Hospitals In Focus

Everyone’s a Critic with Chris Jennings and Doug Badger


In many ways 2022 is starting off just like 2021 with COVID-19 dominating our lives and health care policy taking centerstage in front of a gridlocked Congress.  And just like last year, Chris Jennings and Doug Badger return to Hospitals In Focus to prognosticate on the upcoming year in health policy. Coming from each side of the political spectrum, the two long-time health policy wonks discuss with Chip how the Biden administration has handled the COVID crisis. – What did they get right and where do they need to course correct? The three also examine the seemingly new role of the Supreme Court in the role of legislating in a divided Washington and what this could mean for  health care policy.

Chris Jennings has spent decades working in the White House, Congress and private sector. He served in both the Clinton and Obama White Houses as Senior Advisor to the President for Health Policy and helped pass, enact and implement the ACA, Children’s Health Insurance Program (CHIP) and numerous other health reforms.

Doug Badger has been in public policy for many decades serving as a policy advisor to the White House, U.S. Senate, Department of HHS and the SSA. Doug worked in the Bush (43) administration and developed the administration’s proposal for adding prescription drug coverage to Medicare. He also represented the White House in negotiations with Congress that resulted in the enactment of the Medicare Modernization Act.

Interested in hearing Doug and Chris’ first episode of HIF? Take a listen to Building Biden’s Health Agenda with Chris Jennings and Doug Badger.

Announcer (00:06):

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

Chip Kahn (00:16):

In many ways, 2022 is starting off just like 2021. COVID cases are surging. Many parts of our lives are virtual again, or definitely masked, and the Congress is gridlocked. Also, like last year, health is front and center in Washington from the White House’s ongoing management of the COVID pandemic, to the proposed expansion of the ACA and the Build Back Better Act, to the administration’s regulatory action on surprise bill, to the Supreme Court considering vaccine mandates and the CMS 340B payment adjustment.

Today, we take a deep dive into these and other key issues. We kick off this season of Hospitals In Focus with an update episode, a double-header that gives us perspective from both sides of the policy and political spectrum. Like last year around this time, I am speaking with influential Washington health policy veterans, Chris Jennings, and Doug Badger. From opposite sides of the aisle, each will reflect on the future with the viewpoint from previously holding significant posts on both Capitol Hill and in the White House. I am bringing them back to discuss what difference a year makes and to share their thoughts on what we can expect. In 2022, we start with Chris Jennings, who is president and founder of Jennings Policy Strategies. Thank you so much for being with us today, Chris.

Chris Jennings (01:49):

It’s a pleasure to have me back, Chip. I didn’t know after last time you’d have me.

Chip Kahn (01:54):

Of course. Actually, that was one of our best listened to selections last year, was you and Doug, sort of the Chris and Doug Show. It was really very popular. And so we’re glad to have you back and I look forward to our discussion, but to get started, as we are recording, we are amid an Omicron wave while facing significant supply shortages with testing, hospital staff, and other medical staff and therapeutics. The end of COVID is difficult to fathom now. How would you assess the first year of the Biden administration’s leadership on the COVID challenge and where do you think the public perception is of how they’ve handled the crisis?

Chris Jennings (02:36):

Well, Chip, I think it’s mixed certainly by any definition. It is clear that there is a significant difference from last year and that is we’ve had significant distribution of and take up of the vaccine. And that has placed us in a much better position going to this round of COVID and the Omicron variant of COVID. But there’s no doubt that there are shortcomings, and in particular, I think everyone was disappointed that we were going to go into a round two and round three of COVID through the Delta and the Omicron variant. And as a consequence, I think people are just so tired of this. They had all hoped, including the president, that we’d be much further along. I do think, though, in addition to the vaccines being substantially infused into our nation’s citizens, we have very significant take up rates and we are therefore in a much better position facing Omicron.

We also have a situation where we have other therapeutics that are now coming online that help us in terms of the treatment. Where I think most people feel we’ve fallen short is on the availability of and production availability and distribution of tests. And that has created real problems. I think most people felt that we would never have the set type of volume of this variant that we are now going through. And I am pleased that the administration is aggressively working to produce, contract out, and get distributed these tests. And I think that will make a significant difference going forward. But I think the bottom line is the public is tired of this as we all are.

