Medicare Post-election by Stanford Health Policy on Exposure

Robert MacCoun, a professor of law and a senior fellow at the Freeman Spogli Institute for International Studies, relays the potential risks and benefits of legalizing marijuana. His research focuses on drug policy, and he has written extensively about the effects of marijuana from a legal and health perspective.

California, Massachusetts and Nevada all legalized marijuana in the last election. Does this mean the legalization movement has reached a tipping point?  

If Hillary Clinton had won the election, it would probably feel that way, not because she’s a legalization advocate, but because she’d have bigger fish to fry and would probably continue President Obama’s laissez-faire approach. With the Trump administration’s new cabinet, all bets are off. Still, one in five Americans now live in a state where recreational use of marijuana is legal, and that’s a big market. And as the market grows, the industry’s lobbying clout grows.

What are the health risks post-legalization?

That depends on how much consumption levels increase. There are good reasons to expect marijuana prices to fall, which will increase consumption. Because many people use marijuana without health consequences, I worry less about an increase in the number of people using marijuana than about an increase in the number who use it one or more times daily. There is growing evidence that heavy marijuana use is associated with an increased risk of psychosis. We don’t know if it is a true cause-and-effect relationship; let’s hope it is not. But I think the biggest health threat is dependence, which for marijuana is something like getting stuck in the La Brea tar pits — your world just gets smaller and smaller as you get more dysfunctional.

Robert MacCoun, PhD

How can legalizing states combat these risks?

The good news is that legalization makes possible all sorts of regulatory options that weren’t available under prohibition. States should insist that no marijuana products are to be packaged in a way that entices children. Doses should be standardized, and there should be accurate labeling about the THC content. States should discourage products with high levels of THC, and perhaps encourage products with higher levels of cannabidiol (CBD), an ingredient that seems to counteract some of the harmful effects of THC.

The bad news is that the state ballot initiatives didn’t do much more than give lip service to public health and safety, and industry entrepreneurs are pushing back hard against state regulators. I think the industry is being foolish here — they’ve won eight states but still have 42 states to go. I don’t think they realize how quickly a backlash could emerge if those eight states show rising rates of various adverse outcomes.

Could there be any positive health effects of marijuana use?

Absolutely. There are plenty of lines of evidence suggesting medical benefits for some patients. Intriguingly, several new studies suggest that medical marijuana states may be experiencing reduced levels of opioid use and opioid overdoses. The Catch 22 is that the DEA decided not to reschedule marijuana because there isn’t enough rigorous evidence, but there isn’t enough rigorous evidence because the Feds have made such studies almost impossible to conduct.

Some of the biggest health benefits of marijuana will occur if it turns out that marijuana use is a substitute for binge drinking. There are both physiological and economic reasons to think that might be the case, but while some studies show substitution, others show complementarity. For a researcher, one big benefit of legalization is that it is going to help us finally answer a lot of these research questions.

Stanford Health Policy faculty members Michelle Mello, David Studdert and Laurence Baker discuss repealing the Affordable Care Act (ACA) and how it could affect health coverage in the United States.

Now that the United States has elected a Republican president and Congress, what is likely to happen to the Affordable Care Act (ACA)?

Michelle Mello and David Studdert: Exactly what will happen is unclear at this point, particularly since President-elect Trump’s own position on the ACA seems to be evolving by the day. In an interview on Nov. 11, he said he is interested in keeping some of the key provisions of the law, such as a ban on insurers discriminating on the basis of pre-existing conditions and provisions allowing young people to stay on their parents’ plans until age 26. But his opposition to other provisions, including the cornerstone provision requiring individuals to purchase insurance coverage, likely will remain. At this point, about the only thing one can say with certainty is that substantial change is coming.

Is the ACA likely to be repealed fully, or will some components be spared?

Mello/Studdert: On the campaign trail, President-elect Trump said repeatedly that repealing Obamacare is a priority. House Republicans have said the same. A complete repeal seems unlikely in the short term, though. There’s more opposition to some provisions of the act than to others, and millions of Americans now depend on health insurance coverage made available through the ACA. More likely, Republicans will target certain key elements – the individual mandate, minimum essential coverage rules, the subsidies available to low-income purchasers of health insurance and federal financing arrangements for the Medicaid program. Eliminating all of these features would spell the end of Obamacare as we know it. Eliminating any one of them would seriously threaten its viability, because the ACA’s strategy depends on having all major legs of the stool in place.

