Speaker 1 (00:07): 

Welcome to Hospitals in Focus from the Federation of American Hospitals. Here’s your host, Chip Kahn. 

Chip Kahn (00:17): 

Hello and welcome to Hospitals in Focus. In this episode, we take a deep dive into the current and past state of health policy making on Capitol Hill with one of the central players of the last two decades. We will discuss a few of the major health policy accomplishments of recent years, as well as take a look at what the Republican majority in the House and its Democratic counterpart in the Senate are considering this year. 

(00:46): 

To walk through both history and prospects, we have one of the most qualified practitioners of health policy in the nation, Wendell Primus. Wendell just wrapped up an unprecedented and impactful career on Capitol Hill serving for 18 years as senior policy advisor on budget and health issues to Speaker Nancy Pelosi, playing a keystone role in the passage of the Affordable Care Act, ACA, and just about every other important piece of healthcare legislation for the past 20 years. Before that, among other influential positions, he served in key roles on the staff of the House Ways and Means Committee, and in the Clinton administration, as the HHS deputy assistant secretary for human services policy. Thanks so much for joining me today, Wendell. 

Wendell Primus  (01:37): 

Very glad to be with you, Chip. 

Chip Kahn (01:39): 

Wendell. Let’s get started. Let’s look back before we look forward. The Affordable Care Act, ACA, became a teenager this year, turning 13, but the policies it contains continue to be both transformational and unfortunately controversial. What do you see as the key effects of the law and how does that compare to what you thought would happen when the bill was enacted? 

Wendell Primus  (02:06): 

Chip, I think it’s less controversial than it was many years ago. I mean, the Republicans are no longer talking about repeal, or repeal and replace, and I think the law has been implemented about according to plan. I mean we have a lot more insured individuals. The 2021 Census report showed that we had tied our lowest uninsured level ever. And as more and more states, the Medicaid expansion, and as we now are seeing record levels in terms of marketplace enrollment, I think that uninsured rate is going to go down further and further. And I think the most interesting thing is that in the states that have expanded Medicaid recently, it was because voters in those states overturned their state legislators and voted to give low income people health insurance. I think that’s very significant and very interesting. 

Chip Kahn (03:13): 

Yes, it it encouraging because, from my view, ACA could be universal coverage, at least for Americans, if every piece of it was implemented. And hopefully those other states that are left out, which become fewer every year, eventually will come on board. 

Wendell Primus  (03:32): 

You’re absolutely right, Chip. I mean, what the ACA has accomplished is that every citizen, setting aside the issue of the undocumented for a moment, everybody now has access to affordable healthcare as a result of the ACA. 

Chip Kahn (03:48): 

And it’s really made a difference in a lot of lives. Something else that you’ve worked on probably will make a difference in many lives, and that’s the focus you have placed in recent times on reforming payment for drugs under the Medicare program. As one of the primary staff members on the Hill responsible for drafting HR 3, and then the ultimate drug payment changes that were enacted, how would you characterize the implications of these changes in the Medicare statute? And to sort of add another wrinkle, how does that set the table for the current discussions around refining the role of pharmacy benefit manager? 

Wendell Primus  (04:31): 

I think the drug pricing legislation that was enacted as part of the Inflation Reduction Act was very significant, but it’s a gift that can keep on giving. The CBO score in the Inflation Reduction Act was about 200 billion. When the House passed HR-3, the drug pricing savings was about 500 billion. So there is still a long ways to go. And the president has doubled down on that in his budget legislation that he sent up earlier this year. He’s increased the number of drugs that would be negotiated. But he didn’t apply the negotiated rate to the commercial sector. I think that’s one very important thing that still needs to be added. So we still have a ways to go, but it’s a very significant first step, and I see many more steps in the future. In terms of refining the role of PBMs, or pharmacy benefit managers. I think that is much less significant relative to the further changes that could be made to drug pricing. 

Chip Kahn (05:37): 

So let’s look at some other issues that are under examination now. A major one that the Energy and Commerce Committee and other parts of the House will probably focus on is price transparency. I was speaking to Energy and Commerce Chair Cathy McMorris Rodgers recently, and she views this as transformative for Medicare and healthcare in general. Where are you on price transparency, and do you see it as the kind of lever for change that some would argue it is? 

