The ACA and the Supreme Court: What Are the Scenarios?

Eli Y. Adashi, MD, MS, CPE; Stuart Altman, PhD


March 16, 2012

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In this segment of Medscape One-on-One, Stuart Altman, PhD, of Brandeis University, talks with host Eli Y. Adashi, MD, about US healthcare reform and the upcoming Supreme Court hearings on the Affordable Care Act. Altman is an expert in healthcare policy and has worked with a number of presidential administrations, including the administrations of Presidents Nixon, Clinton, and Obama.


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. Stuart Altman, the Sol C. Chaikin Professor of National Health Policy at The Heller School for Social Policy and Management of Brandeis University. Welcome.

Stuart Altman, PhD: Thank you.

Power, Politics, and Universal Health Care

Dr. Adashi: I would like to dedicate today's session to your recent book, the title of which is Power, Politics, and Universal Health Care. It is, for all practical purposes, a history of healthcare in the United States over the past 100 years. Since we can't cover it all, perhaps we can look at what's been happening recently, which has been very exciting.

Dr. Altman: Yes, it has been. I've been privileged of having lived and been part of this history for at least 45 years. And, as I look at the current environment under President Obama and the whole debate over healthcare reform, many people are asking, where did all this come from? How did we get here, and why is our system so complicated? That's what prompted me and my coauthor to write this book, because really, where we are is where we've been. If you go back in time, you will see that many of the pieces that are part of the current debate really go way back.

What is a big surprise to a lot of people when they read the book is how much of the Obama plan and the current health reform plan was put together under the Nixon administration in the early 1970s. I was privileged to have worked for President Nixon during the time and was very much involved, and if you put the Obama plan and the Nixon plan up against each other, I would say about 80%-85% is the same.

The Affordable Care Act: A Huge Initiative

Dr. Adashi: That is a very interesting point, which brings me to my first question: How did the President plan this huge initiative that ended up producing the Affordable Care Act?

Dr. Altman: There is no question that without strong presidential leadership, we would never have passed it or never will pass it. I worked for Senator Obama during the campaign, and many people told him to stay away from healthcare. It is a loser. It's too complicated, there are too many forces against you, why do it, and he was determined. He said it is too important, and I am going to make it a very important, if not the most important, part of my new administration. He was willing to take it on. I also worked for President Clinton during his transition and he also took it on, but I think he made some pretty fundamental mistakes, which ultimately led to it not being passed. Without strong presidential leadership, it would not have happened, and Obama had some important friends in Congress to help make it happen as well.

Dr. Adashi: If you were to try and summarize the ingredients that made it work this time around, what would you say those were?

Dr. Altman: There is no question that you need a strong -- unfortunately, and I don't want to be too partisan -- you need a strong, Democrat-controlled Congress. Universal coverage is not a Republican issue, even though, as I said, it was Richard Nixon who really pushed it forward. Now that's a story in and of itself, why an otherwise conservative president made it his issue. Even though I was there and lived it, if you really push me, I'd say it's hard to explain. But, for the most part, it's a Democratic issue and we would not, for example, have passed Medicare in 1965 had Lyndon Johnson not had a strong majority. That's very important.

You also need to be savvy about this thing. Americans are not ready for a revolution. There are a lot of people that want a single-payer system and to simplify the system, make it fairer. And I can understand that; I understand why they want that, but it's just not in the American character. You need to be savvy, and one thing that comes as a big surprise to most people when you talk to them, including I'm sure your colleagues, is that people say, "Well, yes, we need universal coverage, but even more important we need to control healthcare costs."

But you cannot do both of them together. Sure, theoretically it makes sense -- get a good system working together -- but add serious cost-containment, and you will turn a big group of supporters of universal coverage, including doctors, hospitals, pharmaceutical companies, and insurance companies, into antagonists, which is what happened to Bill Clinton. President Obama didn't do that. While people criticize the current healthcare reform for not controlling costs, I think it was very smart.

Let's Make a Deal

Dr. Adashi: In this context, you make very clear mention of some deals that had to be in place for this to fly. Can you expand on that?

Dr. Altman: President Obama made a commitment to the American people that this healthcare reform legislation would not cost the country anything -- easy to say, hard to do. Let me say a few things about that. First of all, it had to cover about 15% of our population, which amounts to give or take 50 million Americans. To do that is not cheap. But a lot of these people are either young and don't need a lot of healthcare or are already getting healthcare. As you know, billions of dollars of free care are provided every year by our hospitals and our doctors. So it wasn't that this bill added that much to healthcare. The best estimates are that it added only about a 1%-2% increase in healthcare spending. That adds up to almost $100 billion a year, but healthcare is very expensive.

