Healthcare Reform: A Guide to the Affordable Care Act

Eli Y. Adashi, MD; John E. McDonough, DPh, MPA


October 21, 2011

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Eli Y. Adashi, MD: Hello. I am Eli Adashi, Professor of Medical Science at Brown University, and host of Medscape One-on-One. Joining me today is Dr. John McDonough, Professor of the Practice of Public Health with the Harvard School of Public Health. Well-schooled in both academia and government, Dr. McDonough is the author of a new book, his third: Inside National Health Reform. Welcome.

John E. McDonough, DPH, MPA: Thank you.

The Hammering Out of Healthcare Reform

Dr. Adashi: It's wonderful to have an opportunity to discuss this rather insightful book, which I had the pleasure of reading through this past weekend. Perhaps we can begin by asking, where were you when the Healthcare Reform Bill was being hammered out?

Dr. McDonough: Just to back up a little, before the National Health Reform process I had spent my career in Massachusetts in academia, in the state legislature, and I was centrally involved in the formation of the Massachusetts Health Reform Law in 2003, otherwise known as "Romney Care" to many people. In 2008, Senator Ted Kennedy, anticipating a drive to do national health reform, asked me if I would come to Washington DC and work in the Senate and try to help folks figure out how we might structure National Health Reform.

I started in the US Senate in June 2008. I worked for the Senate HELP Committee -- Health Education, Labor and Pensions -- which is one of the two principal committees in the Senate with jurisdiction on health policy, the other being the Senate Finance Committee. I worked there from mid-2008 through early 2010. I left in early 2010, I spent some time here in New York as a visiting fellow at Hunter College, and that's where I was able to find the time to write this book.

Dr. Adashi: You really were there before, during, after, and, in a sense, at the very heart of the process.

Dr. McDonough: Yes. I really peg the official start of the process on June 22, 2008, when Senators Max Baucus and Chuck Grassley from Iowa, a Republican from Iowa, held a major summit on Capitol Hill at the Library of Congress to launch the health reform process. And it was a very positive, bipartisan day, where everybody was saying failure is not an option, and we all agree doing nothing is not an option. It was a very positive time that is hard to remember right now with how much things have transformed downward as the feelings around health reform have become so harshly divisive and partisan. But it started out very optimistically. I started out at Senator Kennedy's request and I was there through most of the process.

Explaining the Affordable Care Act

Dr. Adashi: Your book is divided essentially into 2 major parts, the first of which describes the process in great detail and with remarkable insight. The second part is more about the structure of the law and I just wanted to spend a minute about that. To the detractors of the Affordable Care Act, this is a monumental structureless document that has been described either as incoherent or unwieldy, or worse. What's your view of the Affordable Care Act having seen it being generated, having poured over it obviously multiple times? What would be a fair description of the coherence and structure of the law?

Dr. McDonough: First, it is a landmark law. There is no doubt about that. Whether you think it's a landmark good law or a landmark bad law, it's a landmark and its only peers in US social policy are the 1935 Social Security Act and the 1965 Medicare and Medicaid Act. This is a law that doesn't come along every session, every decade, every generation; this is once every other or every third generation.

The law is big, complicated, and somewhat unwieldy, just like the US healthcare system is big, complicated, and unwieldy. If you're going to try to do a comprehensive reform for a big unwieldy system, the law itself is going to be big and unwieldy. I do a huge amount of talking around the country to all kinds of audiences, comprising very informed people and regular citizens, and what I find across the board is that everybody has a strong opinion about this law. They like it, they hate it, they like this, they hate that, although very few people say to me that they feel like they have a good understanding of the law itself as a law. What I do in that second chapter that you reference is I get into the guts of the law to try to explain it. The best way I can describe it is -- just like a book has chapters and an act has plays and scenes, and a baseball game has innings -- a federal law or a federal statute has titles, and the Affordable Care Act has 10 titles. When people understand the architecture of the law, the structure, and how those 10 titles work, the law makes a lot more sense and it becomes more accessible for people to understand it. People have heard about this provision or that provision, but have no sense of a coherence of the whole.

