David
Matthew Cutler is the Otto Eckstein Professor of Applied Economics at Harvard University. He holds a joint appointment
in the economics department and in Harvard's Kennedy School of Government and
the Harvard School of Public Health. He
graduated from Harvard College, summa cum laude, with a degree in Economics,
and then joined the Harvard faculty after receiving his Ph.D. in Economics from
the Massachusetts Institute of
Technology in 1991.[1] He
served in the administration of Bill
Clinton and was the senior health care advisor to Barack
Obama.[2] From
2003-2008 Cutler was Dean of the Faculty of Arts and Sciences for Social
Sciences.
Notes: The following letter details the problematic issues facing ObamaCare, and why this program is going to be an absolute mess for 10 to 12 years into the future . . . . . an analysis designed to be helpful, written by a friend of the Administration, a summary written just six weeks after the signing of this bill. This advise was almost completely ignored by an Administration that believes it can simply "declare" something to be effective and serviceable ~ blog editor.
To: Larry Summers
From: David Cutler
Subject: Urgent Need for Changes in Health Reform Implementation
I am writing to relay my concern about the way the
Administration is implementing the new health reform legislation. I am
concerned that the personnel and processes you have in place are not up to
the task, and that health reform will be unsuccessful as a result.
Let me start by reminding you that I have been a
very active supporter of reform. In addition to being the senior health
care advisor to the President’s campaign, I worked closely with the
Administration, helped Congress draft the legislation, met with countless
Members of Congress and interest groups to explain the reform effort, conducted
numerous radio and television interviews, walked hundreds of reporters through
health care, and wrote a number of op-eds and issue briefs supporting reform. I
am told that the President and senior members of the Administration valued
my input, though I was never offered a position in the Administration.I say
this to illustrate that I have thought about the issues a good deal and have
discussed them with many people.
You should also note that while this memo is
my own, the views are widely shared,including by many members of your
administration (whose names I will omit but who are sufficiently nervous to
urge me to write), as well as by knowledgeable outsiders such as Mark McClellan
(former CMS administrator) and Henry Aaron (Brookings). Indeed, I have
been at a conference on health reform the past two days, and have found not a
single person who disagrees with the urgent need for action.
My general view is that the early
implementation efforts are far short of what it will take to implement reform successfully. For
health reform to be successful, the relevant people need a vision about
health system transformation and the managerial ability to carry out that vision.The
President has sketched out such a vision. However, I do not believe the relevant members of the
Administration understand the President’s vision or have the capability to
carry it out.
Let me illustrate the problem you face and
offer some solutions.
Problem Areas
A central concern is the Department of Health and
Human Services, the main implementation agency for reform. The Department
is making a good start on the immediate deliverables of reform: high risk
pools and coverage for young adults. But it is far behind the curve
on the key long-term reform efforts, most notably reforming the delivery
system to support higher quality, lower cost care. Let me give you
a few examples.
1. A good deal of reform implementation needs to occur at the Centers for Medicare and
Medicaid Services (CMS). You were dealt a bad hand here. The
agency is demoralized, the best people have left, IT services are
antiquated, and there are fewer employees than in 1981,despite a much
larger burden. Nevertheless, you have not improved the
situation. The nominee to head that agency, Don Berwick has never run a
provider organization or insurance company,or dealt with Medicare or Medicaid
reimbursement. On basic issues such as the transition from fee-for-service
payment to value-based payment, Don knows relatively little. Further,
he has been ordered not to be involved in anything at the agency until he
is confirmed, which will likely be in the fall. Don has a wonderful
vision, but there is no way he can carry it out in any reasonable time without
substantial help.