Chip Kahn (04:24):

Chris, the buck stops at 1600 Pennsylvania Avenue on so many issues. And we’re all hoping for their leadership in meeting this wave of Omicron, but what do you think the administration’s COVID strategy will be going forward looking maybe beyond Omicron? And what is your view on expecting COVID as an epidemic to become less of a threat to our future, maybe more of an endemic than a pandemic?

Chris Jennings (04:55):

Yes. I think that we are transitioning into an endemic, and I think after we get to the Omicron variant, we may see that more and more. But I think if past is prologue, we can never be particularly confident. The one thing that we do need to do is make sure that we’re better positioned in the future for any such pandemic. And I think we’ve shifted, or we need to shift from the acute interventions, which we are presently in the middle of, to longer term strategies that ensure that we have adequate production and availability of PPE, of testing, of all the therapeutics and vaccines that we will need going forward, which suggests that we still need to have significant investments in our public health infrastructure, which have exposed many, many vulnerabilities of our healthcare system.

And I do think, in this particular case, Chip, this is an area where there is openness to bipartisan approaches. I’ve been encouraged by the Senate Health Committee and the leadership of Chairman Murray and Senator Burr. And I think there’ll be more of that to deal with this going forward, which is very different than say, for example, the coverage and access issues.

Chip Kahn (06:07):

Well, that’s encouraging, Chris. Let’s turn to the Build Back Better, the BBB legislation. Of course, the legislation is up in the air. We don’t know whether or not it will be enacted. Democrats consider it transformative. Could you review really quickly from your perspective what the highlights of the healthcare components are and what promise it holds for ACA?

Chris Jennings (06:33):

Yeah, I’d be happy to. I think there are what I call the core four issues that are part of this package that have substantial and broad base support, particularly with the healthcare stakeholder community. And one thing before I start with this, Chip, is to say and to remind people that some of that agenda had already been enactment in the American Rescue Package for a short period of time. The expansion of subsidies for the Affordable Care Act to make premiums much more affordable, and some incentives to states’ Medicaid program to expand as well, as well as incentive for states to do more in home and community based care. But that is just short term policy. And if we don’t do the longer term policies, then we’re going to see sort of affordability cliff in the Affordable Care Act and an access cliff in Medicaid.

And my view is that that’s why failure really isn’t an option for the Democratic Party. They do have to pass the four core, which are affordable care act, increase in subsidies to ensure that premiums are affordable all across the board of all income populations, the investment in and access to the marketplace for the 12 Medicaid states that cover millions of people in poverty who do not have access to affordable coverage, the prescription drug cost containment policy and the coverage enhancements within the Medicare program both for prescription drugs and hearing, and last, the investment of home and community based services through the Medicaid program. There’s $150 billion.

Interestingly, and I think why I’m a little bit more optimistic about the healthcare policies is almost all these provisions have broad base healthcare stakeholder support. And in addition, Senator Manchin’s counteroffer to the White House seems to have embraced virtually all of those policies which, of course, is not the case in many other elements of his counteroffer. So healthcare is actually positioned quite well assuming we do get an agreement.

Chip Kahn (08:44):

Do you have any sense for what the timing would be? I mean, when will we know whether this is a go or not in terms of making these advancements in terms of the aspirations of ACA particularly?

Chris Jennings (08:56):

Well, I think we’re going to have to go through the democracy and voting debate that we’re going to be seeing over the next two weeks or so. And then I believe we’re going to be reengaging on Build Back Better. I personally think that it gets harder later in the year to see closure on a policy. You know how that is. If you get closer and closer to an election, it becomes harder and harder. My view is that by the first end of the first quarter through March, I think we better be pretty close to being done. And I think that people are going to have to accept compromises, but I think it’s still a very viable option for the Democrats to pursue. And as I say, if they fail to do so, they’ll have very little to market for their reelection campaign in 2022.

Chip Kahn (09:43):

Chris, this time last year, we were discussing how the ACA had in a sense survived four years of intentional neglect or worse. What do you think is the primary action the administration has taken over the past many months to turn this around? Do you think they have been successful? And is there more that they can do to promote and build on the ACA within existing authorities without having to go back to the Congress?