The 10 Titles of the Affordable Care Act

For example, Title I is a revolution in terms of private health insurance in the United States. If it is implemented by 2014 as designed, health insurance in the United States will never be the same. Title II is a revolution in terms of the structure of the US Medicaid program and the relationship between the federal government and the states. Title III is some fundamental changes in our healthcare delivery system to improve the quality of care for all Americans and to make major significant changes in Medicare. Title IV is all about prevention and wellness, and trying to create a structure where we try to help people and not just wait till they get sick. Title V is all about the healthcare workforce. Title VI is a little bit of a grab bag, fraud and abuse, transparency, elder justice, comparative and clinical effectiveness research. Title VII creates a pathway for the US Food and Drug Administration to approve what are known as "biosimilars," generic-like biopharmaceuticals. Title VIII is a new national disability program called CLASS or Community Living Assistance Services and Supports. Titles IX and X are the revenues to pay for about half the law. And if you look at the law along that kind of a structured way, believe it or not the law itself can actually become accessible and starts to make sense. You can actually begin to see what folks were trying to do, and why it came together and why it is the way it is.

What I try to do in that big second part of the book is have a chapter on each of the 10 titles that tries to convey to people what is this title, what makes it tick, why did it come together the way it did, what are some of the interesting compelling stories that were involved in the creation and structure of that title. That's really the part that I'm hoping that people will have the patience to get into. I think if they have the patience and they get into it, they're going to be surprised by how interesting and compelling a lot of these stories can be.

What Role Did Physicians Play in Healthcare Reform?

Dr. Adashi: The simple point is that unless one actually appreciates the existence of such inner structure and the logic thereof, it is easy to get thrown off by this or that section, which is probably the most likely piece of the law that your average individual would likely be exposed to.

Our viewers undoubtedly would be interested in what is expanded on in the first part of the book, and that is the relative role of the various actors in the drafting of the law, be it the legislators, the Hill staffers, the White House staffers, interest groups, how is that process transpiring in general or even more importantly how did it take place or shape up in the context of the healthcare reform bill?

Dr. McDonough: It was an immense process. It involved literally hundreds and hundreds of Capitol Hill staffers, hundreds of people from the administration, hundreds of members of Congress, and literally thousands of people, thousands and thousands of people who tried to influence and shape and direct this process. And again, if you want to understand who was most influential in which piece or not, you really have to almost look at it through the titles because there are some interest groups that were heavily influential. Physicians, for example, were deeply involved particularly in Title III, around the delivery system reforms and the quality of care and the Medicare issues in particular. They were more tangentially involved in the others, but in the areas where they chose to put their effort and their attention, they were hugely influential in the process. They didn't get everything that they wanted. In fact, they didn't get the major thing that they wanted. The major thing that physicians really wanted was to eliminate the curious payment situation in Medicare and to eliminate this formula that's been lost since 1997 called the SGR or the sustainable growth rate, which has created this ongoing, unfolding crisis in Medicare physician payments for more than a decade now.

Dr. Adashi: Yet to be resolved.

Dr. McDonough: They didn't get that done and that was a major disappointment and literally everybody, I think, wanted to do it. But, at the end of the day, the price tag of resolving it was so high that it couldn't get through with all of the other pressures. But physicians had an awful lot to do in terms of the physician quality reporting elements of the law, the improvement of care in terms of readmissions, and healthcare-associated infections; they were central players in a lot of that as were the hospitals. I would say pretty much any major organization that wanted to be a part of this process could get in, get at the table, and have influence. I don't think any group got everything they wanted. Everybody came away with some disappointments, as it should be.

