Adviser to Presidents Considers Politics and Reform

A Conversation With Gail R. Wilensky, PhD

Change comes slowly, says this public policy expert whose work over the last two decades has helped frame the health care debate. She’d like to see greater efforts in the public and private sectors to reward quality.

In and out of government, Gail R. Wilensky, PhD, has been a close observer of — and participant in — the tumultuous health policy debates of the last two decades. Currently, she is the John M. Olin Senior Fellow at Project HOPE’s Center for Health Affairs in Washington, where she follows federal health policy and the evolving medical market. Project HOPE (Health Opportunities for People Everywhere) is a not-for-profit foundation that provides medical training and health care education programs on five continents. It formed the Center for Health Affairs in 1981 to provide objective research and policy analysis on health related issues.

Wilensky has advised both Bush administrations. Most recently she served as co-chair of the President’s Task Force to Improve Health Care Delivery for Our Nation’s Veterans, which issued its final report in late May. In the first Bush administration, she served as deputy assistant to the president for policy development, focusing on health and welfare issues. That appointment followed a two-year stint, from 1990 to 1992, as administrator of the Health Care Financing Administration (now the Centers for Medicare and Medicaid Services) in the Department of Health and Human Services.

From 1997 to 2001, Wilensky chaired the Medicare Payment Advisory Commission, which advises Congress on payment and other issues relating to Medicare. From 1995 to 1997, she chaired the Physician Payment Review Commission. She also has been associated with several research centers and on the faculty of two universities. Wilensky earned a BA in psychology and a PhD in economics from the University of Michigan. She spoke in early June with Senior Contributing Editor Patrick Mullen.

MANAGED CARE: How significant an issue do you anticipate health care will be next year in the presidential election?

WILENSKY: It is not shaping up to be as serious an issue as I believe the Democrats, who are raising it, hope it will be. It will be a factor in sorting through candidates in the Democratic primaries. This is a traditionally Democratic issue and there are stresses and strains within the Democratic party, particularly with regard to spending increases and concerns about the uninsured. I wouldn’t want to suggest that it’s not an issue of any relevance for 2004, but I think the economy will be the overriding issue.

MC: So the situation might resemble 1992, with the economy as the central issue and health care in the mix.

WILENSKY: Yes, and if economic concerns lead to a skittish middle class, that would raise additional concerns about health care. It’s really the economy that will drive the campaign. If the economy is showing some signs of recovery and increasing strength, then I don’t think health care will be the delineating issue.

MC: The Bush administration is advocating Medicaid reforms that Republicans say would give states greater flexibility and Democrats say would endanger the essence of the program. How is that debate playing out?

WILENSKY: There does seem to be movement among some Democratic governors to put limits on spending in exchange for increased flexibility.

MC: In other words, turn the federal Medicaid contribution into a block grant?

WILENSKY: The idea is to turn a portion of it into a block grant. The question is, how big a portion? Another issue is under what circumstances allowances would be made to accommodate other factors that could influence the amount of the block grant.

MC: So the amount could go up under extreme circumstances?

WILENSKY: Right, but while you might get support from Democratic governors, you may or may not get support from liberal Democrats in Congress. The question is whether it’s possible to find sixty votes in the Senate to overcome a possible filibuster. In the House, you don’t have to worry about the supermajority that is an issue in the Senate. It’s possible to get legislation passed in the House if Republicans either stay together as a group or pick up just a few Democrats. In the Senate, I think it will be very important politically for Republicans to show that they could put together a coalition that can get fifty or more votes even if they can’t get to sixty.

MC: From a policy perspective, is it wise to set up a block-grant approach to Medicaid?

WILENSKY: Having some tradeoff for increased flexibility with some limits on growth is appropriate. The primary factor that produces cost constraint in Medicaid is the states’ portion of the matching grant, but states have shown that when pressured fiscally they have been able to devise strategies that allow them to increase spending almost exclusively with new federal money. Therefore, finding other ways to define limits on federal spending is appropriate. That’s not to say there isn’t any concern about including measures that allow for unpredictable pressures to increase block grant spending. Still, we need to move away from an open-ended entitlement. The state/federal match may no longer serve the function it was initially set up to serve. It was assumed that the match formula would be a constraining factor on costs. As we’ve seen through upper payment limits, intergovernmental transfers, and in the early 1990s, provider taxes and voluntary donations, it’s sometimes possible for states to increase spending entirely with federal dollars. That means the matching grant concept is no longer viable as a cost-constraining factor. Something that would add a per-person limit to spending is legitimate. Having a portion of Medicaid spending that is fixed and a portion that is variable also makes sense. I would like to see more emphasis on measuring the health status and outcomes of people who are affected by the program and a little less emphasis on processes of care. I don’t think they’ve told us very much over time. They really don’t provide us nearly as much assurance as people think.

MC: You’ve said in the past that the employer-sponsored health system has its peculiarities, and that if we were designing a system from scratch we probably wouldn’t do it that way. But now that we have it, do you share the view that this country is unlikely to go in a radically different direction?

WILENSKY: We are not likely to make a radical move. We may allow structures that would begin to set up competing ways to get health insurance coverage. Tax credits would provide one such means, either for people who don’t have access to employer-sponsored insurance or maybe ultimately for people who do have such coverage but who don’t wish to choose it. We need to be careful with the sequence in which we roll out changes so that we don’t disrupt a system that has provided coverage to large numbers of employed individuals.