Wendell Primus  (06:08): 

I do not see that as a major transformation for Medicare. I mean, as you know better than anybody, Chip, prices are set by Medicare. I mean hospitals get a certain price, and so do doctors. So I don’t see it at all significant for the Medicare program. I think it’s a good thing. I’m not arguing against price transparency. And I think it may be more important in the private sector for commercial insurance, but prices are hard to establish. I mean, if you do a given procedure on someone that is healthy versus say the same procedure on someone that’s 100 pounds overweight and has a lot of comorbidities, the time to recuperate and the expense involved may be substantially different. So I think price transparency is complicated, and it has a role to play, but I do not see it as a major transformation, particularly in the Medicare program. 

Chip Kahn (07:09): 

Many of the policies established by the ACA remain in discussion even today, and some Republicans would even like to see some of them changed, like the one regarding the ban on physician ownership and referral to hospitals. You will remember this ban was adopted because of research that indicated physician owned specialty hospitals particularly had over utilization. Do you see this discussion relevant to today, and is there any reason for us to shift policy here from your view? 

Wendell Primus  (07:43): 

No, I do not believe there’s any reason to shift policy. I mean when we enacted that as part of the ACA, it was because the Congressional Budget Office scored it as significant savings. Because as you said, there was over utilization. I do not think that score from CBO has changed. I know many Republican members, particularly from Texas, are introducing legislation that would overturn that ban, but I do not see anything that would warrant a change, and I believe that ban should continue. 

Chip Kahn (08:18): 

There’s a lot of discussion today around hospital consolidation, and frankly a little bit less focus on consolidation with insurers. And interestingly on the insurers’ side that consolidation is both horizontal and vertical with insurers buying other insurers, but also buying up doctor practices and other parts of the delivery system. I saw one estimate that UnitedHealthcare and its affiliates could soon control as much as 10% of all healthcare expenditures in the United States within the next five to seven years. That’s sort of a mind blowing notion. How do you see this affecting healthcare in the United States, and where are you on this sort of vertical shift with so much of the levers of healthcare going to the insurers? 

Wendell Primus  (09:12): 

Well, you’re correct. It is kind of a mind blowing set of issues here where we have UnitedHealthcare buying up a lot of doctor’s practices and actually employing doctors. I think that has implications for the Medicare Advantage market and upcoding, et cetera. And I do not think this is changes for the good. So I mean I think this will eventually start to affect prices in a negative direction, I mean in an upward direction, but it’s not clear to me what we do about it. 

Chip Kahn (09:45): 

You bring up Medicare Advantage, and there is quite a bit of scrutiny now in Congress and at CMS. Just recently it was announced that enrollment for MA will pass the 50% margin in terms of the number of Medicare beneficiaries, and there doesn’t seem to be anything stopping that. Many seniors obviously love their MA, they get extra benefits. But there is a downside when it comes to coding abuses and overuse of prior authorization, which can lead to care being delayed or denied. How do you view the explosive growth and the implications of MA, and should oversight be increased, or what should be done in terms of really this transformative change in Medicare? 

Wendell Primus  (10:37): 

Well, this is a very important set of issue here, and we’re going to see that continue because, as you say, Medicare beneficiaries get a benefit from enrolling in MA plans. Many employers right now see it as an advantage because they can lower their employer cost for Medigap type insurance. So I think it needs a lot more than just oversight. I think we need some fundamental rethinking here of what the reimbursement levels for MA should be. And this will not be easy. I mean there are a lot of political forces that will keep MA high. And last year we were working with Representative DelBene’s bill, which was trying to put a clamp or restrict prior authorizations. And we learned from CBO that MA plans achieved about a 10% utilization difference relative to fee for service. 

(11:38): 

Plus I think we’re going to see some upcoming MedPAC reports that are going to say MA plans, because of upcoding and other things, may be getting an 11% increase in payments relative to fee for service. So I think there’s some fundamental changes that we need to make in reimbursement in a downward direction, and this is going to continue to be an issue. And also the fact that we crossed the halfway point means that in some areas of the country, we’re seeing 75, 80% penetration. And that then raises issues of whether what’s left in fee for service can really serve as a benchmark for what the MA plan reimbursement level should be. 

