Conference Participants Deliberate Future of U.S. Health Care Reform

Sarah Galer
University of Chicago News Office
November 6, 2012

The 2010 Patient Protection and Affordable Care Act and this year’s U.S. Supreme Court decision to uphold much of the law have ignited a widespread national debate on health care.

In light of these historic events, the University of Chicago Law School and the Biological Sciences Division hosted a major conference, The Future of Health Care Reform in the United States, to help inform and shape future public debate on health care reform.

"There is a general consensus that the U.S. health care system fails to cover millions upon millions of people, that the costs of care are too high, and the quality of care is by many measures inadequate,” said Mark Siegler, the Lindy Bergman Distinguished Service Professor of Medicine and director of the MacLean Center for Clinical Medical Ethics, in his welcoming remarks. “What we disagree about is how to fix the system. Whether you love or hate the Affordable Care Act, there is no question that much work remains to be done.”

The conference, held last month, attracted some of the most influential and active voices working to reform health care today. The proceedings from the conference will be published in a forthcoming book. Discussions ranged from legal and budget issues, to the ACA’s implications for health care coverage expansion and delivery, and the difficulties of streamlining the health care industry, tracking performance, and encouraging efficient innovation.

Systematic problems with economic impact

“Whether we focus on cost containment, on the ongoing difficulty of providing universal access to health insurance, on quality of care issues, on the institutional design of Medicare and Medicaid, or on simply implementing the ACA, there are multiple problems to solve,” said Law School Dean Michael H. Schill, noting that while the United States sees itself as an innovator in health care, the World Health Organization ranks the U.S. health care system 37th in the world.

“Each of those systematic problems has real impact on insurance carriers, on health care as a business and on the economy, and most importantly, on patients and their families,” Schill added.

Speaking to a diverse audience of representatives from government, civil associations, business, private insurers, policy makers, medicine, law and academia, the first panel of the day featured thoughtful commentary on the legal ramifications of the Supreme Court’s ruling on the ACA. Jonathan Adler, a legal scholar at Case Western Reserve University, argued that Congress’ rush to pass the law magnified the opportunities for litigation, with more than three dozen cases already pending.

Carter Phillips, Co-Chair of the Executive Committee at the law firm Sidley Austin, a sponsor of the conference, predicted a ripple effect of litigation against laws involving the Commerce Clause, due to the Supreme Court’s decision to strike down that clause's use to support the individual health care mandate. He also contended that the Court’s argument against Medicaid expansion — that it amounted to a coercion of states to enact certain policies — was too vague to be useful.

“Coercion is not a concept that is self-defining,” Phillips said. “For purposes of how they are going to reform health care and virtually every other entitlement program, this could be at least a bit of a nightmare if only because we don’t know what the consequences will be in each context.”

Many panelists agreed that there would be clear benefits under the ACA, with case studies from Oregon and Massachusetts finding particular benefits for patients.

“How will performance of Massachusetts hospitals inform what may happen under national reform?” asked Amanda Kowalski, an economist from Yale University. “Well, we might be likely to see reductions in length of stay, reductions in admissions for the emergency room, and some improvements in preventative care,” also adding that the growth rate of hospital costs have held steady in Massachusetts.

However, many disagreed about how much the ACA would cost. Charles Blauhous, an economist at the Hoover Institution and a public trustee for Social Security and Medicare, said the net addition to federal spending would be over a trillion dollars in the next decade.

And while Steve Parente, a health finance scholar at the University of Minnesota, said that $1.4 trillion would flow through the federal health care exchange, he argued that a true cost-benefit analysis would be impossible to do at this time.

“There are just too many distortions,” he said, “with all of these little distortionary things along the way that just increase the costs because of people trying to compensate, to work around the incentives or disincentives to keep their costs down.”

From Interferences to ineffeciencies

John Cochrane, the AQR Capital Management Distinguished Service Professor of Finance at the University of Chicago Booth School of Business, discussed the relative dysfunction of the health care industry compared to other industries, during his luncheon keynote speech.

“Where are the Walmarts and Southwest Airlines of health care?” Cochrane asked. “They are missing, and for a rather obvious reason: regulatory and legal impediments.”

“The ACA and the health-policy industry are betting that new regulation, price controls, effectiveness panels, ‘accountable care’ organizations, and so on will force efficiency from the top down,” he said.

Cochrane said such interference, which causes distortions between supply and demand, has led to the inefficiencies experienced by other similarly regulated industries like the U.S. Post Office, Amtrak, military procurement and public schools.

“Government-imposed efficiency is, to put it charitably, a hope without historical precedent,” concluded Cochrane.

Richard Epstein, the James Parker Hall Distinguished Service Professor Emeritus, also was skeptical of efficient government regulation. “There is a huge and complicated public-choice dynamic that is going to intercede between what we want to see from a good government model and the actual models that will start to take place.”

Boston University economist James Rebitzer was more hopeful. “The open question for me is, will insurers find ways to create value and reduce costs in the newly competitive small group and individual market?” he said. “If they can, I will judge this policy intervention a great success. If they can’t, I will wonder why we tolerate these institutions.”

The conference also was supported in part by the Center for Health and the Social Sciences’ biannual Regis J. Fallon Lecture Series on Health and Law.