What is the legal process for repeal, and what issues would likely arise?

Mello/Studdert: Although Republicans will have a majority in the House and Senate, they fall just short of a filibuster-proof majority (60 votes) in the Senate. This is why a repeal is not likely to occur – at least not straight away – unless several Senate Democrats break ranks in the vote. A more likely scenario is that Republicans will use the budget reconciliation process to make the kind of changes mentioned above. Bills of this kind require only a simple 51-vote majority in the Senate, which they have.

Laurence Baker: Republicans have substantial ability to remove parts of the law under budget reconciliation. They can make changes to aspects of the ACA that involve financial in- and outflows to the federal government, but not other things. Reconciliation thus allows them to make changes to the major things like the mandate – because it involves a tax penalty – the subsidies and Medicaid. But they would not be easily able to repeal things like the exchange structures, guaranteed offers of insurance regardless of health status and other provisions. Guaranteed issue would be a real problem for insurance companies without the mandate, so repealing one but not the other threatens significant disruptions in insurance markets.

Most of the discussions thus far have focused on efforts to repeal the ACA’s expanding coverage aspects, but there are other aspects of the ACA that could be addressed. The ACA set up and funds the Center for Medicare and Medicaid Innovation (CMMI) and Patient-Centered Outcomes Research Institute (PCORI), two organizations that have not been discussed much in the repeal debates and which are seen by some Republicans in a more positive light. The ACA also makes changes to Medicare payments. It seems likely that repeal debates will focus more on coverage and less on these things, but it’s hard to tell at this point.

How will this affect Americans who current receive subsidies for health insurance?

Mello/Studdert: Elimination of the subsidies would have a major effect on the ACA’s core objective to cover the uninsured. By 2017, about 25 million people will have purchased their health insurance on the exchanges set up under the ACA, and about three-quarters of them will receive subsidies to help make premiums affordable. If the subsidies disappear, we should expect that health insurance will become unaffordable for many of these people or no longer look like a good deal. The tax credits and health savings accounts currently being discussed won’t make up for what is lost, and many people who currently have insurance can be expected to drop it. Elimination of the individual mandate will further open the way for this to happen.

Baker: The reality of the health care system is that there are not easily available alternatives to the ACA that would protect coverage and be palatable to broad groups of Republicans. Single-payer, or national health insurance, is a non-starter, so they’d be left with market-oriented reforms, and there are not obvious ways to pursue those without at least some core features of the ACA. Most of the proposals recently put forward for a replacement, including those highlighted by the Trump campaign, like cross-state competition, tax credits for insurance purchase and block granting Medicaid, would not really offer coverage to a large number of the people who would lose it under repeal. So a key question is what alternatives the Republicans come up with. In a similar way, the ACA and its provisions have become increasingly woven into our insurance system. Insurers and employers, among others, have made decisions and investments incorporating the ACA. Undoing those threatens disruptions and political challenges.

Michelle Mello is a professor of law and of health research and policy.

David Studdert is a professor of law and of medicine.

Laurence Baker is a professor of health research and policy, chair of the Department of Health Research and Policy in the School of Medicine and a senior fellow at the Stanford Institute for Economic Policy Research.

The U.S. Preventive Services Task Force now recommends adults ages 40 to 75 with no history of heart disease — but who nevertheless have at least one risk factor and an elevated risk of cardiovascular disease — take a low- to moderate-dose statin.

Health policy expert Bob Kocher likes to show a slide of the signature page of the Affordable Care Act, which he helped draft when he worked in the White House.

The mottled page shows an official time stamp of March 23, 2010, and the choppy signature of President Obama, who had to use the 22 pens he would later gift each member of Congress who helped him pass the landmark health-care law.

“We thought it would be pretty simple,” Kocher recalled with a grin. “We had 60 Democrats in the Senate and a huge majority in the House, a popular president. But then you saw what happened.”

