CareTalk Podcast – Obamacare Architect, DeParle, on Future of the ACA

Obamacare architect, Nancy-Ann DeParle, stops by the show to discuss the future of the Affordable Care Act.

David Williams:

Welcome to Care Talk, your happy home for incisive debate about healthcare, business, and policy. I’m David Williams, president of health business group.

John Driscoll:

And I’m John Driscoll, the CEO of CareCentrix.

David Williams:

Hey John, it took you a while, but you finally found a guest to bring on the show who knows something about healthcare. What’s the story?

John Driscoll:

Well, Nancy-Ann Deparle not only gets it, but she helped craft it at CMS, at the White House, and was one of the key architects for Obamacare. So finally, I have someone to help argue my side of the argument, and maybe I’ll win this time, David.

David Williams:

We shall see, John. I’ll let you tee up the questions. You probably rehearsed them in advance, is all I could say.

John Driscoll:

Welcome Nancy-Ann.

Nancy-Ann Deparle:

Thank you. Great to be here, I think.

John Driscoll:

So Nancy-Ann, maybe you could [inaudible 00:00:46] to us a stellar policy background, but tell us a little bit about what got you interested in healthcare, and tell a little bit about your earlier career that before you got to all these white houses you worked in.

Nancy-Ann Deparle:

Well, I started off in country music, and I wasn’t talented enough to do that. Not as a performer, as a lawyer. So I started my career in Nashville and there were two major businesses in Nashville then. Now there are more, but they’re still two of the dominant ones, which is the music industry and the healthcare industry. And my law firm represented a number of music companies, including what was then called RCA records. It’s still a label, but it’s part of BMG now.

So I represented RCA and a big litigation that Elvis Presley’s widow, Priscilla Presley, and Lisa Marie Presley sued RCA over one of Elvis’s records. And I was representing a couple of country music artists, and really trying to get into that. And I realized that I’m not discerning enough when it comes to talent management. I thought everyone was wonderful because just the idea that you would get up there and sing was so amazing to me.

And it was around then that I was offered the opportunity to work on some healthcare litigation that the firm was doing. Actually some litigation on behalf of Vanderbilt. And I found it fascinating and I realized that a lot of threads in my life had kind of come together there because, in my life, healthcare was something that really mattered. It mattered … As you and I have discussed, my mom died when I was about 17, and she died of lung cancer. She had insurance. She was lucky, she worked for the state of Tennessee. But she actually didn’t die of the cancer. She died because she went back to work sooner than she should have because she was worried about losing her job and losing her insurance and leaving three kids without anything.

So that, plus my grandmother was in the initial group of people who were eligible for Medicare. And it’s funny the things you remember, but I can actually remember sitting in her kitchen table with her little box of bills and her talking about President Johnson having signed Medicare and wondering if it would help her. So it’s such an interesting twist of fate that I ended up running the Medicare program years later.

John Driscoll:

But weren’t you involved in running the Medicaid program in Tennessee?

Nancy-Ann Deparle:

Sort of. So I ran the Tennessee Department of Human Services, which did the eligibility determination for Medicaid, and we did run directly the AFTC, the former welfare program, the food stamps program, foster care and all those things. And so I was on a commission that the governor, who I worked for, when he was elected, he said he wanted to tackle the problem of what he called indigent healthcare. Poor and working class people across Tennessee who could not afford healthcare services. So we had a commission that went across the state and met with people and met with hospitals. And what came out of that eventually was TennCare, which many people have forgotten, but it was the first 1115 waiver. We used the [inaudible 00:04:25]-

John Driscoll:

Which is a Medicaid managed care?

Nancy-Ann Deparle:

Right.

John Driscoll:

For the state and federal program for the poor. Was that one of the first ones, Nancy-Ann?

