Was named in 2015 as one of washingtons top 100 tech leaders. As ae proud to have sean member. Also joining me is angela braly. Lani. Inally john castel thank you for joining us and being here. What an issue. Sean i feel like we are stepping backwards. We just talked about tax reform, which is next on the agenda, and now we are going backwards to health care. I was at an event the other night and they are talking about how it failed. A more appropriate term is that it was paused, and it will be taken up again. What i think is interesting about the Affordable Care act and the health care market, then we will jump into the discussion. When the Affordable Care act was passed, there were projections about how it would affect enrollment. In 2017 where were we supposed to be . The projection was we would have 25 million enrollees through the Affordable Care act. As of february there are 12. 2 million, and it seems like it has flat lined. It is not growing anymore. When there is a commentary that it is a failed piece of is one of thehat pieces used. Health care continues to exit the market. The projection is 36 of regions will only have one offering. Last year it was 4 . A significant move in the wrong direction. For the first time this year in tennessee, one of the things that the legislature will have to address is that there are 16 counties in tennessee that will have no plans available. This intersects with the fact that there are supposed to be subsidies, but how do you get access to subsidies if theres available and now you will be penalized if you do not buy insurance, but you cannot participate . There are complexities because of this. For those reasons, and more, this will probably be picked up and not left alone. This pause you think will last . Here from a sit nonpartisan business perspective and say i will wave a magic wand and when it is picked back up, this is what i hope it will include, what would that be . i will be the outside of the beltway person and john can be the inside of the beltway person. It is not clear if we will have a bill. If we do, can we get the right numbers of people to vote in the house and senate on the bill . I think what will happen, and i do not speak for my prior , they have been vocal because they have been in the exchanges, which reflects they were in the individual market as well. Progresses, some things never change, and some things change a lot. In 20 10 i testified before congress, who summoned me to talk about that in california rates had gone up in the individual market by 25 . Year, when there were projections of the average rate of increase for the exchanges, the average rate was 25 . Some things have not changed. I think you will hear more concern about the counties where people cannot get coverage. States where there is only one insurer, they will continue to be bigger problems. At what point is there such a rallying cry that people are willing to dive deeply, and are . He fixes going to be fair once they are in the sense that they will work in the Insurance Marketplace. Fair in the sense that they will work in the Insurance Marketplace. They would like insurance to take all comers, but strip the requirement that every individual have coverage. That really isnt insurance in the end, it is a government program. We have to be careful. Go and look on the internet and search complex chart of the aca, you will see how complex it is. Pulling out one pin will not get it done. Sean if you do google that, theres a famous spaghetti chart which is an info graphic and our president clearly did not look at that chart before he addressed it. Even deciphering the chart is difficult. John im going to be a little contrary. Im retired, so i can do that. I dont think there is a chance , or if there is, it is a slim and there hasnt been of a legislative solution to the Affordable Care act. Prior to august of 2009, in the first days of the Obama Administration when there was a lot of work being done on Health Care Reform, there was work being done by republicans on Health Care Reform in the house and senate. There was a task force in the and a task force in the senate. House, they went off, as all members of congress did for , recess and came back realizing the anger of the American People toward what had been done in the house was so great that this issue became more valuable as a political issue to see who would control congress and potentially the white house than a social or medical issue in trying to fix a broken Health Care System. All the intellectual work that had been going on, at least on one side of the aisle, stopped at that point. Was no surprise that you fastforward eight years and bring together republicans who a who control the house and senate and white house and say lets move forward with the replace part and theres no consensus because none of the , work had been done for the last eight or nine years to develop a political consensus for replacement. But what has happened, is the Affordable Care act has become the political equivalent of Social Security reform. A lot of us think we know what needs to be done, but it becomes politically impossible. So, i look forward to what i if i wasl happen, or so good at predicting i would have won my ncaa pool or i would have predicted donald trump was elected president , which i didnt. My bona fides are out there,. I think we should watch is three areas of reform, or venues of reform, that right now we are not focused on. First and foremost, this administration does not give up and i think it will be very aggressive in regulatory action and executive action that they can take to change the things they believe are wrong with the Affordable Care act. Secondly, i think over time and in small increments, there are things democrats and republicans can agree on, and youve heard some of those discussions in the last two or three weeks since the failure of the reconciliation process, that might be able to between were fixed and other legislative venues. You will see some of those brought to the forefront. You will be able to see opportunities for small change. Thed, and most importantly, Payer Community and Health Care