It's a controversial process, and some people say, "Oh, it went so fast, they rushed it so much," and other people say, "Why did it take so long?" The truth is both of those perspectives are true. It did take a darn long time, a lot longer than anybody thought it was going to take. I mean when we were in the middle of it in the summer of 2009, I said to some people, how long is this going to go on? They said, "Well this will be done by Thanksgiving, Christmas at the latest of 2009." It got done at the end of March 2010. It went on for about 3 months longer than anyone imagined it could go on.

At the same time, it went pretty quickly relative to some of the other efforts in the past like the Clinton effort in 1993-1994, which started in January 1993 and didn't really come to its sad end until September of 1994 about 20 months later. But lots of key groups and certainly physicians had prominent seats at the table and you can see their fingerprints, and the results of their efforts throughout, not as far as they would like, but certainly in meaningful significant ways.

What Were the High Points of Drafting the Affordable Care Act?

Dr. Adashi: Like any process that involves that many people over that long a time, there must have been high points and there probably were low points, and you were in a unique position to observe and to pass some of those judgments. As you reflect, if you had to point out or pick a particularly rewarding high point, what would that be?

Dr. McDonough: It would be July 15, 2009, when the Senate HELP Committee, on which I was working as a staffer, finished one of the longest so-called markups or the sessions where you consider the Bill and every member of the committee has the chance to propose their amendments and they argue and fight it out, and this went on for about 30 days. This was one of the longest senate committee markups in the history of the US Senate. A lot of folks thought that the process would just collapse on its own weight. When we went through this process, we had about 900 amendments that had been filed by members and any member could bring up any amendment they wanted, and the Republicans were opposed at that stage of the process, so it was not a friendly process. When we did finally reach the end, we were the first committee in either the House or the Senate to finish deliberations of the Bill and there was this sense of yes, this is real. Yes, this is moving forward and we might actually after 100 years of failure get something done. I would say that was probably a pretty significant high point for me.

What Were the Low Points of Drafting the Affordable Care Act?

Dr. Adashi: That process was shepherded by Senator Dodd I recall, and he was probably deserving of significant credit. On the other hand, if you had to think about a particularly disturbing low point in the process, what would that be?

Dr. McDonough: I would say it was close. Following up to the high point of the Senate HELP Committee finishing its markup, a few weeks later we went into August 2009, and it was the summer of those intense town meetings where the Tea Party folks made their first appearance and started this extraordinarily rancorous set of town meetings where there was yelling and shouting and pushing and shoving and it got pretty ugly. It didn't have the impact they thought it would have on Democrats in terms of freezing them, intimidating them, making them go back. It did though have that kind of an impact on a significant number of Republicans. There were 2 groups of Republicans as we got into this. There was 1 group that was very interested in making this work and finding a bipartisan solution. Perhaps if I would single out one, I would single out Senator Grassley from Iowa, the ranking member on the Senate Finance Committee who appeared on Fox News in June of 2009, and he was asked about the so-called individual mandate. He said, listen, if we ever want to fix this healthcare system, we just have to be grown-ups and understand there's no way to do it without having some kind of a mandate in there so that people aren't gaming the system and forcing costs to rise. We were all very heartened by that. Then 3 months later, in September he appeared on Fox News and he said the reason he opposed the legislation is because of the individual mandate. What changed in those 3 months?

The most striking thing that happened was at the town meetings in August of 2009 when there was so much anger directed at him, I have a photo in the book of one of his constituents holding a sign that says, "Grassley, you're fired." (The anger) was less aimed at the Democrats and more aimed at the Republicans. That whole month was one of real concern and worry that the whole thing might be going down the tubes and we might end up once again, as has happened so many times -- 8 times before -- where we go through this process and nothing happens.

Will the Affordable Care Act Survive Efforts to Repeal It?

Dr. Adashi: You more than most are probably aware that the Bill is under legislative pressure, under legal pressure, and through the creation of the Congressional super committee and the Budget Control Act, is probably under fiscal threat as well. Two questions, first of all as a true insider with unique insight on the law, what is your sense, and I know prophecy is beyond our reach, but what is your sense of the longevity of the law and how it will emerge on the other side with so many variables at play?