Nancy-Ann Deparle:

It was the first. In fact, Bill Clinton, famously, in his initial meeting with President George HW Bush, they have a judicial meeting after the new president’s elected. This was the issue he raised. States want 1115 waivers. That was the issue that he raised with President Bush, because President Bush had turned down the TennCare waiver. So Bill Clinton, President Clinton granted it, and it formed really the foundation for the Massachusetts waiver later, which followed. Everyone talks about Romney Care as being a basis for the affordable care act. But actually TennCare was the first foundation because what it did was say to hospitals, “Right now, you’re receiving large amounts of disproportionate share money,”] the so-called dish that is based on the numbers of poor and indigent people that a hospital covers. So instead of getting those checks, we’re going to use that money and match it up with people who don’t have insurance coverage and give them coverage instead, and it was covered under Medicaid. So that’s how that whole thing came about.

John Driscoll:

It’s really one of the early areas of value-based care, putting healthcare on a budget, which we talk a lot about. So how did you get into the Clinton White House?

Nancy-Ann Deparle:

Through governor Ned McWhorter, my mentor in Tennessee. So when I was at the University of Tennessee and undergraduate school I was the student body president. And we used to go over to Nashville and lobby the state legislature for things that we needed, students positions on things, because the state legislature ran basically the state university. Got to know Speaker Ned McWhorter, who’d been speaker of the house for 20 years or more. And when he was elected he asked me to come in to his cabinet. So that’s how I became the Tennessee Commissioner of Human Services.

And he was good friends with then Governor Clinton. And in fact, when I was moving to Washington in 91, I had dinner with Governor McWhorter at the residence. We’re sitting there, this is before cell phones and all that, sitting out there having dinner outside and one of his aids comes and says, “Governor, I have a call for you from Governor Clinton.” He picks up the phone and he says, “Hey, Billy Bob,” that’s what he called him. “Hey, Billy Bob, how are you doing?” And that’s when Bill Clinton told him, this was September of 91, that he was planning on running for president.

John Driscoll:

You spent some time in the Clinton administration. Bill Clinton tried to get a version of managed care, managed competition as it was at the time, passed. What lessons did you take from that, that number of failed attempts to make that happen, that you then applied in the Obama administration? Because you’ve brought, it’s not just some war wounds, politically speaking, but also some insights.

Nancy-Ann Deparle:

A lot of scars. And one of them was that the Clinton health plan changed everything. It changed healthcare, not only for people who didn’t have insurance, but for people who had employer sponsored insurance. And I have a vivid recollection of sitting in my office one day and thinking, “So if this passes, I’ll go into the DC …” What did we call them? Connector. I forget. Whatever we called it. I don’t really want to do that. Why do I have to change? I have insurance. And sort of realizing, if that’s how I feel about it. How does the average American with employer sponsored insurance feel about it?

So the way President Obama approached this, having had these learnings, and Rob Emmanuel and I gave each other a pinky promise that we weren’t going to come out of this with nothing, because there were multiple opportunities to have gotten … Unlike this time with the Obama administration, we had a half dozen very serious Republican efforts at covering the uninsured, moving forward on quality and access, and we said no to all of them and let them off the hook. And time was not our friend. And so we made a pinky promise to each other that we weren’t going to come out of this with nothing. So don’t try to do too much. Don’t come out of this with nothing. Those were two lessons.

And so President Obama really wanted to fix the parts of this that were broken, without breaking the parts that were working okay. That means necessarily building on the employer based system, which covered then and still covers today, the vast majority of people. There’s a lot of debate going on right now, was that the right calculus? Should we have tried harder to have a single payer system? That wasn’t even in the cards. To people who say that, I would love to sit down with them and walk through the votes that we had in the United States Senate at that time. So anyway, we learned a lot. We learned a lot.

David Williams:

Nancy-Ann, do you remember Harry and Louise back from those days? Did you ever meet them?

Nancy-Ann Deparle:

Indeed, I do. No, I never did meet them. But I’m good friends with Chip Kahn, who was the person who pervaded that ad.

John Driscoll:

But you seem to have navigated the slings and arrows. It was a tight victory. Now Obamacare is the law of the land, as of most recent Supreme court decision. Absent the legal and political challenges, how are we doing against what you folks had laid out as a coverage value, equity?