Delivery system will continue to do the kinds of things we have seen that are indeed good reforms in outcomes and efficiencies but are not yet , institutionalized in the Largest Insurance Company in this country, which is medicare, so they can continue to be rewarded and expanded. Its the moral equivalent of Social Security. Stop agonizing over it. Angela, i, and sean are probably the only ones that have not been on a Social Security reform commission, and im sure there will be an opportunity to be on a Health Care Reform commission going forward, but i dont expect anything to come of it. One thing not recognized is that the Affordable Care act invested incredible power in the secretary of health and Human Services. Heart of that is, i think, there was a view that democrats would control the white house and the cabinet and having that power at that level would be very useful. Secretary price will be able to make significant change without legislative action. One of the things i think about , my perspective comes from being an entrepreneur and trying to Reform Health care by building a business that Reforms Health care, is looking at the regulatory tangle and complexity trying tog something, reduce cost, increase quality of care within that tangle. Realize there was a Major Health Care piece of legislation that was bipartisan and drastically affects the care delivery and payment model. Are there opportunities for other areas of reform that will interact with payers, for instance, price transparencytype legislation, and are there other places where we can continue Delivery System reform outside of questions about the Insurance Markets and payment . Angela i will talk about that a little bit. If you remember when they were trying to do repeal and replace, the first part was a legislative proposal that didnt happen. The second phase was secretary price making Regulatory Reform , both underneath what would have passed as repeal and replace and whatever else he had the discretion to do as a regulator. The third step was additional reform that would require a higher vote level. Im sure the secretary is examining how far he would be able to go in terms of Regulatory Reform and the payers system all the players , in the system are participating in that. Im glad you brought up this idea that we are hopefully going to have entrepreneurs come to health care and create more value on the delivery side, but i just read this article by the person who is in charge of the Exchange Operation at the federal level, who said, no worries. Be new entrants coming into the marketplace. Sean if you can fight the fight to get into the market. Angela i dont know who hes talking about because the coops , did not work and i never thought they would work. The big insurers are trying to get bigger and merge with others to have more scale, but when you get into the Insurance Market, all of a sudden, you are exposed to all these requirements, including Capital Requirements that protect the consumer from a flybynight Insurance Company. So i would love to see more , entrepreneurship and price transparency, because i believe the lack of transparency is a reflection of the fact that we have third arty payers at every turn. Almost 50 of people are covered by their employers and they dont feel it. They feel it because their , the employers certainly feel it, but they do not act as a consumer of goods and services when they acquire their health care. John we have to rubber the secretary of health and Human Services happens to run the Largest HealthInsurance Company in the country. Sean and he is a physician. John which i hope helps, but i am never sure. I have run into a lot of physicians who have no idea how things are paid for in the system, so we can all get confused. I think there is an opportunity there. Let me give you an example. I had the pleasure of serving the Johns HopkinsMedical Center board. We did a review of joint replacement. The progress that has been made in joint replacement at our hospitals is astonishing. What used to be a week in a hospital is averaging less than two days if it is a hip and just a little less than a day at half if it is a hip and a little need. Days if it is a a knee. Infection was an issue bringing patients back to the hospitals after joint replacement, we have moved our post operative infection rates to very low levels so that they are indistinguishable from the best track and other surgical procedures. Rehabilitation used to be a long and painful process. We have changed our rehabilitation process so the patient begins rehabilitation two weeks before they enter the operating room. People can do a lot of our procedures on outpatient basis. One problem. Medicare does not pay for the most efficient outpatient and most productive procedure. Medicare is considering changing it, but all the innovation that has come in that set of procedures has come through good medical practice and smart efficiency and smart management. But the a guest Insurance Company will not sanction it. If we can begin to get medicare , in this case, to begin to think in the same level and drive the same kind of innovation that we are able to be more and should incentivized to produce in the Health Care Delivery system, then i think we have a chance. Angela i promised john i would not give a heart time about pharmaceutical cost but i can , give a hard time about hospital cost. Sean i will jump in on that, too. Angela Johns Hopkins is an exceptional medical facility, and there are many Hospital Systems doing fabulous, great work, and it is value oriented and they are really considering , the patient on all of these issues but i found that , hospitals are like mothers. Theres only one most beautiful baby in all the world and every mother has him. All hospitals are not necessarily the greatest deliverers of value and value enhancement, and a lot of that is because of the way they are paid. I agree that we need to continue to try to innovate and push innovation and value orientation in the Delivery System no matter what is happening. What is happening with the repeal and replace discussion. I am not going to argue, because one of the