Karen Davis

Americans’ Health Care – Seen with 20/20 Vision

VTR Date: September 28, 2012

Karen Davis discusses the American health care system.


GUEST: Dr. Karen Davis
AIR DATE: 09/29/2012
VTR: 09/13/2012

I’m Richard Heffner, your host on The Open Mind.

And today’s guest – quite appropriately, given our intense focus at election time on fostering a truly comprehensive and realistic health care plan for all Americans – is Dr. Karen Davis, a nationally recognized economist with a distinguished career in public policy and research, having served as Chair of the Department of Health Policy at the Johns Hopkins School of Public Health and as Deputy Assistant Secretary for Health Policy in the U.S. Department of Health and Human Services.

Now, since 1995, Dr. Davis has been President of The Commonwealth Fund, a national philanthropy working toward a high performance health system for America. She retires as the Fund’s Chieftain at the end of this year…but not before I pin her down – this week and next – for another stellar analysis of what we must do to move our nation’s health care system from perhaps among the least effective and most expensive to among the best-performing and most cost-effective.

Now, a dozen years ago my guest and I did the first of what became a long series of Open Mind conversations on this vital area of national concern.

I took for our theme at that time what Dr. Davis had called “A 20/20 Vision of Health Care”…where Americans’ health care system should be – has to be! – by the year 2020.

She identified five vital elements to that vision: Automatic and affordable health care insurance coverage for all. Access to health care for all. Patient responsive health care. Information-driven health care. And commitment to quality improvement.

All of these to be achieved by 2020 for America truly to be a world leader in this most important indicator of a civilized society.

And I would ask Dr. Davis again today, as I did a dozen years ago, whether the first and foremost part of that 20/20 vision remains for her affordable health insurance coverage for all…and ask how this year’s election promises or threatens to impact upon that Holy Grail.

DAVIS: Well, I do think health insurance for all is key. It’s key to a high performing health system; it’s key to preventive care; it’s key to health outcomes, healthy lives for all Americans. And the truth of the matter is I was a little optimistic in thinking how quickly we could get there. And, and we lost ground over the last decade.

So the numbers of uninsured went up from 37 million in the year 2000 to 50 million last year. The good news … the Census Bureau has just recently released the latest numbers for 2011 and for the first time we’ve had a major drop in the number of uninsured. Dropping about 1.3 million to about 48 and a half million uninsured Americans.

And some of that is the result of the affordable care act signed into law by President Obama in March of 2010.

For example, it covered young adults up to age 26 under their parents health insurance policy. And that was one of the areas of the biggest gain.

There were also improvements in Medicaid and Medicare coverage … very important programs to insure coverage for the poorest, sickest and oldest Americans.

But all of that is very much at risk. There’s a difference in this country about whether we ought to have universal health insurance for everybody … whether we can afford it.

There have been proposals passed by the House of Representatives that would repeal the Affordable Care Act.

Governor Romney has also indicated that he has concerns about the bulk of the Affordable Care Act, although he said he might keep certain, certain parts of it … such as the coverage for young adults.

But I think if we keep this law in effect and I think that’s very important to do, continue to implement it, expand the Medicaid program to cover everyone at the very lowest income, incomes in this country and set up health insurance market places at the state level that give people choices of insurance coverage … covering everybody, whether they’ve got pre-existing health conditions or not … at the same premium.

And providing health toward paying the premium, so that no individual has to pay even 10% of their income for their health insurance premiums.

So the Affordable Care Act as it now stands would provide assistance on a sliding scale to help families with incomes up to $90,000 pay their health insurance premiums and make sure it’s really affordable for everyone.

HEFFNER: Now, can we afford, as a nation, the Affordable Plan?

DAVIS: Well, President Obama did provide the financing to cover the expanded coverage of the uninsured, to improve the benefit so that no one’s underinsured. And that everybody’s covered by essential health care benefits.

He paid for it in two ways. First of all he achieved some savings in the Medicare program. Those savings came from reducing over payments to private managed care plans. And they came by trimming the “raises”, if you want to call it that … the inflationary updates for hospitals and other healthcare providers.

I should note that the hospital industry supported those changes. They said, “if you cover the uninsured, we’ll have fewer bad debts, we can get by without as much of an inflation adjustment every year from the Medicare program” … so about half of the cost of covering the uninsured came from those savings in Medicare and other, other public programs. That’s been an issue about whether the savings in Medicare were used to cut benefits or detracted from, from seniors.

But, in fact, seniors also got improved benefits, improved coverage of medicines, eliminating the donut hole and coverage for prescription drugs where in the past Medicare beneficiaries had to pay 100% of the cost above a certain level. So that, that was fixed.