Nancy-Ann Deparle:

Well, thank God we have it. I’ll say that. It’s a foundation that we can build on. It’s imperfect. No one knows that better than I do. But given the assignment, which was to build on the current system, try to bring down the rate of healthcare cost growth, to address the number of people who were uninsured and reduce that, make improvements in moving towards value, improving quality, I think on all those things I would give it a pretty, pretty good marks.

It’s not as affordable as people wanted it to be. There are a number of reasons for that, starting with all the undermining of it and the undermining of the marketplaces and the fact that states … There’s still a dozen states that haven’t expanded Medicaid, which needed to happen. So lest I drift into history again, I will say, to me, this is a little bit like the Timex watch. You both of you were probably too young to remember John Cameron Swayze and his ads where the diver jumped off the [inaudible 00:12:10]-

John Driscoll:

David’s older than he looks.

David Williams:

Takes a licking and keeps on ticking. Come on.

Nancy-Ann Deparle:

Right, right. He’d jump off the cliffs of Acapulco go in a washing machine with the Timex watch and it would come out ticking. And I believe that’s a little bit the way the Affordable Care Act is. And lest I jinx it, I would say that last week’s decision felt to me like it’s now seven two. We now have Justice Clarence Thomas basically saying, “Look, this is over.” And even Senator Cornyn said, we’re moving on. Famously from the state that [inaudible 00:12:50].

John Driscoll:

So David, here you go. Now you’ve got to live with it. You can’t criticize it anymore.

David Williams:

I’m going to live with it John. But listen, Nancy-Ann, we were very interested in the blog posts you wrote for health affairs along with that, with some colleagues back in January, and you had sort of three overarching things that you were focusing on about access affordability and equity. I think we both really liked the way you laid that out into like five policy priorities, and then went deeper on that. Can you talk a little bit about what the thinking was behind that post and how we’re doing, not just with the SCOTUS deciding to rule in a rational way, but are we making progress on those three big areas? Are those policy priorities being implemented? Is there any bipartisan move for those, or is it just a stalemate?

Nancy-Ann Deparle:

Well, our group was bi-partisan, and it was policy walks mainly, or people who are operating the healthcare industry. So it’s not perhaps a representative of the population at large. Our ambition was to set forth for the then on named new HHS secretary, what we thought he or she should be working on and prioritizing. And there were debates certainly in our group, as I said, it was bi-partisan, but really not about the major priorities.

We elevated … One thing I want to note is that we elevated equity because the commentary that we had was this is always on people’s lists, but it’s never high enough. It’s never the thing. It’s never something that’s really helping to drive policy, and we’re at that point now where, especially with the pandemic we saw and we continue to see what a disproportionate impact it has had populations that are lower income, communities that are black and brown and et cetera.

So we elevated that. We said, “Now’s the time to really make a real effort to do something on affordability out of the box.” I think the administration would have to get good marks there, and Congress as well, for moving forward to make the affordable care act tax credits and subsidies more affordable. You’ve seen what a huge uptake there’s been since they opened up the marketplaces again. The key will be, can they hang on to that? But I believe there’ll be able to.

So the playbook is really, in my view, a lot of what’s happened in California over the last couple of years. They have very competitive marketplace. They’ve kept premium increases in the affordable care act marketplaces in California, the cover California down to less than a percent. They’ve got very enthusiastic participation. They’ve had a more heavily regulated marketplace, arguably, because they’ve said, if you want to be in the Medicaid market in California, Medi-Cal, then you need to be in this too. But I think it’s worked well and it works for the insurers too, because it gives them … The state’s making efforts to market, get people in the marketplaces. That’s what drives the virtuous cycle that we need for insurance to really work. So that’s where I think the Biden administration and Congress need to go, and I hope that they will.