But, when you add it all up, it still costs a trillion dollars over 10 years to do this, and where was the administration going to get the trillion dollars? What the Obama administration did is it went to each of the constituent groups, such as hospitals, and they said, you stand to gain upwards of $200-$300 million a year because now you're going to get your bills paid; before, you were providing free care. We want some of it back, and the hospitals agreed to give $160 billion dollars over a period of 10 years.

They went to the pharmaceutical industry, and they said, you're going to get your prescriptions paid for; you're going to have people who, before, couldn't afford it. We want (money) from you, and they gave a certain amount back. They went to the insurance industry, and they said, we're going to mandate that everybody has to have health insurance. You stand to gain a fortune, but we don't like the things you're doing, such as denying people coverage because they have preexisting conditions. We're going to wipe those out and, in addition, we want additional money. And the insurance industry, obviously not pleased with every aspect of the bill, still supported it.

What's most important, no healthcare group opposed this legislation. With all due respect, the American Medical Association, which has not been a big fan of universal coverage, supported it and continues to support it. Yes, deals were cut, and it was mutually beneficial for the healthcare community and for the administration to cut those deals.

Healthcare Reform and the "Gang of 6"

Dr. Adashi: That's very interesting. You also make special mention of Senators Baucus and Grassley, and then the so-called "Gang of 6."

Dr. Altman: Yes.

Dr. Adashi: Could you say something about how these actors influenced the process and, for that matter, the outcome?

Dr. Altman: I'd be glad to. You have to understand Congress. The Senate Finance Committee is a very key committee, for example, and it is chaired by Senator Baucus from Montana. And he is what you would think of as a moderate liberal; he's a Democrat, but he is not ready to turn over the whole healthcare system to the government. He very much wanted a bipartisan bill. He has had a long tradition of working very closely with Senator Grassley, who was the Republican majority. And he hoped that he could forge a compromise bill.

The so-called "Gang of 6" was made up of 3 Democrats and 3 Republicans. They tried to come up with a bipartisan bill. Senator Grassley, who's known for compromising, made it very clear that he was not going to go it alone. They had to come up with a bill that would bring a number of other Republicans along. He was not going to be the total flame-carrier. The majority -- the vast majority -- of the Republicans, from day 1, for a variety of reasons (some of them very political) were not going to give Obama a win on this. They had strong philosophical differences. The Gang of 6 worked very hard -- it took months -- but, at the end, they just folded their tent, and Baucus had to go it alone.

Speaker Pelosi's Role

Dr. Adashi: Speaking of credit, what can you tell our viewers about former Speaker of the House Nancy Pelosi's role in making this happen?

Dr. Altman: I would say she was very important. She is a single-payer supporter and sort of represents the so-called liberal arm of the Democratic party, but she had to recognize that in order to get this important legislation through, she was going to have to compromise her principles and put together a very moderate bill because in spite of the rhetoric, this is not socialism. This maintains a strong role for private insurance and private markets. It's a true compromise.

She agreed to compromise, but I think her most important point and where she deserves a lot of credit, is when our senator from Massachusetts, Senator Kennedy -- Mr. Healthcare -- unfortunately died at a critical time, and then surprise of surprises, was replaced by a Republican. It looked like healthcare reform was dead because, before his death, the Senate had only the 60 votes they needed to get this passed and avoid a filibuster.

It looked like gloom and doom after the recess, and there were many key people within the administration that went to the president and said, "Forget it. Maybe you should go for a little piece of legislation. You'll never get it through; don't waste your political capital." And Pelosi went to the President and said, "No, we need to make this happen. We will figure out a way." And he agreed, and he went against some of his advisors. The 2 of them, and a few others, pushed and came up with this strange animal in order to get it through. For that, she deserves a lot of credit.

How Would You Grade the Affordable Care Act?

Dr. Adashi: As key legislative achievements go -- and I'm asking a professor here -- what grade would you give the Affordable Care Act?

Dr. Altman: The pragmatist in me and, as someone who has been fighting this battle for 40 years, would give it a very high grade, like a B+ or A-. If you back away and ask, "If you didn't have all the political fights, could you design a better bill?" The answer would be "absolutely." But this is America, so you could say there's unfinished business. They didn't do cost-containment in the bill, and there are places in the bill that are poorly written. There were pieces of it that are inconsistent with each other. Ironically, what most people don't realize is that no one expected this bill to pass.

The way bills work is that the Senate passes a bill. Then, the House passes a different bill. Then, they have a committee and rewrite it. But they couldn't do that, given what I just said about the override, so they had to leave in place a bill written by the Senate that had a number of mistakes. So if you ask me technically what grade I would give it, it probably would be a C+. But in terms of politics and where we could be, I would give it a much higher grade.