Chris Jennings (10:13):

Well, Chip, I think they’ve been very aggressive on outreach and marketing and targeting populations very creatively. And that has helped contribute to significant enrollment, but that has been supplemented by the American Rescue Package policies that increase subsidies to make those premiums more affordable all the way up to income scale. And so I believe that needs to be sustained, and to your point, it needs to be sustained legislatively. They’re being very careful about how they deal with insurance reforms and policies that might lead to options provided to enrollees that provide substandard benefit coverage. And so on all three of those fronts, they’re being very aggressive and I think they’re being quite successful. They probably will not be as successful at maintaining the improvements enrollment that they’ve seen if we don’t sustain the premium subsidies. And as I say, that does require legislation.

Chip Kahn (11:17):

The president and all of his administration has clearly set improving equity as a top agenda item. And health is one of the focus areas in that. How do you think that will play out in the upcoming year? There’s been a lot of discussion over the last 12 months, but it sort of hasn’t hit its formative stage in health. What do you think we’ll see?

Chris Jennings (11:40):

Well, I think to your point, Chip, there’s been an administrative commitment, administration-wide commitment to equity and disparity issues, which really is a part of every process of every policy development dynamic that exists within the administration. They no longer are throwing it to a minority affairs office and just thinking about siloing this issue, but they’re integrating it in every policy decision that they make, whether that’s delivery reform, or coverage, or insurance reform, or public health. And to me, that’s a really important change. You’ll note that the CMS administrator and the secretary have really required that as part of their processing.

And I would point out, of course, that the so-called Medicaid coverage gap policy that is operated into the Build Back Better legislation is probably amongst the most significant and measurable and accountable measures to address equity and disparities that any policy the Congress can consider includes. And so I’m very, very encouraged by that. I’m very encouraged that Senator Manchin is supportive of that, as well as the Affordable Care Act enhancements. And that suggests that that might be sustained in the upcoming negotiations.

Chip Kahn (13:04):

It seems like we’re always in an election cycle. And as this year begins, we’re so many months away from the midterms. How do you think healthcare, you’ve alluded to it in an earlier answer, but how do you think healthcare will play out in the election? And is there healthcare other than COVID that will have any resonance in the campaigns?

Chris Jennings (13:26):

Yes. I think that people get confused about healthcare and its polling. It always ranks usually close to number two. And, of course, the economy is always number one. And the reason why it’s always close to number two or number two is because it is such a big part of people’s perception of economic risk. And that comes down to their ability to have affordable healthcare, which means both that they have affordable premiums, but also they have meaningful benefits so they don’t have higher and higher out-of-pocket costs that limits their ability to access affordable healthcare. So to me, that is the direction that the Democrats have and will continue to pursue to address this issue. And if we’re really talking about what is the driver of healthcare and the politics of healthcare is, one, yes, moderating, mitigating, and moving beyond COVID is certainly number one. But right behind that is finding better ways to ensure more affordable, less complex healthcare for the American public.

Chip Kahn (14:37):

I guess to wear my hospital hat for a moment, it seemed to us that the administration has given a bit of a regulatory edge to managed care over providers in the implementation of surprise bill legislation, as well as the Medicare Advantage regulatory action that we’ve seen. What’s behind this? And in 2022, is it possible for providers to make up any ground with the administration?

Chris Jennings (15:06):

Well, I think, Chip, everything is in the eye of the beholder, but I guess I would say a couple things about your question. First, I don’t believe that this administration or any democratic administration is totally beholden to the managed care or insurance industry. And I’m sure the insurance industry wouldn’t think that they are. And on surprise medical billing, that is an issue, of course, that has resonance not just to health plans but to businesses and labor and consumer groups who are generally favorably disposed to the administration approach here. Having said, to your point, I believe that there is a very strong case to be made to greater managed care scrutiny under contracts with the Medicare program, particularly as it relates to reliable payments to providers, as it relates to a question of how much we’re paying them and what we’re getting out of it, as it relates to up-coding issues, as it relates to quality issues.

I think you’re going to find a much more aggressive administration in ensuring greater accountability within that industry. So as I say, you’re in it for the long haul and I have every confidence that you will win as much if not more than you’ll lose.