issues, the program i just described or something being done and used baltimore to help manage outside the hospital the broader , population in baltimore with high levels of diabetes and hypertension actually works counter to our best interest as a hospital because where do you make the most money in the Hospital System . When you put heads in beds. Thats why im saying you have to change both at the same time. We get it, a lot of other Hospital Systems are getting it, and they understand they have to change the Health Care Model so good forward in the process to avoid putting people in your bed where you will make the most money. But that means the pay system reformingas adept at a Delivery System as it can be. Sean when i talk to friends you dont have much experience in the health care market, they will say, how is the American Health care act going to affect your business . That is an insurance piece of legislation. We are in health care business. We deliver care. There are multisides to the market. Theres the question of who should the government cover . Do we provide coverage to everyone who might not afford it . How do we expand medicaid . 31 31 states have expanded medicaid under the Affordable Care act and many of those are red states. That is one of the reasons why the previous legislation proposed was not going to get anywhere in the senate and didnt even get there. The other side is if there is this pool of money, how is it paid and how do we make sure it doesnt continue to grow . There are these weird aspects of the Payment System, so if you were to get a Knee Replacement in a hospital outpatient medicare willat pay for that outpatient facility is three times what they would pay for an independent, not hospital owned, surgical facility. Why is that . I would argue that it has in their district. There is a lot of pressure to pay for that. Angela secretary price will look at the ability to regulate, him now. Works for she came from indiana. She was the architect under Mitch Daniels and mike pence, our now Vice President , around what is a modified wavered Medicaid Program that we call h ipp. The Health Insurance program, or hipp 2. 0, it could default into medicaid. Health savings accounts, and the idea is even those eligible for medicaid at of poverty, low levels of income, have synthesize thet payment of a premium and retention of a Health Savings account with the belief and expectation that people would the more of a consumer of the Healthcare Services by those mechanisms. There is always debate about the effectiveness of that. From a feedback perspective, on my health care when im a participant in this program in positive ways, and we are hopeful it has a real impact overall. . Ohn can i ask you a question ive always been curious about this. When i was an employee, when my employer said they wanted to increase my participation in the Health Care Delivery system by increasing the transparency, it was a euphemism for raising my copay. The more color in the slide projection, the worse it was. We dont really if you are a patient hugo in for a procedure, on a planned reemergence he basis, no one says would you 7. 5 the 15 year knee or the knee and here is the price difference. How do you bring that transparency into the cost basis, particularly when a lot of health care is not delivered a an optional basis, on nonemergency basis . In my experience running a Health Delivery company, the complication comes from price of security. We have contracts with , if you get ana procedure done or care, there is a charge for that that has no in what will ultimately be paid. There is a jew dictation process. Process. Cation technology is starting with this. A woman that comes into one of practices has a problem, gets a test, up front we can say this is what it will cost with your plan, and this is what you will pay. We are seeing the predominance of high deductibility plans is changing consumer behavior. When we look at one of our divisions, 50 of the dollars an hour revenue came from consumers. Selfpaid not consumers, it was a codeductible as well as selfpay. We think about, how do we do that . I think we are a better value than some practices down the street. We are seeing people actually choose. What you are talking about is more complicated. There is a multidimensional aspect to choices. The Orthopedic Surgeon says this knee, here is the 15year knee. We need to give someone a price and a choice when they have choice. As we go down the spectrum, we forget to the starting point to get to providing pricing and options with more complex cases. John what about from the context of tax reform . One of the things that is very opaque in the process of Health Insurance is the employer exclusion. That is, in part, what the cadillac tax meant. Describe thet you cadillac tax . The Affordable Care act was about individual and small group markets. Most commercial insurance is not in those markets. John full disclosure, i will blame it on larry burton, who is sitting here. I was with the Business Roundtable at that time, so it was larrys idea, who was the time. Ive director at the with Insurance Market reform, what are you going to do that people who are paying for the largest portion ,f health care in the country that is through premiums they pay to Insurance Companies to manage their employees and retirees and Health Care Costs. At that time, and i suspect it is the same, large employers, whomultibillion companies provided Health Insurance for their employees, families, and retirees. At the time, general consensus was this was the largest single uncontrolled cost i have. I was able to improve , productivity, commodity cost, Market Access cost, all the things that you increase,tivity except this area. One idea was one of the problems that i face, particularly if i was facing a large collective bargaining unit, is anything my collectivebargaining unit wanted in terms of increased benefits is tax advantage opposed to other costs i was incurring. Why dont we talk about, why dont i get rid of the employer exclusion . Tax favored to provide health benefits. Like of people didnt that. Not the least of which would labor unions. Set ampromise was we will limit above which we will tax employers should they provide a Health Care Benefit that is greater and its value than where did we start . 