And preventive services, like mammograms and colonoscopies are now covered without any cost sharing for Medicare beneficiaries.

Anyway that was half of the, the savings. And the other, truthfully were some taxes. Insurance companies, medical device manufacturers, pharmaceutical companies … even on tanning salons (laugh), so there were some revenues from that.

And there were some increase in, in taxes for higher income thresh … ahh, families … the President said that below a threshold of $250,000 for a couple, he wouldn’t raise taxes, but he did increase taxes a little bit for people above that, that income level.

So the Congressional Budget Office in fact has consistently estimated that the Affordable Care Act reduces the Federal budget deficit, doesn’t add to it and furthermore, if you were to repeal it and all of the savings that are in there from, for example, eliminating the overpayment of private managed care plans … the deficit would go up by over $100 billion dollars. So it, it was a balanced approach … obviously no one likes to have to pay higher taxes. Or is concerned about any trimming of, of payments to hospitals … but on the whole, I think it was a very thoughtful way of financing that coverage and absolutely clear that we simply had to cover the 50 million uninsured Americans and that we could never have the quality of care and the kind of care for our fellow citizens that we really want without providing that floor of coverage for essential health benefits.

HEFFNER: Care for our fellow citizens. Concern that we are our brother’s keepers. Do you think that attitude will be maintained.

DAVIS: Well, I think we’re all aware when you don’t have health insurance coverage. And it’s not just affecting poor Americans, it affecting working Americans, middle class Americans. Our studies show that even among the insured, about 30 million are underinsured and that’s been going up over time and now affecting the middle class.

We also found that about 89 million Americans, that’s out of over 300 million Americans, almost 90 million have a period of time when they’re without health insurance coverage.

And obviously if they get sick or already have some pre-existing conditions, they’re not going to be able to buy coverage at any price, if they try to get insurance coverage in the future.

HEFFNER: Do you think that’s in the nature of the American ethos?

DAVIS: I don’t think it’s so much America as it is the way the marketplace works.

HEFFNER: What do you mean?

DAVIS: Ahh, well, if you want to make money as an insurance company, it’s best to cover only people who don’t get sick.


DAVIS: And 10% of everyone … of all Americans account for about two-thirds of all health care spending.

So if you have a way of avoiding the very sickest individuals … those with pre-existing conditions and just cover the 50% who hardly go to the doctor at all, or the 90% who represent only about a third of spending, you can make a profit as an insurance company.

So it’s a natural economic force. But it’s a very powerful force to try to screen out people who are sick, or are likely to get sick because they smoke or have some other kind of risk factor that suggests that they may have serious health problems in the future.

HEFFNER: What are the other things that lead to, lead us to have to swallow such a large gulp of costs now?

DAVIS: Well …

HEFFNER: What about doctors? Let me ask you about doctors. You’ve talk about insurance companies. What about doctors, what about hospitals?

DAVIS: Yes. I … this for the most part have the support of doctors and hospitals. No one in America agrees with everything and we all don’t agree with each other. But certainly I think for physicians they really want their patients to get the care that they need.

So when they have a patient who can’t afford a prescription drug and they don’t control their blood pressure and they have a stroke. That must be just devastating for a physician. Or when they’ve got a patient who, who really needs chemotherapy and they can’t afford that care. It’s just heartbreaking when there are things that we know how to do and doctors could help a patient … could have popped that colon cancer at an early stage and it just doesn’t happen because people didn’t go, they didn’t buy the medicine, couldn’t afford to get the test … didn’t go to the specialist as, as was recommended.

And the single most important factor that leads to these kinds of breakdowns in our health care system is the absence of health insurance coverage. So I think physicians … let’s face it, it also increases their income if patients can pay and, and certainly for hospitals, they don’t have the kind of bad debts that put their whole institution financially at risk if they do care for people without health insurance coverage.

HEFFNER: But I guess my question, which I put so poorly … had to do with the possibility that we can develop a decent … by 2020 or 2030 or whenever it’s going to be … the kind of health care system that we want for America.

Whether doctors are contributing to the problem in terms of the costs involved, the incomes that they want …

DAVIS: The …

HEFFNER: … the fact that everything, even medicine has become a for-profit enterprise.

DAVIS: Well, I certainly think doctors could be part of the solution.

HEFFNER: Tell me what you mean.

DAVIS: And I think things have to change. And I think doctors and hospitals and others recognize that the writing’s on the wall now and we’re going to move away from our current system.