Chip Kahn (16:29):

Well, obviously, every community needs its hospitals and needs access to healthcare. So hopefully, the insurance companies won’t go too far to get in the way of that. Moving on though, Medicare obviously is always important and close to the center stage, but we haven’t heard much about the Medicare trust fund in discussions in Washington recently despite the fact that we are not very far off from going off a fiscal cliff with the trust fund. Do you think it’ll be part of the 2022 discussions, or if not, when do you think it’ll get on the policymaker radar screen?

Chris Jennings (17:06):

Well, to your point, Chip, I was a little bit surprised last year, it didn’t get a little bit more attention because the insolvency date is shorter than all but one other year over the last 30 years. And this year, it may be tied with the lowest number of years to insolvency, which of course was utilized as a rationale for significant Medicare reimbursement changes in the ’90s that we debated over. And I could see something like that happen but probably not in this election cycle. I think you’ve succeeded in a number of fronts at, one, having a sympathy about hospitals in general, about everything they’re going through right now, which I think is appropriate. Second, if you really look at Medicare growth rates, they’re not growing significantly more. And in fact, their payment rates are significantly lower than the private sector.

So it’s hard to suggest that there’s a lot of room for deeper cuts within the Medicare program, particularly as it relates to hospitals. And the reason why, of course, hospitals are relevant to the hospital insurance trust fund is that’s where a significant portion of hospitals receive their reimbursement. What this does raise to me, though, is that I don’t think it’s a sustainable dynamic. I think that politicians of both parties will be focusing on this more and more over time. And I think if I may be so bold, this to suggest that the hospital community should not only talk about where they are in terms of reimbursement rates and their lack of ability to sustain many more changes that reduce their reimbursement rates, but also the need to have additional revenues to sustain and support and strengthen the Medicare trust fund.

There is no way that we can have the aging of the baby boom population and do it through sheer efficiencies and reimbursement reductions. We’re going to have to have some more revenue. And yes, that probably means something called taxes, but that will be necessary to avoid cuts or reductions in reimbursement if one of the priorities is going to be extending the trust fund.

Chip Kahn (19:18):

Well, I think at least in the short term, we’ve really got to worry about the stresses on hospitals, the workforce stresses and other stresses, but clearly in the long term, this is going to have to be dealt with. I must admit I was with a Republican senator the other day, and he even admitted that part of the solution to the trust fund problem probably includes some revenues. And when we get there, I don’t see how you do it without some combination of policies that may include fiscal policy. We talked a little bit about the midterms. And clearly, there’s not a lot of expectation unless BBB gets done in terms of what can happen legislatively. What do you think, assuming not much happens in this election year, what do you think the administration is likely to do in the health policy area going forward? We talked a little bit about COVID, but in other areas as they steer health policy into 2022 and beyond.

Chris Jennings (20:21):

Well, of course, you mentioned something that’s very important, Chip, which was the workforce demands right now. You’re seeing states and the feds starting to begin to respond to the shortage. The question is whether their interventions will have an immediate impact. I’m not sure. But one thing that we do know is that this is a longer term challenge because we do have the aging of the baby boomers, and it will require more particularly nursing and less skilled healthcare professionals. And I would argue, certainly, a primary care focus with the physician community that we need to do a much better job on.

So for all those reasons, I think the healthcare workforce are things that can be considered. It’s important to note that in ARPA, which of course the rescue plan, there was some dollars there and there’s significant dollars in the Build Back Better legislation for more resourcing for workforce, which I think is something that gets lost on a lot of people. But if we really want to address some of the challenges that you face, we’re going to have to take this on quite, quite seriously. And I worry that if we fail to do so, hospitals are going to be in such a difficult position. And that will have longer term cost problems because the payment just to find well-trained nurses is going to be just very, very unaffordable, which will of course raise premiums and out-of-pocket costs as well. So it’s in all of our interest to really seriously address this workforce issue.

Chip Kahn (21:52):

Chris, it’s clear from our discussion that the great political divide dictates so much in our society and the running of our government today. One of the manifestations of it is it seems to me there’s much more litigiousness and many policies are ending up at the Supreme Court when in the past, laws would’ve passed and people would’ve implemented them and everyone would’ve lived by the law. What do you think about this trend? And do you think it’s going to continue?