Unfortunately, the senior staff at CMS, which has been
appointed, is not up to the task. For example, I recently met with the
senior CMS staff about how all the new demonstration and pilot programs
envisioned in the legislation might work. This is a crucial issue because
the current demonstration process takes
about 7 to 10 years, and thus following this path would lead to no serious
cost containment for the next decade. When engaged about the speed of
reform,the staff expressed the view that:
(a) their fear was going too
fast instead of going too slow;
(b) we ought to add a layer of
university review to the existing process, to be sure we are doing the right
thing; and
(c) the natural place to start demonstrations is in end-of-life care
(Death Panels notwithstanding).
As a result, you have an agency where the
philosophy of health system reform is not widely shared, where there is no
experience running a health care organization, and where the desire to move
rapidly is lacking. The result is that I have very little
confidence that the Administration will make the right decisions about the direction
and pace of delivery system reform.
2. The second major task of reform is to set up and run insurance exchanges. I amnot
encouraged by what is occurring there either. Running exchanges is a
collaborative process. As just one
example, the person who ran the Commonwealth Connector in Massachusetts estimates
that he had 500 town meetings to discuss reform, the equivalent of 17,000 meetings
nationally – and this was in a state where two-thirds of people, along
with insurance companies, supported reform. The
person newly appointed to head the insurance oversight office has a reputation
as an insurance bulldog, not a skilled
facilitator. Remember that most people will get their information
about reform from their doctor and their insurance agent. If you
cannot find away to work with hesitant states and insurers, reform will
blow up. I have seen no indication that HHS even realizes this, let
alone is acting on it.
3. A fundamental issue in making reform work is explaining reform to providers andshowing
them how to respond to it. The Department has done nothing
along these lines. Most providers know very little about reform, and
they are universally surprised to hear a positive philosophy about how
they can benefit from health system transformation. Their most common comment
is ‘why hasn’t anyone explained this to us?’ As Atul Gawande’s famous New Yorker
article put it, you need the equivalent of an agricultural extension
worker in every community to make reform work. This does not appear to be
on HHS’s radar screen, however.
4. Above the operational level, the process is also broken. The overall head of
implementation inside HHS, Jeanne Lambrew, is known for her knowledge of
Congress, her commitment to the poor, and her mistrust of insurance companies. She
is not known for operational ability, knowledge of delivery systems, or
facilitating widespread change. Thus, it is not surprising that
delivery system reform, provider outreach, and exchange administration are
receiving little attention. Further, the fact that Jeanne and people
like her cannot get along with other people in the Administration means that the
opportunities for collaborative engagement are limited, areas of great
importance are not addressed, and valuable problem solving time is wasted on
internal fights. All in all, the
administration has immense decisions to make about transforming healthcare
delivery and coverage. But no one I interact with has confidence that
your current personnel and configuration is up to the task.
Some Ideas
When a corporation needs to move in a new
direction, it sets up a new structure to focus on where it needs to go. You
can’t change the culture by piling new responsibilities onto a broken
system. I believe you need to follow this model. You need to bring in
people who share the President’s vision and who know how to manage health care
or other complex operations. These people then need to interact with existing
agency personnel to make reform happen.
You need to start with a strong team at the
White House. That team needs to lay out the milestone goals for the next 5
to 10 years, coordinate across various agencies, and communicate with the
public.
To avoid the perception of secrecy, I would recommend an
outside Board of Overseers that would monitor progress and report regularly on whether
health reform is meeting its goals.
You also need a major change at HHS, which I
envision as a revamped and enhanced implementation group. That group needs
to share the President’s vision and have expertise in several areas:
- Managing large and complex enterprises
- Payment reform, including people who can work with existing employees todesign and implement the necessary programs;
- Information technology systems, including how to update the IT structure in CMS and link that to the effort to computerize medical records;
- Outreach, including people who can lead an education campaign for medical care providers, insurers, and insurance brokers; and
- State coordinators, who can empower and work with state-specific groups to setup and manage insurance exchanges. In each of these areas, you need to take advantage of external experts as well as people inside the Administration.
Editor’s
note: It does not appear that Obama implemented any
of the five suggestions listed immediately above.