Basically our current system is called “fee for service”. We pay for everything that gets done by piecemeal. Every test, every visit to the doctor, every hospitalization, every referral … in fact we pay more if you go to the Emergency Room to get care than if you go to your primary care doctor.

So, we pay more if there’s a medical error. If you have to do the surgery twice, you get paid twice … if you get an infection while you’re in the hospital, we’ll pay extra for that.

So, I think we all agree we have to move away from what’s called “fee for service” payment to a system called “pay for value”. That really rewards doctors and hospitals that change their practices.

So what does that involve? It’s, it’s part of what I laid out, as you said … 12 years ago about a 2020 vision for American health care.

It’s first of all ensuring access to care. Every patient needs a regular doctor that they can get into (laugh), they have access on nights and weekends, it’s a doctor who knows them, has all of their medical information …

HEFFNER: Wait a minute, let me interrupt and just ask you … do you mean a doctor or a doctor’s office? Do you mean a, a group of physicians …

DAVIS: Ah, I think …

HEFFNER: ….are we going to have that without …

DAVIS: … increasingly we’re going to move to teams of care …


DAVIS: …so it’s not just going to be the doctor on his own. It’s going to be a medical practice or a health care practices that included nurses, may pharmacists, may have nutritionists as part of the health care team with each one contributing what they can do and, and having modern information systems.

Electronic medical records that everybody can read … but everybody’s on the same page about what this patient needs and that lend themselves to reminder systems. So that people are called in when they’re overdue for a preventive service. Or they haven’t been in to have their blood pressure checked or their diabetes checked.

We’re still at a state in this country of, of not systematically making sure that people are getting the basics. Half of Americans are not up to date with preventive care. So we’ve got to have a regular doctor … that practice has to be organized to support a team approach to care. Particularly what we’re learning from some of the work the Commonwealth Fund has funded is that if you have a nurse care-coordinator working with the very sickest patients, these 10% with multiple problems and it is known to them when they come in see their doctor, they see this nurse, they talk by phone, they can get advise.

The studies that we’re funding evaluating what’s called “a patient center medical home” find about a 20% reduction in hospitalizations from this kind of nurse, care coordinator working with the very sickest of patients and, and being there to, to get advice about whether a symptom is troublesome and needs to be dealt with right away or there are things that families can do to deal with it.

So, access to care, re-organizing that care so it’s really responsive to patients and is pro-active … reaches out to them with … calling them in, doesn’t wait for them to come in … when they’re really desperate, but, but gets ahead of it.

And is, furthermore, committed to quality improvement. And that requires data. To get better you’ve got to know you’ve got a problem. And one of things the Commonwealth Fund has had is the comparative data on quality of care, across hospitals, across practices, physician practices, across nursing homes … is a wonderful motivator for change.

When you see that you’ve got an error rate, as a hospital, higher than another hospital, when you’ve got the central line infections much higher than other hospitals, you start thinking “well, what are they doing to get the rate down to that level?”

And it’s kind of exciting to see how many hospitals have really gotten engaged in doing something about, particularly on patient safety and improving performance. But we’ve got to improve performance across the board.

Making sure people are getting their preventive services, reducing avoidable use of emergency rooms, by being able to get an appointment to get in to see your doctor when you need to see it. Across the board … identify what the problems are, see who’s doing a good job, learn how they’re doing a good job and then I would say, above all, have a payment system … that rewards you for doing the right thing, for getting it right the first time. And really being a partner with your patients in improving their health.

HEFFNER: Well, you say “above all”, but above all you really mean is insurance.


HEFFNER: Coverage.

DAVIS: Insurance and paying doctors the right way. I would say those are … both having a doctor and then rewarding the health care system for taking accountability, for seeing that people get the right care and, and being responsible for eliminating waste.

HEFFNER: But let me ask you this question and it stems from the business of universal health care insurance. How could it be, as it is, that we seem to be divided as a nation on this question of the health care plan that the President … that President Obama has set forth?

We seem not, as I would think we would be, just mad as hell and won’t take it any more and say, “of course there must be this basic insurance plan”. How do you explain Americans division on this question? Misinformation?

DAVIS: Well, I do think a lot of it is people not knowing. Not knowing what’s really in the law and what isn’t. When you ask them about specifics, do you favor young adults covered under their parents policy? Yes.

Do you think people who … working families with incomes of $20,000, $40,000 ought to get help paying their health insurance premiums? Yes. They’re for that.

Do you think women ought to be charged more than men? Or under the law charge the same premium? Do you think essential services like maternity care ought to be covered?

You go through the specifics of the law then people are pretty supportive of that. I think what the concern is, is this more than we can afford?