Chris Jennings (22:24):

Chip, I think your observation is right. I think it’s caused by a number of different things. First, of course, is the polarization of the parties, but also the lack of ability of Congress to, number one, pass legislation. But even when they pass legislation, they provide very broad authority to the secretaries of whomever, whether it’s Republican or Democratic administration interpreting the law. And that gives broad authority to them to make decisions that perhaps the Congress or the stakeholders who are affected by them would disagree with. And that has created, therefore, a subsequent invitation, if you will, for those two that lay question to those interpretations to take the administrations to court. And we’ve seen that in past administrations and this administration.

I would also say the other problem of Congress really failing to do its oversight role and its clear legislative role is that does provide more flexibility for the executive branch to be more aggressive in this area. So this has an enormous implications downstream, but absolutely impacts the litigation risks issues for the administration and the opportunities for stakeholders to lay question to their interpretations.

Chip Kahn (23:48):

What you’re describing, Chris, from my perspective is really manifest in healthcare particularly, and there, we see this issue of government power and then government being questioned. We have before the Supreme Court, American Hospital Associations cases on 340B. There’s the Empire case. There’s the vaccine mandate cases, which are going to go through the courts but are getting Supreme Court review. And then there’s even the abortion issue. But let me leave that separate for a moment, although wrap everything together in a prognostication or ask for a prognostication on your part as to, with this trend and with the court seemingly going more conservative, in some ways, you could almost argue this is the court that Trump built. Where do you see things going on these cases generally? And is it going to change the dynamic between the power of the government if the court rules that Chevron and flexibility in the government’s part is not allowed?

Chris Jennings (24:58):

Well, I think it’s quite clear that the power has shifted to the executive branch and then to the Supreme Court and away from the Congress. What I think might happen is Congress, particularly Democrats in the Congress, will have to be much more careful about how they draft language. They’re going to have to be more explicit, and they’re going to also have to look at past interpretations to the Supreme Court about how they might review and adjudicate policies that the Congress passes. And I can tell you right now that is part of the process that Congress is considering even for the most recent Build Back Better legislation that’s pending before the Congress.

I think, secondly, there is a general sense that in healthcare, in particular, the sensitivity of… the political sensitivity, the ideological differences between the two parties on healthcare, particularly as it relates to coverage and access and insurance reforms, will be litigated more and more frequently. And as you point out, also the role of government and how intrusive it can be in order to provide and ensure safety. We’ve seen even today the Supreme Court ruling in a divided way about what those roles are. One stopping the application of vaccine mandate to employers, but allowing for it to be open to their contracts under the Medicare and Medicaid program. And so I don’t think there’ll be a one-size-fits-all approach that we’ll see out of the Supreme Court, but clearly, they’re going to be very sensitive to how language is drafted and how it’s interpreted by the executive branch.

Chip Kahn (26:49):

Chris, this has just been great. Thank you so much for joining me today and being part of this podcast. Where can people go to learn more about your work?

Chris Jennings (26:59):

Well, they can go into my website, which is Jennings Policy Strategies, and they’ll be able to find it. I just hope that when I hear this downstream, that Doug will be in total agreement with everything that I say.

Chip Kahn (27:15):

Well, we always like the yin and the yang of American politics and particularly health policy. So I’m sure you’re going to enjoy whatever he has to say. So with that, thank you, Chris.

Chris Jennings (27:26):

My pleasure. Thank you, Chip.

Chip Kahn (27:34):

Now from the perspective of the loyal opposition, Doug Badger, a senior fellow with the Galen Institute and a visiting fellow in domestic policy studies with The Heritage Foundation. So glad to have you with us today, Doug.

Doug Badger (27:48):

Thank you for having me, Chip.

Chip Kahn (27:50):

Doug, I think you qualify as a Washington old hand. Not much in healthcare policy has occurred during your career that you haven’t been directly involved in, or at least provided wise counsel to policymakers on. Would you tell us a little about yourself and those experiences that might give our audience some perspective on your background?

