America's Bitter Pill
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But even as more and more data rolls in on the ACA, even with a historic slowdown in health care cost growth, and millions of people gaining coverage, Republicans are still staking their platform on repealing this progress. This is painfully clear in the decision by some Republican Governors to not expand Medicaid. Now, you’ve seen some Republican Governors do the right thing, and expand coverage to their residents, and I’m hopeful that more will. But it is a completely unnecessary and mean spirited decision to continue to deny coverage to those who need it most because of politics.
But it should be pretty clear by now that I didn’t do this because it was good politics. I did it because I believed it was good for the country. I did it because I believed it was good for the American people.
QUESTION 8
Two questions about Valerie Jarrett:
a. I am told by five people who have served in senior capacities in the Administration that Ms. Jarrett often told them that “the President wants you to bring us your solutions, not your problems,” and that this may have been why you were unaware of troubles associated with the HealthCare.gov launch. These same people also said that on matters in which she was involved she was “the real chief of staff.” I feel compelled to ask you to comment on that.
b. I am also told by three senior officials that Ms. Jarrett agreed with you that Nancy-Ann DeParle should be the person in charge of the implementation of the health reform law, including the website. Is this true?
THE PRESIDENT’S ANSWER
Declined to answer.
QUESTION 9
With regard to #3 in the May letter (“Can Anyone Fix The Jalopy”), do you think there will be a time ten or twenty years from now when the political climate will have changed and we can more thoroughly “fix the jalopy” that is our nation’s healthcare system? For example, do you think it will ever be possible to pass legislation that does more to control costs (such as price controls on prescription drugs, or authorization for Medicare to negotiate prescription drug prices)?
THE PRESIDENT’S ANSWER
There’s always going to be more that can be done to improve public policy, whether it’s strengthening the economy, or increasing energy independence, or making health care affordable—but now, for the first time, we have addressed some of the worst problems of our health care system, and we have a foundation to build on and improve. Millions of Americans have gained access to affordable coverage, and some of the worst insurance company abuses are now things of the past.
And on health care affordability, there was a lot of pundit chatter that dismissed the ACA’s initiatives to promote value, improve efficiency, and reduce waste, and a lot of those people are having to rethink things now. Frankly what we’ve seen in progress on costs has surpassed almost anybody’s most optimistic expectations. I remember some prominent reporter saying that Congress would be popping the champagne if they passed a deficit reduction bill with that big of an impact today. And the lesson that all of us should take away from that is that there are a lot of ways to address our deficits and our health care costs that don’t rely on just cutting benefits, or turning Medicare into a voucher program. What the ACA has already shown is that we can make a dent in that, and that it can pay huge dividends for families and the federal government’s balance sheets. We can do more, and my budget includes a number of policy changes to build on this progress. Congress also needs to keep pursuing that kind of change, and prioritize reforms that reduce inefficiency and waste before telling older Americans who worked their whole lives that Medicare isn’t going to be there as it was promised to them.
QUESTION 10
Your reputation as “No-Drama Obama”—that is, as someone who has little tolerance for egos, turf battles, shouting matches, and so forth—has been borne out in my reporting. Notwithstanding the obvious benefits of this leadership style, do you think it might also have had the consequence of letting conflicts within the White House and the Administration (such as disputes related to the planning and launch of healthcare.gov) simmer beneath the surface, outside your view?
THE PRESIDENT’S ANSWER
You need to create a culture where people feel free to admit there’s a problem, but you also need a structure where those problems make it to the right people so actions can be taken.
In hindsight, there should have been one central person in charge, a CEO of the Marketplace. Now we have that in Kevin Counihan, who successfully launched the Marketplace in Connecticut, and Secretary Burwell has made many other significant changes to ensure accountability and transparency moving forward.
I mentioned the work Mikey Dickerson and others are doing to simply and improve digital services across the government, and I expect that those efforts will help us bring in new talent, and work more effectively with the great talent we already have to improve the experiences that Americans have with the government.
QUESTION 11
How would you explain to a sixth or seventh grade class the process that led to the passage of Obamacare—the negotiations with the various industry sectors, the lack of bipartisanship, the sheer complexity and length of the statute?
THE PRESIDENT’S ANSWER
Declined to answer.
METHODOLOGY AND SOURCE NOTES
READERS DESERVE TO KNOW AS MUCH AS POSSIBLE ABOUT WHY AN author thinks he knows what he says he knows.
Although I have tried to make it clear throughout the text who or what my sources are, these notes are intended to supplement the text by providing information about sources where I decided that something in the text required an explanation or elaboration that would interrupt the narrative.
In some cases where I thought an additional explanation or note was especially important and I did not want to count on readers finding it in this section, I included a brief footnote in the text.
GENERAL METHODOLOGY
In no case is a thought attributed to someone directly unless that person told me about that thought.
In no case is a conversation or a discussion in a meeting quoted unless at least one participant in that conversation or discussion was my source.
