AEI Fellow Thomas Miller: There is No One Magic Fix to American Healthcare

Conducted by April Xiaoyi Xu (PO ’18) Editor-in-Chief

Transcribed by Jenna Lewinstein (SCR ’19) Digital Content Writer

Thomas Miller is a fellow at the American Enterprise Institute (AEI) studying health care policy, litigation, and reform. He researches regulatory barriers to choice and competition, and investigates market-based alternatives to the Affordable Care Act. Previously, he worked as a Senior Health Economist for the Joint Economic Committee in Congress. His latest co-authored book is titled, “Why Obamacare is Wrong for America.” CJLPP sat down with Mr. Miller following his Athenaeum talk titled, “The Future of Healthcare in America.”

CJLPP: It has been announced that the Trump administration is cutting the Affordable Care Act’s advertising budget by 90 percent, as well as reducing spending on groups that help customers find the appropriate insurance plan. Do you think this will impact the effectiveness of the program? If so, how?

Miller: We have had some experience with that during this last enrollment season. They shortened the dates and did not put the same amount of money into the various groups that were engaged in the enrollment processes. Despite this we got about the same amount of people enrolling. It did not seem to make a difference because the biggest difference is how much you are being subsidized. The minimum is fairly high and it is not going to get much lower as long as the current subsidy structure remains in place. In the same way, reducing the enrollment period in half didn’t make a big difference because most of the people enrolled very early. There was not a great demonstration of the extra volume that came from those investments.

There are other parts of the healthcare system where we should be spending more money, with the goal of making it easier or practical for people to use it. This does not mean just enrolling them in an insurance plan. We have a very complex system, which is bizarre, confusing, and demoralizing to patients. Not only while you are in the hospital, but also when you are seeing a physician. Knowing that they are only able to communicate with you in the allotted three minutes that they have scheduled for you in their office. There is a very important and neglected aspect of healthcare, which is to make it practical, understandable, and workable for real people. That that may involve public investment, because it will not come privately. Again, in my theme of substitution rather than addition, rather than try to add more extensive services that people either don’t know they have or don’t use, we should invest more on decision support and patient engagement. A worthwhile contribution would be to prioritize ways in which the system becomes real to people so that they can have a role, a voice in exit, and a choice. However, we tend to have a lot of self-interested groups which make sure they get their operations funded, but don’t necessarily deliver the actual care that affects people’s real lives, for both health and economic reasons.

CJLPP: Continuing with the Affordable Care Act, the Trump Administration also decided to repeal the individual mandate. For those of us who are not familiar, what is the Obamacare individual mandate? And what does its repeal mean for Americans?

Miller: Well the individual mandate had a mixed progeny, it was put into the Affordable Care Act for multiple reasons but particularly as a way to derive a budget score. It did not work out that way, but that was just one part of it. The creators of the ACA were trying to throw together different items to create the pretense that everything was paid for and was offset with other revenues to pay for the expenses. Now it was never collected, but this scoring approach was another way to do a short-term fix. Also, those who like the Affordable Care Act and those who engineered it tell people not only is this stuff good for you, you don’t have any choice, you are going to have to get it anyway. And they were hoping that they would bring in people who would pay more for care than it was worth to them, mostly younger people or slightly up the income ladder, who didn’t think they needed as much health insurance, because they needed that money to pay for other people. That was the main engineering purpose of the individual mandate.

Now, let’s move over to reality. In practice, the individual mandate was the most disliked part of the Affordable Care Act, even by the people who were not even affected by it and already had coverage. People did not like the idea of being told they have to buy something as a government requirement. There were also legal arguments. I was involved in some of this litigation, which went up to the Supreme Court to determine whether it was unconstitutional or not. We got a split decision due to the oddities of Chief Justice Roberts. Because it is disliked, it was always a very weak individual mandate that acted as a suggestion. Once they ran into trouble, the Obama administration put in all kinds of special exceptions and exemptions from the mandate. In addition, there is an unaffordability part of it.  You are not subject to it if it costs more than a certain amount, if you don’t file taxes, or if your state didn’t pass the Medicaid expansion The actual numbers of people who were subject to the individual mandate would admit that they had not gotten the insurance on their tax forms and then paid the penalty.
So unsurprisingly, all the promises of the individual mandate did not materialize. It took a long time in the world of budgetary scoring for the Congressional Budget Office to recognize this. They began to recognize, “Oh, I guess we were a little on the high side there,” so they started marking it down. People are not going in the streets to say, “We have to get that individual mandate back.” The way it worked was, people enrolled in the exchanges if they were getting a lot of subsidies, and if they were not they didn’t. That was the magic, if you give people money, if you subsidize them, they will come—whether they like it or not. In my opinion the individual mandate was a bad idea and did not keep with our values and history. I would be opposed to it in theory and in principle. But I didn’t need to make those arguments. I wrote a lot about the individual mandate and all the practical impediments to it, and how the opposition had more than enough to kill it off.