12,600 . Do you remember . Darn. Would be attacks. Everyone thought that would be a cadillac tax. That would be the goldplated health care or strongest unions. A combination of where Health Care Costs have gone and inflation has not gone, anyone who offers a Health Care Plan for employees right now, bebably even the ced would subject to a substantial tax. You would be subject to the , and it scares the heck out of them. The 2 project for his will never cross. Sean it would fundamentally change the market and drastically change the health care market, but it does not seem like it will ever kick in. I think we can open up for questions. We have a question right up front. Hello. Congratulations, i arrived a little bit late. Risk management, but i work in washington. I work for the trust fund of the world bank. The trustees call of the world bank, but separate from the world bank. I have been in washington for 18 years and now we have the obama , administration gone. It is a very daunting task. I live in georgetown. Everyone laughed, the top officials, about the deal that anyway. Takeamacare, what is your with the failure in congress to defeat obamacare . Step . Ou see next angela from a business perspective, obamacare still exists. As we were describing, we think the secretary will try to promote regulation and rulemaking that will move obamacare and some of its key provisions as far as the law will allow without legislative action. The reality is there will be in the marketplace. Thelarge employers, cadillac tax keeps getting pushed down the road. The larger employers taking the risks themselves are pretty much on the same path, though they are concerned about rising costs. Those who are eligible for medicare and medicaid will see changes in medicaid along the lines of what has been done in other places. Medicare, hopefully they will continue to focus on the value equation, how to pay for value, and results. In terms of the exchanges, that is where most of the action and concern is, that those individual markets will continue to deteriorate because the rate increases are so high. That is where the public pressure comes in. I think there is a lot of public pressure even for those who are , not part of the exchanges. There were 43 Million People that were uninsured. Now we are talking about 23 million uninsured. The exchanges are in effect the individual marketplace. I had friends say Small Group Employers who say my small group are so unaffordable that the employee contribution is twice the mortgage payment. Going to haircut public pressure over costs. When does the public pressure rise to the level of belief of what people are describing as the failure of obamacare, thus requiring legislative action and impact elections . Term, there short are breakpoints in the Insurance Market that will be her renders if they are not will be horrendous if they are not at least patched for the short term. I think in the long term you , will have to face the reality of choices that people dont want to make. When i look at the trajectory of what is happening in the science related to health care, and its related cost and benefits compared to what is happening in the tolerance to pay for that science, you really are coming to a point where, for example, a great researcher said the other day that we stand on the threshold of making most cancers a chronic disease, but the cost of that are Combination Therapies that are hundreds of thousands of dollars per year. Now how are you going to make the tradeoff of what is a year of life worth, or two years, or three years, of life worth to an individual . You cannot ask that. There are other areas, like in chronic disease, where you can make a good tradeoff. Is it better to manage type two diabetes order you just wait for amputations and dialysis . You can figure that out. But there are others that will be almost impossible to make. Ultimately, we going to have to come to the longterm question how do we pay for the innovation, the promise of the innovation is there, and that we are all, quite friendly, quite frankly, enjoying . For those of us who are baby boomers, were just living too damn long. Sorry. Gosh, who would have thought . We have expenses as we get older. There is a way to fix that, but we do not want to do that. Sean if you are interested in Health Care Innovation and reform, i would recommend a book, the innovators prescription. It talks about one of the challenges is that as we innovate, we turn deadly conditions into chronic conditions. Chronic conditions cost more money over time. These are questions about how we have Insurance Markets, and when you have costs, the costs come from risksharing and the cost of delivering services. Do you have a pool of people that are only people who just got sick, it will be really expensive. Premiums will be really high. If it is 90 young and healthy premiums would be low. People, on the other side, you can innovate to reduce the cost of providing care, you could potentially push premiums down. It is, as our president learned, a really complicated equation, and it requires work on a number of different areas at the same time. My hope is, rather than one comprehensive piece of there ison is that examination in different parts of the system. How do we stabilize Insurance Markets . How do we ensure there is reasonable coverage for individuals . At the same time i baffled as am an entrepreneur involved in technology that care costs keep going up. There are some demographic reasons why those costs will rise, but on a per unit basis, imagine if the same thing happened in the television world. Today, you can buy a 60inch paperthin tv for 700 today. If it was the same trajectory as health care it would be 50,000 when it started at it is 2000. Something i feel we should be above to solve, but there are a lot of questions. My name is roberta stanley. I am a k12 Public Education consultant who works on school health. You mentioned the conundrum with hospital beds. Hospitals