Kocher was the keynote speaker at Health Policy through 2020: The ACA, Payment Reform and Global Challenges, a half-day symposium of speakers and panels covering some of the greatest challenges facing health care and policy here at home and abroad.

“Everything that you could imagine that would throw a monkey wrench into it, did,” said Kocher, a physician and partner at the Silicon Valley venture capital firm, Venrock, which invests in health-care and technology startups.

Six years after its rocky start — and ongoing threats to repeal the law by Republicans — Kocher still believes the ACA has had a tremendously important impact on the nation.

“Despite the single worst launch of a website in the history of the internet,” he said, 20 million more Americans now have access to health care; 13 million more are privately insured by their companies; and 7 million more are enrolled in Medicaid.

“I believe the ACA is working better than expected by virtue of the fact that there’s nobody in the ecosystem who is not behaving differently,” Kocher said.

Large employers have been forced to engage with their employees about the costs and quality of their health plans, and hospitals are adopting new technology by “liberating their data” with electronic medical records and embracing telemedicine, Kocher said.

“And for the first time, you see patients beginning to engage with new technologies and their doctors willing to entertain new models.”

Kocher, who specializes in investing in healthcare IT and services, said technology would eventually strip away some of the cost of patient care.

“One of the fun parts of my job as a venture capitalist is that I get to see a lot of these embryonic ideas and many of them have powerful ways to pull down costs without hurting quality,” he said. “We’ll have the technology and coordinated care, and data that helps guide the care, so I’m more hopeful than ever about being a patient.”

Kocher, a consulting professor at Stanford Medicine, was one of 15 speakers at the symposium to launch Stanford Health Policy, a community of faculty, physicians, scholars and students across the campus who are focused on improving health care and policy here at home and around the world.

Precision Health

Stanford School of Medicine Dean Lloyd B. Minor shared what he called “some surprising statistics” with the 200 people at the symposium on Oct. 14.

When looking at a pie chart representing the determinants of health, Minor said, only 5 percent are genetically based, 20 percent are based on health care and another 20 percent are due to behavioral factors.

But a full 55 percent of the determinants of health are socially and environmentally determined, Minor said, and that presents challenges for academic medical centers.

“I’m really excited in that I believe that we are beginning to come up with some ways we can address that need, as a leading academic medical center, to chart the future for how we can improve the delivery of health care in our country and then ultimately around the world,” Minor said. “For us, that vision for how we fulfill that need begins with what we describe as precision health.”

Minor said precision medicine, now embraced by the Obama administration, is about using genomics, big data science and personalization in order to individualize the treatment of acute diseases such as cancer, heart and neurological diseases.

“It’s about understanding the determinants and predisposing factors of disease in being able to more effectively intervene earlier,” he said. “And of course there’s no better place to do that than at Stanford because our academic medical center is such an integral part of this great research university.”

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The ACA Moving Forward

Kocher, who often lectures in health economics and policy courses at Stanford, conceded there are serious problems with Obamacare and offered some solutions moving forward.

But the climbing cost of health care and prescription drugs in the United States — which continue to outpace the economy and job growth — is his first concern.

Health insurance on average costs a family of four is $18,000 a year.

“That’s the price of a Corolla,” he said, referring to Toyota’s compact car. “The idea that you’re effectively buying a new car every year doesn’t feel like we’re getting the right amount of cost pressure on the system that we need. So I think that’s going to be the most fundamental problem going forward.”

Despite the gnashing of teeth over what would become of the ACA under a Trump or Clinton administration, Kocher predicted few changes.

“If Hillary Clinton wins, her priorities are actually going to be totally separate from ACA tweaks,” he said, adding that she likely would first focus on K-through-12 education, work on infrastructure spending and then international affairs.

“The odds that she wants to relive 1993 seems implausible to me,” he said.

As first lady, she pushed President Bill Clinton’s universal health-care plan with a mandate for all employers to provide health insurance coverage to all employees. The Health Security Act was widely condemned by conservatives and the health insurance industry and after a rancorous year of debate and counter-proposals, it died.

And what happens to the ACA if Donald Trump is elected president on Nov. 8?

“I can’t bring myself to comment,” Kocher said, lowering his head and chuckling.

He quickly moved on to some suggestions to make health care work better and faster.