Dr. McDonough: Many people are assuming that the fate of this law will be decided next year in 2012 by the US Supreme Court because of the federal lawsuits, and I think right now we can see that that prediction is probably not correct because there are now 3 courts of appeals, 3 federal courts of appeals that have issued rulings; 2 of them have issued rulings favorable to the law, 1 unfavorable, but the truth is that all of the contested terrain within the law right now boils down to just 1 section in Title I, which is the individual responsibility requirement or otherwise known as the individual mandate. My belief at this point is that far more significant than what the Supreme Court does, is what will happen on November 6, 2012, the next federal elections. Let's consider 2 hypothetical situations. First let's assume that the US Supreme Court upholds the individual mandate, says it's constitutional, no problem. All the legal action's done, and let's say that in November of 2012, Republicans hold the House, take the Senate, and take the White House. I think it is fairly reasonable to predict that early in 2013, the Republicans will come in and through some kind of a budget reconciliation vehicle, where they only need 51 votes in the Senate, will repeal most of the Affordable Care Act, certainly all of the big expansions of Title I and Title II, all of the revenues to pay for it, a large part of this law will just be gone, if they do that.

Let's consider the other situtation, let's say the Supreme Court sometime in 2012 strikes down the individual mandate, says it's unconstitutional, and in November 2012, Democrats hold the White House, hold the Senate, and take back the House. I think I'm fairly comfortable to predict that in that situation, in early 2013, the Democrats will come in and through a budget reconciliation vehicle where they only need 51 votes they will change 1 word in Title I of the law. They will change the word penalty in the individual mandate to tax and make it a tax penalty. If they do that, there is no constitutional issue relative to the law because it is a tax and Congress has pretty broad authority to raise taxes. So what we are seeing, what we are leading up to is something really extraordinary in American political history and I can't think of a parallel. November 6, 2012 is almost going to be a national plebiscite on this law. Most people who go to vote on November 6, 2012 will be voting on the economy and on who knows what, gay marriage, foreign policy, whatever, not on the Affordable Care Act. But the results of that election if they go 1 party rule in either direction will be profoundly influential in terms of the fate of this law. This is really new territory and a new political kind of event that I can't see a parallel to in legislative political history.

What Effect Will the Budget Control Act Have on Healthcare Reform?

Dr. Adashi: Putting aside these very possible scenarios, and isolating the discussion to focus on the Budget Control Act, what threats do you see from that process, which is bound to create some cuts in the budget by one mechanism or another. What implications do you see in that process to the Affordable Care Act?

Dr. McDonough: Under any scenario related to the super-committee, there may be some slight damage to the Affordable Care Act and no major significant damage to it. If the automatic cuts take effect, the access expansions in Title I and Title II will not be touched. Most of the other aspects of the law will stand. It is hard to conceive of the Democrats on the super-committee agreeing to changes that would represent a significant undermining of the law. We don't really see that. In some ways, I'm reminded of Bill Clinton, in his early years. If you remember what happened with Bill Clinton, in 1993 and 1994 there was a lot of activity, a lot of stuff got done, not healthcare, but a lot of other stuff. He ran into a tough midterm election and lost the House and the Senate. Then in 1995 and 1996, there was a lot of sound and fury, a lot of people arguing, government shutdowns, and all kinds of things. Substantively, little or nothing happened in that 2-year period.

Then, the presidential election happened, we saw Clinton was reelected, the Republican House and Senate were reelected, and they came back in 1997 and they did business. There was the Balance Budget Act and things got straightened out. We can almost see a parallel. Barack Obama had 2 very productive first years, including getting health reform done; ran into political trouble in 2010 because of the economy, lost the House, and now we're seeing a replay of 1995 and 1996 with a lot of smoke, a lot of fury, a lot of thunder, people arguing with each other. These are all big dangers. And, at the end of the day, I think at the end of this 2-year period we're going to look back and say, "there was a lot of sound and fury and very little got done." Then after the presidential election we hope in 2012, people will say, "Okay, time to come back and get some real work done."