With respect to value. I think we’re seeing … CMI is taking a hard look at what it should be doing. I think the Trump administration, to its credit, did a lot to … You asked about whether there’s bipartisan agreement. When Secretary Price came into the office over at the Humphrey building, a lot of us thought, “There goes CMI,” because he had been one of the most ardent foes of it. He didn’t like the demonstrations about hips and joints, and he didn’t like any of that. He became a believer because he saw, “Hey, this is a way to try out things that maybe we want to do too,” and I would say that secretary Azar was even more devoted to it. And I actually agree with him that probably we need to move towards more mandatory demonstrations and away from just demonstrations where you cause a lot of risk selection and you invite people to try things out. If you really want to move more rapidly, that’s probably where we are now.

David Williams:

One of the other things that you mentioned in the post was about home-based care, which was clearly a big deal during the pandemic, and also John’s hobby horse. Do you think that we’re going to see that outliving the pandemic as the home-based care, as more of a temporary blip?

Nancy-Ann Deparle:

Oh, absolutely. Absolutely. And with respect to that, tele-health. It’s absurd that the original tele-health were written when I was the administrator of CMS in 1997 and 1998. And they haven’t measurably been changed since then. So it was still the case. You could only get tele-health in certain rural areas. And only if you came to an originating site, a site of service. You couldn’t do it in your home, you couldn’t do it if you were living in New York or in an urban area. And it just makes no sense either in terms of Medicare’s purpose and cost structure, or anyone else’s these days. So yes, I don’t think that genie goes back in the bottle. I believe that will be the future, and having more services at home just makes a lot of sense.

John Driscoll:

We’re obviously, at CareCentrix, hugely supportive of that. But Nancy, I’m still sort of struggling with how we get to a healthcare system that costs a lot less relative to the rest of the world. While coverage is increasing, prices for everything, even in California, still are going up through the roof. It’s no law … Health costs are still probably one of the leading cost drivers of bankruptcy in the United States. And I just … How do we break out of this ridiculous cycle of more and more money being consumed by the healthcare industrial complex?

Nancy-Ann Deparle:

So the affordable care act by imposing constraints against lifetime limits and by protecting people in that way has been shown through studies and analysis that have been done to have reduced the number of bankruptcies due to healthcare costs, significantly. More can be done. And I guess I would say to your question about prices relative to other countries, look, Jerry Anderson and others did the work 20 years ago. It’s the price is stupid. We pay clinicians more in this country than in other countries. That’s where it starts. We pay clinicians more, we pay hospitals more. I guess I’ll say something kind of provocative and controversial. This won’t be new to YouTube because you both do that.

I don’t know that that’s necessarily a bad thing. I don’t know that in a developed economy, the fact that we pay people more and hopefully that will include not just the physicians, but the nurses and other people who are working at the bedside. I don’t know that that’s necessarily a bad thing for our economy. I think if it starts to crowd out other spending that we need to be making such as spending on national security or education or other things, then yes, it’s a problem. But in an economy that’s continuing to grow, I don’t know that that’s so much the problem.

What really is a problem to me, and this was a problem when I was running Medicare. It isn’t the … At that point, actually, interestingly home health was growing at 30% a year. And there were some reasons for that mostly having to do with very little regulation around who could be in the home health industry, all that. But it isn’t so much the proliferation of services that bothers me, or the demand. It’s that we’re not getting what we should be getting for that money. So as long as we’re getting …

I don’t have a problem with, in fact I love, Medicare Advantage. It wasn’t so long ago that Democrats really didn’t like Medicare managed care. I think that we’re past that point now. But it used to be that people thought it was just an excuse to stent on care. I think we’ve now seen that, in fact, there are many plans that are doing an excellent job at providing the care that people need not stenting on care. And if we pay them a little bit more to incentivize them to do that versus fee for service unfettered choice, which may or may not be a good thing for a senior, that doesn’t bother me, but let’s just get the metric straight and let’s make sure we’re holding plans and providers to them. And then I think the prices kind of sort themselves out. I do.

John Driscoll:

What about drug prices? There’s got to be something about high pricing in healthcare that you don’t like. David likes higher prices in drugs, but most people don’t. And it just feels like it’s unsupported by anything other than history and entitlement. Is there a solution there?