“The first thing we need is to make these adolescent exchanges grow into adults and be stable and work better,” Kocher said of the health insurance marketplaces, which have foundered in some states and thrived in others.

He said the Covered California exchange, which insures some 1.7 million Californians, is the only exchange working really well because it has large bidding regions, doesn’t let all insurance providers into the system and does great outreach to young, healthy people.

Secondly, he said, the market power of hospitals has become too strong.

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“I realize there are some hospital leaders in the room and I salute you — you’ve done many things right, including getting market power,” Kocher said, addressing David Entwistle and Chris Dawes, the CEOs of Stanford Health Care and Lucile Packard Children’s Hospital, respectively, who also spoke at the symposium.

“But we need to figure out how to make the demand side of the equation more balanced with the supply side.”

He called health care today “massively inefficient” and “insanely unaffordable,” and said the average hospital stay is now $6,000 in the United States.

Kocher said he recently took his daughter to an emergency room and was charged $52 for a Tylenol. He told them he was a doctor and offered a Tylenol from his backpack.

“But I was told I couldn’t because of the safety of the hospital,” he said, shaking his head.

Kocher said hospitals must be accountable for their quality of the care and fined for failure to achieve promised quality indicators. As hospitals continue to bundle services and acquire private practices and physicians, costs have not gone down as expected.

Instead, hospital prices nationally have risen 6 to 9 percent in the last five years, faster than the rate of inflation. Perhaps, he suggested, some procedures and services should be tied to Medicare rates above a certain percentage of market share. And federally subsidized drug prices should be tied to patient income, not the facilities they use.

Kocher said there continues to be great debate over how high the penalty should be for those who decline to join a health exchange if they are uninsured by an employer.

The annual fee for not having insurance in 2016 is $695 per adult and $347.50 per child.

A higher mandate, he said, would get a lot more people into the system.

“But there’s no chance Congress is going to think about that.”

You can watch all the videos from the event here: 

Health Policy through 2020 by Stanford Health Policy on Exposure

As health-care costs climb ever upward, controlling expenses without sacrificing high-quality care becomes increasingly important. Payment systems based on the value of care are emerging as a way to combat rising costs.

Many researchers like Jason Wang, an associate professor of pediatrics and a Stanford Health Policy core faculty member, have found that bundled payment systems may help health-care institutions achieve better value of care.

In a new study in the Journal of the American Medical Association Oncology, Wang and his co-authors show that a value-based bundled payment system is associated with cost containment and improvement in care, even improving chances for survival.

The study examined Taiwan’s bundled pay-for-performance (PFP) system for breast cancer. Instead of the traditional fee-for-service (FFS) system that is typical in the United States — in which every test, surgery and exam is billed individually — this system includes all aspects of treatment in a single established cost, or bundled payment.

Based on guidelines set by Taiwan’s National Health Insurance Administration (NHIA), the pilot program reimbursed health-care institutions’ costs for breast cancer treatment based on the patient’s cancer stage, 0 to IV. Institutions that exceeded the NHIA’s standards received a financial bonus as an incentive for better performance.

The study followed 4,215 patients in the bundled-care system over a five-year period, comparing the quality of their care, the cost of their treatment and the outcomes of their treatment to 12,506 similar patients in the traditional FFS system.

The authors found that patients in the bundled-payment system received better care throughout treatment, were more likely to survive, and contained medical costs over time, compared to their peers in the FFS system.

Costs for patients in the bundled payment system remained about the same throughout the study. However, the cost of treatment for those in the FFS system steadily increased throughout the study period. By the end, even health-care institutions receiving the maximum bonus incentive would incur lower costs than those in the FFS system.

Yet even though their treatment was cheaper, patients in the bundled system experienced better results. Patients using the bundled system had significantly higher survival rates for cancer stages 0 to III, and they were more likely to receive higher quality care based on quality indicators.

This is largely due to the better coordination of care made necessary by the bundled system, according to Wang.

“When you play in an orchestra, the whole group needs to play together, so it plays the right tune,” said Wang. “Focusing on value for the patient and the health-care system forces people to play the same tune.”