Provisions That Should Have Been in the Affordable Care Act

Dr. Adashi: Speaking of which, and I realize the imperfections of the process, which provisions would you have liked to see in the Affordable Care Act that did not make it? Cost-control aside.

Dr. Altman: I liked it. While there is no cost-control in it, there are a number of provisions that set in motion some very substantial revisions in the way our healthcare system is designed and designed to operate. The Affordable Care Act integrates healthcare, giving much more power to primary care physicians and recognizing medical homes, but people need to know more. What most people have been focusing on is the part dealing with the individual mandate and whether that's constitutional or not.

From a health professional's point of view, it's the second thousand pages of the bill that really matter a lot. There were parts of it that could be written differently, but I personally -- maybe it was just my background, and the fact that I've been doing this for so long -- didn't come away feeling that there could have been much difference in it. Everything was compromised. They had to deal with hospitals that wanted certain things and physicians that wanted certain things. But I'm a creature of our system, so from my point of view, I don't know if it could have been much better.

The Supreme Court and the Affordable Care Act

Dr. Adashi: As we think ahead, it seems as if the next big road test is the hearing at the level of the Supreme Court. What scenarios should we consider in the wake of a Supreme Court decision? And obviously we have to consider 2 possible decisions: one that affirms the constitutionality of the individual mandate, and one that does not. Take us, to the best of your ability, through those 2 roads that might follow.

Dr. Altman: Okay, so let me put it in pieces. The reason why the individual mandate is so important is that currently, many Americans find that they cannot get health insurance. They have a preexisting medical condition, sometimes from birth, sometimes from some condition that they developed through life. And insurance companies either will not insure people who they know are going to cost them much more than they're ever going to pay in premiums, so either they deny coverage altogether, or they make them pay very high premiums that they can't afford.

The administration and, most Americans, think that's wrong. Under the Affordable Care Act, insurance companies have agreed to cover everybody, as long as the administration requires that every American be covered. The thing the insurance industry fears the most is that millions of healthy individuals do not buy insurance until they need it. You know, you have this view, I have this view, of somebody falling off of the roof and halfway down their spouse gives them an insurance policy to sign.

The individual mandate says to healthy, younger people, "Look, you have to buy health insurance. You really don't need it today, but sometime in the future you will need it." And if we can smooth this out, the insurance companies then get these healthy people to counterbalance the sick people they are going to have to take. If the individual mandate is ruled unconstitutional, even the administration says you no longer can ask the insurance companies to insure everybody.

A lot of Americans are going to be unhappy with that. They think the individual mandate is no big deal, but it is a big deal. Those 2 things go together. The second question is can we have the rest of healthcare reform without the individual mandate. And the answer is yes. It will not be as good, it will leave hundreds of thousands, if not several million, Americans with no health insurance. But as I said before, there are a lot of other aspects of this that are very important, particularly for the healthcare delivery system.

What I most fear is that the Supreme Court not only will rule that it is unconstitutional, but essentially wipe out the whole law. If that happens, we are heading for a very serious problem, and many people in the healthcare community know it. We will have 75 million Americans with no health insurance. We will have hospitals being squeezed by regulation or by millions of people coming in with no insurance. It will not be a pleasant sight if we were to wipe this law off the books.

Controlling Costs in Healthcare

Dr. Adashi: The most significant outcome would be that we will not be able to provide close to universal health insurance, which was obviously a main goal of the bill. Granted, the Affordable Care Act could not, and should not, have dealt with controlling costs. That aside for the moment, what would be your recommendations to this or future administrations as to how to go about controlling the cost of healthcare, since that is not going away and is not being addressed by the Affordable Care Act?

Dr. Altman: This is a tough issue. Let me start out by saying there is no magic pill. There are no single or double villains here. If anything, the reason why our healthcare is so expensive is because we are all part of the problem. If you compare us with other countries, physicians in this country make more than physicians in other countries. But I've come to believe that that's not the real problem. I always define people as rich if they make more money than I do. But, in and of itself, in every country physicians make more than the average person. It's a problem, but it's not a serious problem.

We use much more expensive technology and much more of it than other countries do -- whether it's end-stage renal disease or MRIs. But surprisingly, most people don't realize that we are less likely to go to the hospital than any country in the world. When we go into the hospital, we stay there a shorter period of time than almost any other country in the world. We have other things to do other than going to the doctor. We don't overuse a lot of aspects of the healthcare.

If you add up the "overuse" and the underuse, use is not really the driving force. What is driving costs are prices. It's like marbled cake; it's sort of intertwined in every aspect. Drugs are much more expensive here, equipment is more expensive, and physicians, but everybody in healthcare makes more money, nurses, accountants, and lawyers, even us consultants. And getting at that is very hard, so the bottom line is we do need to slow the growth rate.