Nancy-Ann Deparle:

Well, I’m a little bit cynical about that, I admit, having seen some consulting work that was done around how to set prices for different pharmaceuticals. And I don’t want to paint with too broad a brush. Obviously something more competitive as the answer. And I do think that that part D works pretty well, but the concern, I think, that house Democrats in particular have is there’s no provision to allow the fee for service Medicare to negotiate with pharmaceutical companies. Not clear that fee for service. Medicare could do a better job than the various part D plans do, but that just really sticks in their craw, that somehow we set prices for hospitals and doctors, but when it comes to pharmaceuticals, that it’s open season and they can just set whatever launch price they want.

So it feels to me like that the gig is up there. That that could be ending. That there there’s a good chance that something will pass that will allow both secretary and negotiation, which may not produce that much, but also some regulation around launch prices. That’s what’s in the bill that the house passed a year ago now.

David Williams:

Nancy, and I have to have to tell you that John actually tries to solve the drug pricing problem on every episode, and we’re coming up on our 100th episodes. So assuming that isn’t going to happen actually today, completely.

John Driscoll:

I think it’s a worthy cause, David. And it’s not just the launch price. They raise prices whenever they want to. [inaudible 00:24:35] who was a supporter of value-based care in everything other than drug pricing, I might add, since he presided over a company which jacked up the price of insulin. David, this is a cause worth taking on.

David Williams:

All right, John, I still have another question though, nonetheless. So we talked about four out of the five things from the health affairs post and I didn’t hear us talk explicitly about the high value workforce. And I have a question about that. So certainly you’ve got physician and surgeons that are paid well, some others, but there’s others in the healthcare economy that aren’t paid that well, or maybe don’t have the right training. So I’m wondering what you mean by a high value workforce. I’m also interested in if you have any view about how that might tie into immigration policy.

Nancy-Ann Deparle:

We have a nursing shortage right now. It is not for nurses who want to go help John at CareCentrix and work as a nurse leader in his executive team. It’s for nurses who are willing to be at the bedside in the COVID unit or in the med surge unit, taking care of patients. And I don’t even think it’s as simple … The economist in me thinks this should always be able to solve it, but I don’t even think it’s as simple as just paying more. I think we have to be more serious about redesigning what we do in the hospital to make that work better. And I work with HCA among others, who’s really been focused on this. Because it’s not going away, and yes, immigration is part of the answer, and there’ve been special provisions for bringing nurses from other countries. Mind you, it can cause problems for other countries too if we bring all the nurses here. But if we just focus on the US, that is part of the solution. There are a lot of nurses who want to come here and are willing to take those jobs working at the bedside.

The Trump administration slowed down the processing to a ridiculous measure, to where some of the companies that provide that staffing had to file litigation to try to make them approve what are already legal … This is legal immigration. This is not people slipping over the border to help out at a hospital. So that is part of the solution. I’m hopeful that that’ll be fixed relatively soon, and we can look to that workforce to help meet some of our needs.

But long-term, I guess the optimist in me hopes that what we just went through with COVID, while it’s been tough on a number of clinicians, and certainly nurses have been retiring at rates that I haven’t seen before. I hope it also has attracted a number of people who might not have been interested in health care before, might not have been sure about it, to see that this is a profession that really matters. That nursing and that taking care of patients really matters. Whether it’s testing, whether it’s proctoring tests, all of those things are really important. Public health, my goodness. John and I have had conversations, I’m sure he shared with you some of his ideas around having a national health service corps. That is really a bunch of people who come in just to help on things like this. So I’m hoping there will be people who want to help.

David Williams:

Well John, it’s about time to wrap up. But before we do, do you want to ask one last question about drug pricing?

John Driscoll:

I think my 87-year-old mother who’s a nurse is just so happy that we covered that topic. I think I’m good, David.

David Williams:

Great. Well, that’s it for yet another edition of CareTalk. I’m David Williams, president of Health Business Group.

John Driscoll:

And I’m John Driscoll, the CEO of CareCentrix. Thank you so much, Nancy-Ann.