you can have boutique medicine Disneyland, immediate access, where you have
24 hours per day access by cellular phone to some primary care physician , and
they will arrange stuff for you.

Mark Ma sselli: Dr. Reinhardt , I wonder what happens to our larger economics if
we have a dramatic reduction in the amount that we spend on health care? What
if we were at 17% but actually got great value, would you have any problem with
it?

Dr. Uwe Reinhardt: You know , you are raising one of the most sophisticated
questions in health care that rarely is ever put . Health care is actually part of
GDP . I remember the very first speech I ever gave was in 1976 on the
imperative of cost containment . I showed it t o my wife . She looked at it , and
said , “It is elegant but trash, ” and I said “well, what do you mean by that, ” and
she says “you take it as a pr e mise that we have to control health care cost ,” but
she says “ have you ever worried how much money America spe nds on trucks ,’
and I said “ no , I haven’t .” She said, “So why pick on health care ?” “ Health care
is part of the GDP ,” she says, “ the real issue though , a n economist would tell
you , is if the health care you produce is really unnecessary , then that is not good
job creating .” But I personally believe that a lot of health care is actually highly
valuable . I mean you look at sale value . Everyone hammers around a $1000
pill, but don’t tell me that isn’t a high value product. If all of a sudden we spent a
w hole lot less on health care , there would be a lot of unemployed people, and the
question then is what else would they do . But what you just ask ed me is rarely
ever ask ed , and yet it is an important issue.

Margaret Flinter: So let me use the example you just raised of Hepatitis C and
Sovaldi of where are patients with Hepatitis C most likely to be found in terms of
their insurer . I bet many people have raised this to you since that whole debate
unfolded , and what do you say to these state governments an d health care
systems about the need to make an expensive investment in curing a disease
that otherwise is highly likely to lead to long term disability and premature death ?

Dr. Uwe Reinhardt: Well , I think you could teach a whole university course just
about Sovaldi because it raises all th e s e economic , political and ethical issues .

We are basically being challenged by Sovaldi to say how much is the life of
someone in jail with Hepatitis C worth to you , the church or synagogue - going
tax payer. Right? T hat’s an extremely naughty thing for Sovaldi or Gilead
Sciences to do, but they confront ed us with that question , and I have to say so
far , to my amazement , American society has said “We are willing to pay it . The
life of even someone in jail is worth it to us .” One would have to say that it's quite
admirable for those who have that ethical bend .

On the other hand you could also ask, is it really necessary to pay Sovaldi a
$1000 a pill to get innovation in health care , and there I would say well actually
not really, because Sovaldi bought the company that invented the drug for 11
billion . Producing the drug is not that expensive, but the revenue they expect
from it is something like $270 billion . I think if they made only $150 billion, they
would still be very richly rewarded . So you can at that plane also say “You know ,
what , we will pay you $700 a pill , and you still make out like band - aid , and think
of the tax payer too because we have schools to pay for, we have police to pay
for, fire brigades to p ay for, and you have to help us manage our budget too. ” So
you could see this as an issue where there isn’t a clear answer . I could see
Solvadi saying “Look, given what you have already spen t on Hep C for interferon
and for transplant, what we are offeri ng you is no more expensive ,” which is true ,
“ and so we are really just shadow pricing , we s aw what you were willing to
spend, we will charge you a little bit less , and given you were willing to spend
that already , why complain about us ?” And that’s Gilea d Sciences’ point of view .
And this I point out to my students , “As you become an adult , you will realize
some things don’t have crisp answers . May be the Pope knows it , but I sure as
hell don’t.” And I have a PhD , which is great for a mission, I don’t know . I would
say one of the nice thing s you can learn at Princeton is how many of life ’s
question s don’t have a simple answer.

Mark Masselli: That’s right. We have been speaking today with Dr. Uwe
Reinhardt , James Madison Professor of Political Econom y and Professor of
Economics and Public Affairs a t Princeton University. You can learn more about
his work by going to www.princeton.edu/~reinhard . Dr. Reinhardt , thank you so
much for joining us on Con versations on Health Care.
Dr. Uwe Reinhardt: It's been a real pleasure.
(Music) Mark Masselli: At Conversations on Health Care, we want our audience to be truly in the know when it comes to the facts about health care reform and policy. Lori Roberts on 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 do r etiring members of Congress get free medical care for
life ? No , they don’t . A chain e - mail about House Minority Leader Nancy Pelosi
makes that false claim, and also greatly exaggerates what Pelosi could receive
as a pension. We will stick with the healt h care claim. Members of Congress
don’t receive free health care while they are in office or upon retirement. Under
the Affordable Care Act beginning in 2014, insurance coverage for members of
Congress switched from the Federal Employees Health Benefits Program , that’s
the government ’ s employer - sponsored private insurance market for federal
employees , to the health care marketplaces created by the law. Under both
systems, workers and the government both pay for insurance coverage . Like
most employer - spo nsored plans , the government pays a certain percentage of
premiums , in this case 72% , and the workers pay the rest.

That’s still the case for Congressional retiree s. They don’t get free insurance ;
they pay the same share of premiums as active federal emp loyees . According to
the Office of Personnel Management, retirees will be eligible to purchase
insurance through the Federal Employees Health Benefits Program if they meet
certain criteria . They must be eligible for retirement , and they must have been
co ntinuously enrolled in one of the governments ’ employer - sponsored health
plans for five years before retirement. And that's my fact check for this week. I
am Lori Robertson, Managing Editor of FactCheck.org .

(Music)

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 www.chcradio.com . We will have FactCheck.org's Lori
Robertson check it out for you here on Conversations on Health Care.
(Music) Margaret Flinter: Each week, Conversations highlights a bright idea about how to make wellness a part of our com munities and everyday lives. It's a known fact
that the current generation of American children is more obese than any previous generation, and at Washington DC Community Health Center , Unity Healthcare,
a pediatrician was in a quandary over how to tackle this growing health scourge .
He began with a unique solution targeted to a teen patient whose Body Mass
Index or BMI had already landed her in the obese category. What he did was write a prescription for getting of f the bus one stop earlier on her way t o school,
which mad e her walk the equivalent of one mile a day . Dr. Robert Zarr of Unity
Community Health Center understood that without motivation to move , more kids
just might not do it. The patient complied with the prescription and has move d
from th e obese down to the overweight category, certainly an improvement. He
then decided to expand this program by working with the DC Parks Department,

mapping out all the potential walks and play area kids have within the cit y’ s
parks , mapping 380 of them so far .

Dr. Robert Zarr : How to get there? Parking , is parking available if someone is
going to drive? Bike racks , t here is a section on pets, park safety.

Margaret Flinter: Dr. Za rr writes park prescriptions on a special prescription pad
in English and Spanish with the words Rx for outdoor activity and a schedule slot
that asks when and where will you play outside this week?

Dr. Robert Za r r: I like to listen and find out what it is my patients like to do and
then ga u ge the parks I prescribe based on t heir interests, based on their
schedule, based on the things they are willing to do.

Margaret Flinter: Ultimately , Dr. Za rr says with some 40% of his patient
population grappling with overweight or obesity , he wants to make the
prescription for outdoor a ctivity adaptable for all of his patients , and adaptable for
pediatricians around the country. He is planning to create an app for his parks
database where providers and patients a like c an use it , and one day he would
like to be able to track his patients ’ activities in the parks. Rx for outdoor activity ,
partnering clinicians, park administrators, patients and families to move more
yielding fitter , healthier young people , now that’s a bright idea.

(Music)

Margaret Flinter: This is Conversations on Hea lth 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 www.wesufm.org an d brought to you by
the Community Health Center.