Wang believes the lessons learned from Taiwan’s program could be applied in other parts of the world, including the United States, which is currently moving toward bundled cancer care.

Though the U.S. already bundles care for conditions like appendicitis and chemotherapy — in which costs are fairly predictable — many hospital administrators fear that broadening the use of bundled payments for more complex conditions is too risky, financially.

Wang does not share their misgivings.

“People say, ‘We can’t do this for a very complex disease.’ It’s not true,” he said. “When we went outside of the U.S., we started to find systems that work.”

Wang found that when institutions can coordinate care for patients — that is, when a single institution manages all aspects of a patient’s care — the patient is more likely to have better outcomes.

“If institutions take the leadership of providing the infrastructure to coordinate care, they can really deliver better care with the same or lower costs.”

There are benefits for the institutions, too. Right now, because health insurance providers may accept or reject particular costs in an unpredictable way, care institutions never know how much they’re going to get paid for a service. But in a bundled payment system, costs are much more stable and revenue easier to predict.

Considering the benefits, Wang hopes the Taiwan breast cancer study will show institutions in the United States and around the world that bundled payments for cancer can be done on a broad scale.

The value, he said, is worth the risk.

An Indian businessman approached Stanford Medicine in 2005 with an outlandish proposition: Help us build an ambulance system across the sprawling South Asia nation, which is home to 10 percent of the world’s traffic deaths.

S.V. Mahadevan, MD, an associate professor of emergency medicine at Stanford Medicine, was skeptical the nonprofit GVK EMRI (Emergency Management and Research Institute) could truly pull it off.

They only had 14 ambulances in the world’s second most populous nation.

Today the system has expanded to a fleet of nearly 10,000 ambulances, manned by some 20,000 medical professionals who ply the roads in cities and rural villages to provide access to emergency care to 750 million people — three-quarters of India’s population — according to a story in Stanford Medicine magazine last year.

“It’s hard to fathom what this system has done in 10 years,” said Mahadevan, founder of Stanford Emergency Medicine International, which has provided medical expertise to GVK EMRI over the last decade, helping to train the EMTs who now belong to the largest ambulance service in the developing world.

“It could be regarded as one of the most important advances in global medicine in the world today," he said.

Yet up until now there has been no analytical research on the impact of the ambulance service. Though EMRI says its 911-like service has saved more than 1.4 million lives in its first decade, there has been no published research to back up that claim.

Now, research by Stanford Health Policy scholars published in the October edition of the health policy journal, Health Affairs, indicates EMRI’s system has had a significant impact on saving the lives of newborns and infants, one of the most challenging health dilemmas plaguing India today.

Focusing on the first two states served by GVK EMRI — with a combined population of 145 million — their results show that the organization’s services have reduced infant and neonatal mortality rates by at least 2 percent in high-mortality areas of the western state of Gujarat. There were similar effects statewide in the southeastern state of Andhra Pradesh.

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“With our modern medical knowledge, childbirth should not be so risky and newborns should not be dying at such high rates,” said Babiarz.

India has 28 maternal neonatal or infant deaths per 1,000 live births, according to the World Bank, making it one of the highest in the world. The global average is 19.2 deaths per 1,000 births; the rate drops to 4 in North America.

“These issues are particularly compelling to me as a mother,” Babiarz said. “It's wonderful to find a model that has found some success in connecting mothers and their infants with high-quality and timely emergency care when it is most needed.”

The authors used electronic service records from GVK EMRI, matched to population-representative surveys from the International Institute for Population Sciences, and their own survey that they conducted in Gujarat in 2010 through the Collaboration for Health System Improvement and Impact Evaluation in India. The combined surveys include information on over 16,000 live births.

The public-private nonprofit provides its services free of charge and most of its beneficiaries are the poorest of the poor. Each state contributes to the ambulance system, as does the federal government. It also depends on private philanthropy among some of India’s wealthiest industrialists.

The School of Medicine in 2007 signed a formal agreement to develop an educational curriculum and train the initial group of 180 skilled paramedics and instructors. Over the years, the Stanford instructors have learned to tailor the curriculum to local needs.

About one-third of the toll-free calls to 108 — an auspicious number in India — are from women in labor. Deliveries have traditionally been done at home, particularly in rural villages, where women often die of complications. So the Stanford team has since designed a special obstetrics curriculum and helped create the country’s first protocols for obstetric care.