MC: How good of a job are employers doing in improving the value — or at least measuring the value — of the health benefits they’re buying?

WILENSKY: They’re not doing very well, but neither is the federal government. That is not an area where I think either the public or private sector has excelled. There hasn’t been the sense that either public or private purchasers are nearly as concerned about getting value for their money as those of us who are health services researchers would like them to be. Some large employers have been very aggressive in this area, but it has not seemed to be the dominant mode.

MC: So for example, efforts like those of the Leapfrog Group aren’t yet having a major impact?

WILENSKY: There are periodic activities in the public sector by the Centers for Medicare and Medicaid Services and by groups in the private sector like Leapfrog to try to reward increased quality. They are piddling relative to the amount of purchasing that goes on in general.

MC: How do you turn that around?

WILENSKY: Both public and private sector purchasers have to be much more aggressive about trying to reward quality. That means they have to be comfortable that they can measure quality. Once they can do that, they can reward it and try to drive business away from those they think aren’t delivering higher quality. It would also obviously help drive change if individual patient/consumers thought it was an issue. We need to get people’s attention that there is a wide variation in the quality and empirical basis for care and get people to recognize they ought to care about it. We are not a society that is indifferent to consumer reports. We just don’t seem to have really gotten the message that the informed-consumer approach is appropriate in health care as well.

MC: Most consumers are still more concerned with coverage than with quality.

WILENSKY: And just don’t seem to understand the kind of variations that appear to be out there.

MC: How do you get that message out, when people focus on health care only when they’re choosing coverage once a year or when someone in their family gets really sick?

WILENSKY: We need better information showing different outcomes that combine patient satisfaction and actual health outcomes. Then we need to make that information readily available in forms that are credible, so people are comfortable that these are in fact good quality measures. While there can be demonstration projects in the public sector, the flexibility that exists in the private sector makes it a much easier place to try these things there first. Some interesting experiments are being talked about between large employers and large provider groups that involve negotiating a way to share savings associated with good outcomes and to otherwise try to encourage large provider groups to be responsive to employers’ concerns about providing better health care. It just doesn’t seem to be pervasive.

MC: How big a factor do you expect the genomic revolution to be in changing how health dollars are spent and what kind of care is delivered over the next several years?

WILENSKY: We’re not close yet to knowing that. It could have a lot of impact but I suspect it will take a lot longer to get here than many people think.

MC: It sounds like the Internet revolution, with people having huge expectations until they realized that change would come over a period of years, not overnight.

WILENSKY: Right. I don’t believe that this is something that’s about to have a huge impact on delivery of health care on a regular basis.

MC: Senators and Representatives from across the political spectrum came back from the Memorial Day recess saying they were determined to pass Medicare prescription-drug coverage before the Fourth of July recess. Over the past year, you’ve been skeptical about a bill passing during this session of Congress. Where do things stand, and what do you expect will happen?

WILENSKY: This is a very political issue. There is a fundamental disagreement about whether to add prescription drug benefits to traditional Medicare, which is the dominant Democratic position, or whether to try to change how Medicare is structured and particularly how the prescription drug benefit would be delivered and do it somewhat differently. The fundamental problem remains that a bill needs sixty votes in the Senate. That’s a high hurdle to get over, and so I still regard it as not very likely for anything to pass this session. It’s been difficult to get over the fifty-vote mark in the Senate in areas that are not as political as health care. There are deep divisions as to how to proceed. I’ve followed comments by various people in the administration and on the Hill about how they think this could happen. It is easier to imagine next year Congress passing a reduced package that is closer to the low-income catastrophic support measures that have been talked about from time to time. It could be something like the programs that have been proposed in the House and Senate that would provide subsidies for seniors whose incomes are between 150 percent and 180 percent of the poverty line and those who have very high drug expenditures. A lot of people don’t like that as a precedent. They don’t want to relieve the political pressure without passing a full-blown prescription drug plan. It’s important that whatever is put together attracts more than fifty votes in the Senate so it can serve as a precedent for whatever comes in the future. I know that the Republican leadership and Sen. Charles Grassley [R-Iowa] are working hard to find ways to develop legislation that will have some Democratic support. Republicans have to reach out to Democrats who may not find it in their political interest to support a bill. Conservative Republican support might fall away if too much is done to reach out to Democrats to bring in bipartisan support. I truly cannot think of what it would take to get enough Democrats to decide that a proposal is close enough to what they want that they’re willing to have a Republican Congress and Republican president succeed on their issue. The type of bill that could actually pass would basically look like a Democratic bill and it’s hard to imagine why a Republican majority is going to go along with that. Still, there may be some possibility for compromise that’s not obvious at this point.

MC: Thank you.

[Editor’s note: The “possibility for compromise,” that Wilensky alludes to may be forming. On June 10, Sen. Edward M. Kennedy (D-Mass), endorsed the Senate Finance Committee’s Medicare prescription drug bill, saying it was “an opening” that Democrats should take advantage of. While both houses of Congress had just passed bills at Managed Care’s press time, there was no certainty that the differences would be resolved easily, or at all, in conference committee.]

MANAGED CARE July 2003. ©MediMedia USA