In several chapters, particularly those covering the deliberations by the Obama administration and Congress as the healthcare reform legislation was being conceived and then implemented, I quote from notes taken during meetings or a journal kept contemporaneously by one of the participants in those meetings. In those instances, I had access to the notes or the journal and then followed up to confirm their meaning with the author and with at least one other participant in the discussion or meeting.
If I described a source in the text generally but without a name it was because the source had set ground rules prohibiting his or her name from being used. Where I can shed more light than I did in the text, I do so in these notes.
Where I had multiple sources, they are listed in order of the importance of the information they provided. For example, if two sources are listed, the first source may have offered the information, which the second source confirmed. Titles used for the sources are the ones they held at the time of the events in question.
I always have firsthand knowledge of emails, internal memos, focus group reports (such as those done in Kentucky), or stock analysts’ reports that are quoted in the text because I have read them.
Source references, such as books or newspaper articles, are listed below only where it is not clear in the text that I relied on the reporting of others.
References are not listed for general statements (about developments in some aspect of the healthcare industry, for example) if they are widely known and uncontroversial. Similarly, references are not provided for widely reported news events, or for unambiguous statements of fact, such as the date of a public event. Nor are they listed if the material is obviously taken from a public record such as a budget, a campaign debate or presidential speech, or the transcript of a congressional hearing.
If the text quotes from a newspaper article or television program, the
reference is not cited here if the text makes the source and the date clear. However, I have provided links in these notes to videos or documents when I think a reader might want to see them.
References to any company’s revenue or profits are based on its publicly filed financial reports for the period in question.
I always use the latest information that I can find when citing data such as the amount spent nationally on a certain type of medical care or treatment, unless I am using it to relate to an event taking place at that time in the narrative.
In cases where estimates are inexact or vary—such as data on healthcare spending—I veer toward the lower estimates in order not to overstate a point.
All revenue, profit, and salary data for nonprofit hospitals referred to in the text is taken from the nonprofit hospitals’ IRS Form 990 filings, which are available at http://www.guidestar.org/.
SOURCE NOTES
CHAPTER 1: LOOKING UP FROM THE GURNEY
1 We spend $17 billion a year on artificial knees and hips, which is 55 percent more than Hollywood takes in at the box office: These are 2009 revenues for artificial knees and hips and 2013 revenues ($10.9 billion) for Hollywood, derived respectively from this healthcare industry website: http://www.600bn.com/?tag=orthopedic-implants, and this movie industry data site: http://boxofficemojo.com/yearly/chart/?yr=2013. Therefore, the actual difference is likely to be significantly more than 55 percent, because spending on knees and hips surely increased between 2009 and 2013.
2 America’s total healthcare bill for 2014 is $3 trillion: Actually, it is $3.093 trillion, according to this report from the federal government: http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/downloads/proj2012.pdf. However, this was a forecast done in 2013. The real number is not likely to be known until late in 2015 or early 2016. I think it is likely to end up higher. This report by the Deloitte consulting firm used a different calculating method and estimated spending in 2010 to be $3.2 trillion, which means it would be significantly higher than that in 2014: http://www.deloitte.com/assets/Dcom-UnitedStates/Local%20Assets/Documents/us_dchs_2012_hidden_costs112712.pdf.
3 We spend more on healthcare than the next ten biggest spenders combined: This comes from an industry report compiled in 2011 by McKinsey & Company’s McKinsey Global Institute.
4 There are 31.5 MRI machines per million people: See table 2 of this report from the Commonwealth Fund: http://www.commonwealthfund.org/~/media/files/publications/fund-report/2013/nov/1717_thomson_intl_profiles_hlt_care_sys_2013_v2.pdf.
5 We spend $85.9 billion trying to treat back pain: “Expenditures and Health Status Among Adults with Back and Neck Problems,” Journal of the American Medical Association, February 13, 2008. Note: This number is for the year 2005; it has obviously increased significantly since then.
6 as much as we spend on all of the country’s state, city, county, and town police forces: “Sourcebook of Criminal Justice Statistics,” http://www.albany.edu/sourcebook/pdf/t142006.pdf. Note: This is for the year 2006.
7 We’ve created a system with 1.5 million people working in the health insurance industry but with barely half as many doctors: “The Anatomy of Healthcare in the United States,” Journal of the American Medical Association, January 5, 2014. The actual numbers are 1,509,000 health insurance workers and 831,000 physicians (both for the year 2011).
8 Medtronic … enjoys nearly double the gross profit margin of Apple: The actual gross profit margins were 39.3 percent for Apple (for the quarter ending June 30, 2014) and 74.1 percent for Medtronic (for the quarter ending July 31, 2014).
9 nine of the ten largest pharmaceutical companies in the world have signed settlement agreements: Website of the Office of the Inspector General, U.S. Department of Health and Human Services: https://oig.hhs.gov/compliance/corporate-integrity-agreements/cia-documents.asp#cia_list.