Historically, Has a Healthcare Law Ever Been Repealed?

Dr. Adashi: At the least, one would have to say that this is an incredibly fluid time in American political history in general, and in healthcare in particular, which brings me to my penultimate question, has a healthcare law of consequence ever been repealed?

Dr. McDonough: Yes. In July 1988, Ronald Reagan's last year as president, with overwhelming bipartisan support in the House and in the Senate, President Reagan signed the Medicare Catastrophic Coverage Act. The biggest set of changes to Medicare since the program has been created in 1965 including the creation of a prescription drug plan for Medicare enrollees and a financing plan that had higher income Medicare enrollees paying higher premiums than they had been paying. After the law was passed, the higher premiums went into effect right away and the benefits were to be put in down the road. As the higher payment requirements came in on those higher income enrollees, they had a revolt and an immense political storm ensued, Lots of folks ended up protesting the law who weren't subject to those higher payments at all, they assumed that they were going to be and they weren't. There was such a storm that, less than 18 months later, in November 1989, President Reagan's successor, President George H. W. Bush, signed into law a complete repeal of the Medicare Catastrophic Coverage Act. Happily, right now, the Affordable Care Act has lived a longer life since its signing than the Medicare Catastrophic Coverage Act, but it certainly is a historical precedent that gives pause.

That is one of the reasons why in Title I of the law, there were a set of changes to insurance markets to benefit consumers that went into effect within 6 or 9 months of passage of the law to try to avoid that ugly precedent from 1988 through 1989. For example, beginning in September 2010, parents could keep their children up to age 26 on their family health insurance policy, and according to the census data that recently came out, we've now had more than a half million young adults take advantage of that single provision. For just about every other age cohort over the prior year, the rate of being uninsured has gone up. For young adults, who are part of the population with the highest rate of being uninsured, the rate of being uninsured actually dropped between last year and this year by 2%. We can see those benefits and there are a lot more. There's closing the donut hole for seniors.

Dr. Adashi: The Patient's Bill of Rights.

Dr. McDonough: Yes.

Dr. Adashi: The lessons are benefits first, penalties later, and beware of the wrath of Medicare beneficiaries.

Dr. McDonough: Absolutely.


Dr. Adashi: On a personal note, you were a state legislator, a nongovernmental organization executive, an academic, a Hill staffer, and an author. Can you connect those dots for us, what is the common denominator of this very rich, professional life that has many good years to go?

Dr. McDonough: I would just say I have real trouble holding down a job. I'd say the string that ties it together is the relentless desire by so many people in the United States to try to improve the US healthcare system, which has just so many flaws and so many extraordinary opportunities for improvement. I became a friend, back in 1991 when I was in the Massachusetts legislature, of Dr. Don Berwick who is, at least until the end of November, the administrator for the Centers for Medicare and Medicaid Services. One of the things I learned from him right at the start was just a little saying. He said, every defect is a treasure, because every defect provides the opportunity to improve things and make things better. If you can't see the flaws and the defects then you don't know what to fix. And so, with our healthcare system, we have so many abundant, glaring, monumental flaws and so we have extraordinary improvement opportunities. Since I internalized the quality improvement paradigm back in 1991, I have been one of the journeyers on the path to try to figure out how can we improve this system and make it work better so that people get the healthcare services they need, we provide preventive care, and we do right by patients and healthcare consumers. That's what's driven me in all of my various pursuits.

Dr. Adashi: So it's the challenges and the opportunities. Thank you.

Dr. McDonough: Thank you.

Dr. Adashi: On this note, sincere thanks to Dr. McDonough and to you our viewers for joining Medscape One-on-One. Until next time, I am Eli Adashi.


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