(12:25): 

So I see this as a major issue, and I think Congress has to do not only oversight, but fundamentally look at whether MA plans are being overpaid. When I first joined the Ways and Means Committee many years ago, HMOs at that time were getting 95% of what fee for service payments were. Now, it could be as much as 120% taking into account both the utilization implications as well as how much they’re being paid relative to fee for service. 

Chip Kahn (13:01): 

This sort of leads, I think, to a conversation about what could be viewed as a conundrum. On the one hand, it’s been pushed off a number of years, but issues with the funding of the part A trust fund, the hospital trust fund in Medicare, obviously the outpatient side and the physician side of Medicare in a sense is funded by a revolving fund, but still affects federal spending. 

(13:26): 

But at the same time, Medicare payments to healthcare providers, hospitals, and clinicians only equals about 84 cents on the dollar of costs. And with that being the case, how should we look at the future of Medicare’s effect on the whole healthcare system? I mean right now in the House Energy and Commerce Committee and ultimately in the Ways and Means Committee, they’re talking about reducing outpatient hospital department payment by imposing site neutral payment policies between providers. Do you think Congress needs to focus on the effects of this Medicare underpayment, but how do you sort of reconcile that with other issues around the long-term funding of Medicare, as well as various aspects of Medicare where policymakers are questioning whether or not they’re paying in the correct manner? 

Wendell Primus  (14:25): 

That’s a very important set of questions you’ve asked there, Chip. I would quibble a little bit of whether you’re actually getting 84 cents for every dollar of cost from Medicare. I’m not just sure of that number. But it’s very clear that commercial insurance pays hospitals a lot more. And hospitals do quite well when they’re in suburbs and they have a very good mix of commercial insurers and less of Medicaid and Medicare. So I think this is going to be a continuing issue. 

(14:59): 

And if anything, going back to the ACA where we’ve got to worry about the cost of our overall health system, it’s how much commercial insurance is paying relative to Medicare. But I’m not quite willing to accept the fact that Medicare is underpaying to the extent you believe it is. I think site neutral payments in theory is a good thing, but the Congress legislated on that several years ago, and I think Congress has to proceed slowly in terms of whether it makes more changes to Medicare reimbursement levels. I think the real issue is on the commercial side. 

Chip Kahn (15:42): 

There is a natural experiment that’s going on along those lines, and it’s particularly if we look at rural hospitals that are, in terms of their payer mix, proportionately higher, if not almost 100% in many cases, Medicaid and Medicare payment. And we clearly know from that that payments are insufficient to keep the hospitals going. The 84 cents I think can be seen in the MedPAC numbers, but then MedPAC quibbles about what’s appropriate costs. So we’ll save that debate for another day. 

(16:18): 

Now let’s look at another policy that’s being proposed. The Republicans in their debt ceiling measure and in sort of their agenda would like Medicaid to be considered, at least for those who are able, more of a welfare program, and would like to see the imposition of work requirements or other kind of requirements that Medicaid recipients, that they physically can, would be engaged. What’s your view on that, and what’s your view on their justification for that, that somehow as a public program, work should be a attached to it? 

Wendell Primus  (16:57): 

I have a very dim view of work requirements, particularly in health programs. I mean, I think they set up further barriers from people actually getting health insurance. I think in having access to health insurance and having access to healthcare is just very important for keeping people healthy, and therefore keeping people fit for the labor market. So I think this hullabaloo over work requirements is way overrated. I would like to see that aspect of the Republican plan defeated, and we really should work on making sure that everybody has access to health insurance, and therefore access to healthcare. 

(17:40): 

In your last question, you mentioned about rural hospitals. I mean rural hospitals in states that haven’t expanded Medicaid are closing their doors much faster than hospitals in states where Medicaid has expanded. So I think the emphasis should still be on making sure every American has access to health insurance, and work requirements stand in the way of that. 

Chip Kahn (18:06): 

Another major issue facing healthcare is the growing workforce shortage, especially among nurses. I know this is something you’re looking into as you begin your new role at the Brookings Institution. Can you talk about that a bit? 