make money when people are in beds. I think were shooting ourselves in the foot. I had a friend who had a sixhour brain surgery at a hospital up north of here, and in pennsylvania. I dont want to violate have the. Ippa. Olate h they put her out of the hospital in two days. I had to go a couple days later and said in the emergency room for seven hours to convince them to readmit her. They are also having women leave the hospital after one day of birth, no matter how difficult the birth. It seems to me we dealing with a personally sensitive issue, and we need to be thinking a little better on peoples behalf. That was just simply ridiculous. And i think we are forcing our doctors to make decisions that are against their best interests professionally. John everybody has an example, a horror story, that has happened to them, a family member, a loved one. There is an old joke, the punchline is, yes, angela, you can come into heaven, but you have to leave after 2 days. There has been a lot of approaches. Separating those things that can be better handled outside hospital setting from those that require intensive hospitalization. The example, and i dont know why your friend had to go back, and it doesnt make any difference, but you are seeing, particularly in medicare, disincentivizing readmissions, particularly those related to infections. So the reaction has been exactly what you would expect it to be from the Hospital Systems. You are intensively focusing on eliminating infections. Now if i do that, i also have to be able to intensively focus on those services in this patients who need longterm stay in a hospital. But needing longterm stay in the hospital means that you are getting efficient care in an innovative, scientific basis, and that everybody on the team knows the decisions that have to be made and are making them together, not just the physicians. It is not just the physician, not just the nurse it is everybody. [inaudible] nutrition, education, support services. I think we need to think about people in the hospital in the same way. You know, isolating various things, it just does not simply work. Having said that, thank you. Angela two big drivers underlie some of the behaviors you are describing. One, is the thirdparty Payment System versus a consumer that is requiring that service on a regular basis. When you get to a certain level of care, emergency care, serious brain surgeries, those difficult things, people do not act like a consumer no matter what, right . Everyonesond discussion of what being a consumer is. But the other thing that drives a lot of that behavior is the liability system, and i thought it was interesting in this last go round about Health Care Reform that we heard it is seeming less sean there is no discussion of tort reform whatsoever. Angela there was kind of some discussion about costs and quality, but there was a lot of discussion about coverage. Really, i think the existence of obamacare and the fact that it addressed coverage ended up being the thing that was harder to pull back. Because if you looked at the way they propose paying for health care through tax credits instead subsidies, that was something proposed years before which was intended to create more consumer behavior. But then there was discussion about tort reform, and those discussions really did not make it around this time. They got kind of shushed. John that is another point whether you are talking about tax reform or Health Care Reform. Nobody gets reelected, no public official tell me if i am wrong by standing up and sing and saying to his or her constituency, boy, we have made great incremental improvement, not a lot, but we have made incremental improvement on this issue. The fact is that you cannot fix the whole Health Care System in one fell swoop. It is, you know, we have to say, look, from a political standpoint, from a knowledge standpoint, we have to work on what we know will work and try things that are innovative and see whether or not they will work and make a series of steps, but lets not sit and wait until the political environment is absolutely perfect. I am arguing where i started, for an incremental approach. Otherwise itll be right there with Social Security reform, which is happening any minute now. Angela i wonder what the impact is. I think it was the prior panel , or the one before that, that said have we learned now that , new administrations should not come in and try to do the most complex thing and do it in one fell swoop . I work at george mason university, and one of the questions that our researchers are asking are people talking about rebuilding the individual Insurance Market . I am curious from a business perspective if that is a concern of yours . Terms ofn rebuilding the Insurance Market, the individual Insurance Market really was kind of usurped by the exchanges, and we talked about how the number of insurers are declining and the availability of auctions on the exchanges getting more and more problematic. So that is where the solution is going to, that is where the public outcry will come. When people are individually impacted by their ability to get oferage, or the lack affordability, even with subsidies. Everyone in government would love to say, on a post subsidization basis, your rates do not go up. Well, the rates went up, it is just the subsidy may have gone up with it. We will have to get to those issues, as well. Sean one thing i think is often missed is access. You might have a plan, and i will give an example of medicaid we have a lot of ob gyns in our business, and we participate with medicaid in maryland, and they are desperate because they might have 40 of medicaid and they did not have access to services. That is another conversation. I think we are out of time. Thank you very much for the questions. [applause] washington journal is live every day with news and policy issues that impact you. Coming up, a political labor reporter discusses revamping the visa program. Institute competitive discussing the trap agenda on climate in the environment. Watch the washington journal at 7 00 eastern this morning. Join the discussion. We are featuring our ud