CJLPP: Do you think the Affordable Care Act has shifted Americans expectations of government involvement in healthcare?

Miller: Yes, particularly in the beginning. Every time you establish a new program where it looks like someone is getting something for less than it costs and someone else is paying for it, it becomes difficult to take it away. Once the act is put into practice and implemented with a constituency, people are going to notice, “Wait a minute, I got this before and now you are going to take it away?” That is the politics of modern entitlements, which makes them hard to cut back. You can nibble at the edges but it is hard to usually go at it head on, short of major political or economic swings in a strong direction. Sometimes things get built into the scenery and become taken for granted. Then to change it is considered revolutionary and disruptive, or changing something that is already settled. This happens not just among patients and consumers, it is everyone who is feeding off of it. The healthcare community, which is getting more revenue as a result of the Affordable Care Act is saying, “This is what my business plan is and here is what my revenue prospects were, repealing this would upset everything so I am going to hold on for dear life to retain this.” So, it is easier to stop new additions than to take away ones that have been in place for a number of years. This is what the Republicans in office are finding out along the way.

CJLPP: Considering the publicly funded healthcare systems in much of Europe, do you think a similar system would ever be able to work for the United States? Why or why not?

Miller: We would have to camouflage this type of system even more than we currently do. We have a lot of government sponsored healthcare, directly and indirectly, and not everyone acknowledges it. If you add up Medicare and Medicaid and other lesser programs, you realize that about 45 percent of the healthcare dollar is already accounted for. If you add onto that the other ways in which the public sector is either indirectly subsidizing bills or controlling what is being bought and sold, you get well past 50 percent. So, that is where we already are. The question is how it will adjust in the future. We always try to mix and match. For instance in Medicare, we have a growing portion of Medicare called Medicare Advantage, which is a private-sector-like plan under a lot of public rules. It is not Medicare in the traditional sense, but rather looks more private compared to what it was a couple decades ago. It is growing, partly because it does a better job, and partly because more was invested in it compared to the old Medicare system. Medicaid has grown substantially under the Affordable Care Act, and that although the care is mostly brokered and managed by private insurance companies under state rules and state contracts, it is still more public than it is private. European or other public-sector countries have more faith and adherence to government regulation and are more bureaucratized and transparent.

The US likes some subsidies, we like regulatory advantages, and we often don’t look at the total balance sheet and realize how much of it is being run through our political processes. We are not Europeans, we don’t like to get on trains, we would rather get in cars. We are not as solidarity-oriented and collectivist as most of the European nations are. Now most European nations are not invested completely in state socialism either, if you do your research, you will find out that the private sector still plays some role, but they are further in that direction than we are. Also, we are less tolerant of explicit price controls. We like our price controls disguised a little bit.

CJLPP: Americans have shown considerable discontent with our country’s healthcare policy in recent years, whether that be insurance inequity, high costs or quality issues. In your view, what would be the ideal construction of healthcare policy in America?

Miller: I never worry about what an ideal construction in healthcare policy would look like. Our policy is so backward that any improvement will be a step in the right direction. Before we reach for the ideal, we need to start adopting better practices. Having said that, while we may not be good at producing a good healthcare system, we are excellent at producing healthcare system criticism. People will often draw a distinction between not liking their doctor or their health plan, and not liking the rest of the system. But at the same time, people do not want what they have to be disrupted. Generally, there are a lot of people who don’t like their healthcare whatsoever right now and have had bad experiences. Considering the history of healthcare, we have been on a slow slide downward, step-by-step, incrementally getting worse. If we want to improve it, we are going to have to climb that steep hill step-by-step, rather than thinking there is going to be one sudden breakthrough moment where everything changes and it all transforms magically.

CJLPP: Finally, do you have any advice for students looking to make a difference in US healthcare policy and law?

Miller: Do something different. We have tried almost all of the bad policies we could possibly imagine. So, don’t be afraid to suggest something different, it might not be new, but it might have been discarded or dismissed. Because most of what has been established as conventional wisdom has been wrong. And it has affected the lives of a lot of people. We have redirected resources that could have improved people’s health, improved their lives, and better matched what their values and preferences are. But, because policy is driven by people who are already doing quite well for themselves, important priorities often go overlooked.

CJLPP: Thank you very much for your time.

One thought on “AEI Fellow Thomas Miller: There is No One Magic Fix to American Healthcare

  1. Pingback: There is no one magic fix to american health care - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise | MaryPatriotNews

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