Having the growth in healthcare at 2%-2.5% is faster than our income. When I started as a very young man, I will admit, in 1970-1971, we were spending $75 billion. It amounted to 7.5% of our gross domestic product (GDP). Today we're spending $2.5 trillion, and it amounts to 17.5% of GDP. People said the growth was unsustainable and we couldn't grow any faster. The truth is, we are going to grow faster because we want better healthcare. But we need to slow that growth rate.

My own view is we need to be careful that, yes, we should slow it, but we can't just wake up one morning and say healthcare should not grow at all, or healthcare should not grow by the cost of living. It can't happen. My bottom line is we need a combination. We need to put some parts of the healthcare on a budget. You can do that either through government or through the private market. Both have pluses and minuses. But we can't continue to have it open-ended.

It's a longer answer, but if you leave it open-ended, what's going to happen is parts of it, like Medicaid and Medicare, are going to be pushed down. Private insurance is going to be pushed up. More and more people won't be able to afford it. So, we've got to slow the growth rate and keep the gap from getting out of line. It's not an easy thing to do; I've tried it. I've been a regulator and a marketer for over 40 years, and I'll tell you, this country has tried everything. At the end of the day, we have not had the political will. It's not that we don't have the technical will, but we don't have the political will to really do what it takes to really slow this down.

Dr. Adashi: You really don't see us going under 17% of GDP any time soon, if ever?

Dr. Altman: We would have an open rebellion because what would happen is that Americans would find that they don't have the same access, that all of a sudden the quality of care that they've come to expect would deteriorate. We would have open rebellion on the part of people who provide the care. Physicians would become venture capitalists, which they are already. The answer is no, I do not. As a matter of fact, if you push me, I think we're probably going to get to 20% of GDP.

Healthcare Under a New President

Dr. Adashi: Next question is hypothetical, but as a resident of Massachusetts, what would healthcare be like under President Romney?

Dr. Altman: Well, if President Romney would only do what Governor Romney did, I wouldn't worry about it, because actually he deserves a lot of credit for what he did here in Massachusetts. We are very proud of our healthcare. I mean, overwhelmingly, Massachusetts people are very proud and like what happened here in spite of what some newspapers and others would say. We have the lowest uninsured rate in the country, and we are trying to grapple with slowing our growth rate in healthcare costs.

In a funny sort of a way -- and this may not be a politically correct answer -- but if President Romney were to dismantle healthcare reform but leave Massachusetts alone, we'd be okay. It's the rest of the country that's going to be in bad shape. Ironically, what healthcare reform does is it brings the rest of the country closer to what exists here in Massachusetts. Who knows what would happen, but I really think if Romney were ever to become president, he would never do the things he says he's going to do because he would find that in spite of the rhetoric, a lot of Americans do not want to go back to the environment that existed before the debate.

Altman's Healthcare Journey

Dr. Adashi: On a personal note, you're a graduate of UCLA -- how did you gravitate to healthcare policy and healthcare economics? You didn't quite start this way, did you?

Dr. Altman: No. I laugh because some people plan their life and it works the way the plan goes, and I'm sure many physicians are like that. From a very young age they want to be a physician, they work hard, they take science and so on and so forth. Maybe you were like that. My life didn't evolve that way at all. I grew up in New York, and I became interested in finance. I tell people that at age 16, I worked for a Wall Street firm and I got interested in finance, and I thought I was going to go into accounting and finance.

Then, I got under the wing of a very, almost charismatic professor who taught me about general economics. I went to UCLA to become a person involved in what we call human resources. I wrote my dissertation on unemployed married women, of all things. I want to take a little credit for the fact that I anticipated in the early 1960s that women were here to stay when it comes to the labor market.

Then crazy things happened. I wound up in the Pentagon working on an all-volunteer military during President Johnson, and I met a group of people from HEW, and they asked me to do a study about the supply of nurses.

Dr. Adashi: You're referring to the Department of Health, Education, and Welfare.

Dr. Altman: Yes, this was before the Department of Health and Human Services. I wrote a book on the supply of nurses, and then fluke of flukes, I wound up in the Nixon administration, having a very high position in that administration during the early 1970s, when government was a real force in healthcare. With the HMO Act, we doubled the number of training slots for physicians, we tried to regulate healthcare costs, and we set up planning agencies, and it gave me a ringside seat in almost every aspect of healthcare. Once I got into healthcare, I was hooked, and I've been part of it ever since.


Dr. Adashi: Thank you.

Dr. Altman: It's my pleasure.

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


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