We’ve been in a bad economic contraction. We got ourselves over the last decade into serious Federal debt. Truthfully, when I wrote that article, we had a $5 trillion dollar budget surplus. (Laugh)

HEFFNER: I … Karen, I was just going to say that to you. The trouble is we’re talking about such a long range division in this country. Going back to the time when we had a massive surplus.

DAVIS: Right.

HEFFNER: And we weren’t in hard times. How do we explain the fact that Presidents have not been able … up until this point, to carry the day in terms of everyone’s being insured?

DAVIS: Well, certainly, the US as one of the wealthiest countries in the world … can do what every other country has done and cover everyone.

But we did squander the budget surplus that we had in 2000. And I would say at least 15% of that surplus came from the health sector. So there were savings by tightening what hospitals were paid, and we could have used it back then.

We did use some of it to cover prescription drugs for the elderly. That was done without any new taxes or any new payment. But mostly we cut taxes … particularly for higher income individuals … so it made health reform particularly difficult because it had to be financed and it had to be done through a combination of savings and, and new revenues and, and that was tough to put together.

Everybody who used a tanning salon, I’m sure objects to the fact that now there’s a little bit of a fee there that, that adds to that cost. So, it, it made it harder. But still … we found a feasible way of doing it and Presidents have tried for a century to enact legislation to cover everybody.

And I give credit to President Obama that he was the President who made it happen. Close votes all the way through, as you say there’s a lot of misunderstanding and, ands lack of support even after the fact.

But the Supreme Court has upheld the constitutionality of the law. States recognize how important it is to reduce the bad debts of many of their public hospitals in the states.

I think physicians and hospitals actually are starting to get enthusiastic about doing some things in a new way that provide better care to their patients and, and eliminate some of the waste that they know is in the health care system.

So, I see, as each day goes by … each year goes by, there’s more acceptance, more people hear the stories of families who had limits on their health insurance coverage, run out. And those are now abolished under the Affordable Care Act. So …


DAVIS: … as it touches more and more lives, I think you’ll see support growing.

HEFFNER: Is there any real effort being made to educate the American people as to the facts of the matter, as you’ve set them forth …

DAVIS: Well, I think …

HEFFNER: … in terms of affordable health care.

DAVIS: … ahem, can’t say honestly that I think we’ve done a good job with education nor is an effort really being mounted to do it now. But bit by bit it’s coming out. It’s coming out, for example, the Commonwealth Fund showed that 6.6 million young adults are covered by their parents’ policies.

Now about half of those were uninsured, others had maybe a college health plan that wasn’t very good. And they’ve improved their covered by going on their parents plan. So, people tell those stories. They tell their neighbors about being how relieved they are that their son or daughter who maybe has a job, but not a job that has health benefits, can at least stay on their parent’s policy. So, little by little it’s coming out.

We’re seeing the numbers on health insurance premiums slowing down, so health insurance …

HEFFNER: The increase is slowing down?

DAVIS: Right, it used to go up 10%, 15%, 20% a year … double digit was what we expected with health insurance premiums.

This year they … the numbers just out show that family policies the premiums went up 4% for single coverage, 3% … truthfully total health spending went up 3.9% in 2009, 2010 … and that’s the lowest in fifty years. So, we’re doing, we’re doing something right.

HEFFNER: Would you change the dates on that article that we first discussed a dozen years ago? From 20/20 …

DAVIS: You know I still think we can get there by 2020.

HEFFNER: We can get there?

DAVIS: Yes, obviously we didn’t get started in the first decade, but I think we’re now started in earnest … with the Affordable Care Act … we’ve laid the foundation for universal coverage. We’ve laid the foundation for quality improvement. We’ve laid the foundation for improved preventive care and, and health promotion.

You’re even starting to see some fast food chains post the calories (laugh) … that was also in the Affordable Care Act.

So I think if we all work together … in a decade we can have a high performance health system.

HEFFNER: Do you think we will? We can …

DAVIS: I do … we can and I’m optimistic that we will.

HEFFNER: Karen Davis you are a very optimistic person and I hope you’ll stay with me and let’s develop more these other criteria that you’ve established for what will be, shall be, must be, the right kind of health care for Americans. Thanks so much for joining me today.

DAVIS: Thank you.

HEFFNER: And thanks, too, to you in the audience. I hope you join us again next time. Meanwhile, as another old friend used to say, “Good night and good luck.”

And do visit the Open Mind Website at thirteen.org/openmind to reprise this program online right now or to draw upon our Archive of 1,500 or so other Open Mind and related programs. That’s thirteen.org/openmind.