10 the outsized salary of the guy who ran the supposedly nonprofit hospital: Salaries of hospital presidents are taken from the latest publicly available Form 990 financial report that the hospitals in question have filed with the Internal Revenue Service.
11 Healthcare is America’s largest industry by far, employing a sixth of the country’s workforce: U.S. Bureau of Labor Statistics, compiled by taking employment data from all health-related categories.
12 the healthcare industry spends four times as much on lobbying as the number two Beltway spender: Data compiled from the Center for Responsive Politics’ OpenSecrets.org website.
13 60 percent of the nearly one million personal bankruptcies filed in the United States last year resulted from medical bills: This is a widely reported statistic. See, for example, http://www.cnn.com/2009/HEALTH/06/05/bankruptcy.medical.bills/.
14 Montana’s Max Baucus … had a picture on his desk of a constituent he had befriended: David Schwartz and Liz Fowler, who were senior healthcare counsel on Senator Baucus’s Finance Committee staff, with Schwartz assuming that title after Fowler left to work in the private sector.
15 a mother who … had to take an $8.50 an hour job as a nightshift gate agent at the Las Vegas airport: Liz Fowler, and Mary Fowler—her mother.
16 Ted Kennedy’s firsthand experience with healthcare issues: His autobiography True Compass (Twelve, 2009); his wife Vicki Kennedy; and his former senior healthcare adviser John McDonough.
CHAPTER 2: CENTER STAGE
1 Democratic presidential candidates’ forum: The event is available at the C-SPAN Video Library at http://www.c-span.org/video/?197322-1/campaign-2008-health-care-forum; a transcript is available at http://2008election.procon.org/pdf/Dem20070324.pdf.
2 The Scooter Store, based in New Braunfels, Texas, was allegedly using millions of dollars in television ads: Details of the charges and settlement of the case are taken from a press release detailing the charges and settlement from the U.S. Department of Justice, May 11, 2007: http://www.justice.gov/opa/pr/2007/May/07_civ_344.html.
3 another team of federal prosecutors was pursuing a far bigger target—the Aventis unit of Sanofi: Details are taken from a press release detailing the charges and settlement from the U.S. Department of Justice, September 10, 2007: http://www.justice.gov/opa/pr/2007/September/07_civ_694.html.
4 “CIA” had become a favorite acronym having to do with renegade drug companies: In every conversation I had with officials of the U.S. Justice Department or the inspector general’s office at the U.S. Department of Health and Human Services, they were routinely referred to that way.
5 the entrenched, sorry state of the American healthcare system (history of healthcare proposals put forward by Theodore Roosevelt, Franklin Roosevelt, Harry Truman, and Richard Nixon, and general history of healthcare reform): I used multiple sources, including archives from The New York Times. However, the best books about the history of American healthcare and efforts to reform it are the Pulitzer Prize–winning classic The Social Transformation of American Medicine by Paul Starr (Basic Books, 1982) and Starr’s terrific follow-on book, Remedy and Reaction: The Peculiar American Struggle Over Healthcare Reform (Yale University Press, 2011). Two other extremely valuable books were The Heart of Power: Health and Politics in the Oval Office, by David Blumenthal and James A. Morone (University of California Press, 2010), and Power, Politics, and Universal Health Care, by Stuart Altman and David Shactman (Prometheus Books, 2011). The work of these authors informed much of what I wrote about the history of healthcare reform, from the development of medicine into a sophisticated, expensive profession, to the decision of the War Labor Board not to count health insurance benefits as compensation, to the Wilbur Mills scandal.
6 The plan was ca
lled Blue Cross (history of Blue Cross and Blue Shield): Thomas C. Buchmueller and Alan C. Monheit, “Employer-Sponsored Health Insurance and the Promise of Health Insurance Reform,” National Bureau of Economic Research Working Paper No. 14839, April 2009, http://www.nber.org/papers/w14839.
7 the forerunner to New York–Presbyterian: From the hospital’s website: http://nyp.org/about/history.html.
8 in 1929, Americans spent about 1 percent of the country’s gross domestic product on anything related to healthcare: This data was compiled from government archives by http://www.usgovernmentspending.com/healthcare_spending. However, Harvard healthcare economist David Cutler estimated in an email to me that it might have been as much as 3.5 percent.
9 By 1966, it was 6 percent: “Health Care Cost Tripled Since ’50; Federal Data Show Rise to $36.8-Billion in Nation,” The New York Times, January 16, 1966.
10 Theodore Roosevelt had proposed a national health insurance plan: The history of the healthcare proposals put forward by Theodore Roosevelt, Franklin Roosevelt, Harry Truman, and Richard Nixon relies on multiple newspaper archives, plus the books cited above by Starr, Blumenthal and Morone, and Altman and Shactman.
11 Harry Truman—influenced, historians say, by the number of recruits he had met during the war who showed up for duty too sick to fight: Blumenthal and Morone, The Heart of Power.