Grant Miller, an associate professor of medicine, core faculty member at Stanford Health Policy and senior author of the study, has worked on many health policy projects in India over the years. The results aren’t always hopeful.

“I’ve conducted a number of evaluations of large-scale health programs in India, and there are disappointingly few programs and policies that we’ve found to be effective,” said Miller, who is also director of the Stanford Center for International Development and a senior fellow at the Stanford Institute for Economic Policy Research and the Freeman Spogli Institute for International Studies. “So it’s exciting to find one that may have worked quite well.”

Miller and his fellow authors note, however, that further research on emergency medical services in other Indian states and by other providers is still needed.

“We need to do a lot more work — but these results suggest that something important has happened,” he said. “With the release of more population-representative data from more states, we’re eager to expand our analysis to the rest of the country.”

Stanford Medicine’s Center for Innovation in Global Health also supported the authors’ research in India.

Ruthann Richter, director of media relations for the medical school's Office of Communication & Public Affairs, contributed to this story.

Many people dread dealing with health insurance. Choosing the right plan, navigating benefits and understanding premiums, copays and deductibles can leave you frustrated and confused. Even in economic research, health insurance markets pose some of the most challenging questions.

But Maria Polyakova, a faculty fellow at the Stanford Institute of Economic Policy Research and core faculty member at Stanford Health Policy, is motivated to find the answers.

Intrigued by the shifting dynamics of the industry and inspired partly by her own experience of finding health care coverage during graduate school, Polyakova has joined a small group of health economists who are at the forefront of examining the increasing complexities surrounding the provision of medical insurance.

Changes under the Affordable Care Act have deepened the connection between public and private players, Polyakova says. There’s a rise in health care plans that are publicly funded but privately run. And many people using public plans, like Medicare, are supplementing their coverage with private add-on insurance.

The intertwined relationship raises a host of policy challenges, which Polyakova outlines in this detailed policy brief.

“We're moving toward this world where we think competition in health insurance is good because that somehow increases efficiencies and provides consumers with choices that they like,” Polyakova says. “But on the other hand, there has been a lot of debate on whether health insurance is the right place to have choice.”

Polyakova, an assistant professor of health research and policy at the School of Medicine, joined Stanford in 2014. Her ongoing economic research looks at the impact of government policies in social insurance  on consumer behavior, insurer behavior and market outcomes, including risk protection and redistribution.

By investigating the design of health insurance systems, Polyakova’s work could inform policymakers on the extent the government should facilitate competition among insurers that are providing social insurance benefits, or the steps public and private insurers can take to reduce risks and costs for consumers. Her early forays have gained recognition.

For her doctoral thesis on Medicare Part D — the prescription drug component of the federal health insurance program — Polyakova won the 2015 Ernst-Meyer Prize, which recognizes original research about risk and health insurance economics. She also received the John Heinz Dissertation Award from the National Academy of Social Insurance in 2015.

Her findings included evidence of substantial inertia among enrollees, despite significant changes in about 40 plans under Medicare Part D.

“If no one actually ever reacts to changes in products,” Polyakova says, “it could defeat the purpose of having competition.”

Polyakova continues to drill into details where answers may lie. Her empirical research in progress ranges from examining new ways of calculating risk to the effects of word choice in insurance plan descriptions.

“Policies are labeled silver, gold, platinum — theoretically to simplify the plans. But in reality, those simplifications may lead people to choose plans that are not the best for them,” she says. “Assessing the implications of their choices for the overall efficiency of the health insurance system is tricky”

The health care system appeared much more straightforward in Germany, where she worked for a year after graduating in 2008 from Yale with a bachelor’s degree in economics and mathematics.

Then while attending graduate school at the Massachusetts Institute of Technology, Polyakova went through the hassles of figuring out the health insurance system and how insurers reimburse medical providers. She recalls thinking, “Why is this so complicated?”

Polyakova turned her focus to health economics after taking some courses with MIT Professor Amy Finkelstein, a pioneer in the field who became Polyakova’s primary advisor.

“It was very contagious,” Polyakova says.