Wendell Primus  (18:24): 

Well, yeah, I mean, I guess I would say it’s maybe the number one issue in healthcare right now. And it’s a growing workforce across the board from physicians to nurses, and even lower paid workers in nursing homes and home and community-based services. I think a partial answer to that is immigration. I think when the baby boom generation reaches 85, 90, and they reach their peak in terms of demand for skilled nursing services and home and community-based services, we are going to see this workforce problem be even more intensified. And while it’s not a panacea, I think part of that problem could be erased if we would increase legal immigration levels in this country. I think we’ve got to do much more there. And we’ve also got to look at our medical schools, which is primarily a state decision. And we need to focus on all of the issues here in workforce because I view that as probably the number one problem facing our healthcare system today. 

Chip Kahn (19:42): 

The issue that we’ll be defining for the last few years is COVID-19, the pandemic. And the nation’s emerging from it as we speak. The public health emergency is no longer in place. But all the issues related to the experience we just had in terms of public health remain for us. What do you see as the primary public health challenges in terms of preparation for a future pandemic and keeping the public healthy generally, and what do you think should be done? 

Wendell Primus  (20:16): 

Well, I think we need to make more investments in our public health system. Right now, it’s very much state centered. And I’m not saying that’s bad, but I think we need more steady investment. And the other thing that’s got to happen is we got to have better coordination between CMS and the Center on Disease Control, CDC. I think we need rapid information from hospitals and other providers. And that’s where I think a key role would be to better coordinate what goes on at CMS and their reporting requirements and seeing that data that CDC needs gets there. I mean, creating another information system just does not solve a problem. CDC does need better information, and I think we need to work on that. But I see real issues there of better coordination, again, between CMS and CDC. 

Chip Kahn (21:19): 

Wendell, this has been such a helpful conversation. But before we end, I understand that you’re working on a book. Can you give us a sneak peek into the themes that you’re going to be attacking in that effort? 

Wendell Primus  (21:32): 

Yes. I will soon be appointed here at the Brookings Institute, and we’re going to work first on a series of six papers. The first one is going to be how do we resolve and strengthen the solvency of our Social Security system? And I’m working on that paper. We’re going to do another paper on reducing elderly poverty, which is now twice that of child poverty. People may not understand that fully, but using kind of a more comprehensive measure of poverty that takes into account SNAP benefits and housing vouchers and tax benefits. Child poverty is, again, about half that of elderly poverty. We have, as you know, solvency issues in the hospital insurance fund. And immigration, again. We will have a paper on immigration because, again, we see that as a partial solution to the workforce problem. 

(22:29): 

But in addition, I think there’s going to be a real crunch on the Medicaid program because the Medicaid program now is our long-term care payer of last resort, but you have to spend down into it. And I think when, again, the baby boom generation reaches its peak in terms of demand for long-term care services, it’s going to put a real squeeze on state budgets with all the implications that that has. So we’re going to do a series of six papers that will redefine and bring solvency to Social Security, Medicare, and also tackle the issue of long-term care. 

Chip Kahn (23:09): 

Well, I certainly look forward to reading your thinking on these critical matters of the day. And I just want to thank you so much for all your service as well as being with us today, Wendell. 

Wendell Primus  (23:22): 

Well, it was my pleasure, Chip, and I wish you well. And the hospitals just play a very critical role in providing care to Americans that are in need of care. 

Chip Kahn (23:33): 

Thank you. 

Speaker 1 (23:39): 

Thanks for listening to Hospitals in Focus from the Federation of American Hospitals. Learn more at fah.org. Follow the Federation on social media @FAHhospitals and follow chip at Chip Khan. Please rate, review, and subscribe to Hospitals in Focus. Join us next time for more in-depth conversations with healthcare leaders. 

Wendell Primus

Wendell Primus served as the Senior Policy Advisor on Budget and Health issues to Speaker Nancy Pelosi for 18 years before leaving his post earlier this year.

In that capacity, he was the lead staffer in developing the Affordable Care Act. He also played a major role in the SGR legislation in 2015 and various budget agreements.

Prior to this appointment in March, 2005, Primus was the Minority Staff Director at the Joint Economic Committee. He has also held positions at the Center on Budget and Policy Priorities, served in the Clinton Administration at the Department of Health and Human Services and also served as Chief Economist for the House Ways and Means Committee and Staff Director for the Committee’s Subcommittee on Human Resources.

Primus received his Ph.D. in economics from Iowa State University.