Doug Badger (28:11):

Well, to start with ancient times, Chip and I were colleagues both… Chip with the Ways and Means Committee and I was with the Senate Republican Policy Committee and later at the assistant majority leader office, and we worked on things like HIPAA. We worked on the Balanced Budget Act of 1997 and so forth. I later joined the White House with the National Economic Council as an advisor to President George W. Bush where I represented the White House in negotiations over the Medicare Modernization Act, which created the Medicare part D program health savings accounts and made various other changes to the program. I’ve also been a partner at Washington Council Ernest & Young on the lobbying side and also with the Nickles group where our group represented among other healthcare clients some hospital systems, as well as the American Hospital Association if I’m allowed to mention that on this podcast, Chip I’m not sure.

Chip Kahn (29:11):

Yes. Thank you, Doug. And we really do look forward to your perspective. So let’s get to it. So how do you rate the Biden administration’s response to COVID and what would you have done differently? And where do you think they should make midcourse corrections?

Doug Badger (29:30):

Well, I think by its own standard, of course, the administration’s performed poorly. As a candidate, President Biden repeatedly said he was going to shut down the virus and repeatedly accuse President Trump of being responsible for all of the COVID-related deaths. Well, of course, the two biggest waves of infection have occurred, including the one we’re in right now, occurred during the Biden presidency. And more people have died with COVID on his watch than on President Trump. But campaign verbally aside, when you ask me what I would’ve done desperately, from the beginning, the president remained in campaign mode. It was, “Everything Trump did on this was wrong. Everything I do is right.” And instead of characterizing the vaccine efforts, which were already underway when he took office as building upon, improving, expanding, any number of verbs would’ve done on what his predecessor had initiated with Operation Warp Speed. The idea was, “Nothing was happening till I was president, and that I came along with this great vaccine.”

He spent the first six months taking credit for declining cases, which I think as we all know now had more to do with the trajectory of the pathogen than with any policies of the White House. And then since then, he spent it blaming people, blaming other people for his resurgence. He was recently, again, calling this pandemic of the unvaccinated. More recently, things have gotten more erratic. We’ve had discordant policies on boosters, confusing messages on masking, on how long you should isolate with the virus. And, of course, in year three of the pandemic we’re about to enter, we still have a shortage of tests. So I wouldn’t hold the president accountable certainly for not shutting down the virus, and nor would I have expected him to be able to heal our political divisions. That’s just not in the cards for any office holder. But he could have taken a less politicized and strident view toward the pandemic. And I do wish he would do that. I do wish he would’ve adjusted his tone a little bit because we’re not going to persuade people who are unvaccinated by blaming them for all of the ills of the world.

Chip Kahn (31:57):

Before we leave this, Doug, just you as a policy expert, do you think we can figure out a way to integrate the COVID into our way of life if it’s not going to just go away?

Doug Badger (32:10):

We’re going to have to, right? There’s one view and everybody’s sort of making this up regardless of their level of expertise that somehow, rather, Omicron will be this quick spike and wave, and then we’ll have acquired antibodies that perhaps the vaccines haven’t imparted, and maybe then this goes on to become more of a background virus. But whatever happens, you can’t distort social life, economic life indefinitely, or indomitably. You have to learn to find ways to coexist with the virus. And how we do that given our social, culture, and political divisions, of course, is going to be very, very challenging, but we absolutely have to do it.

Chip Kahn (33:01):

Doug, you have critiqued over time the design of the ACA insurance exchanges. What is your view of the current effect of the enhanced subsidies for exchange coverage included in recent legislation, as well as being embedded in the House-passed version of the Build Back Better Act?

Doug Badger (33:19):

Well, the problem is it fails to address the core problems with the ACA. Look, anybody who’s enrolled in these policies complains about them. They complain because the premiums are high, because the cost sharing is burdensome, because the networks are so narrow. And in many of these plans, if you go out of network, you’re basically uninsured. So instead of addressing those problems, the idea is that, well, we’ll just enlarge the subsidies. And by the way, we’ll make people who earn 200,000 or 300,000 a year, we’ll make them eligible for subsidies because nobody wants to pay full price for an undesirable product. Now, the subsidy expansion as CBO has looked at it, the Congressional Budget Office and others, really doesn’t affect materially the number of uninsured. Basically, we’re just paying bigger subsidies to insurance companies on behalf of people who already have insurance.

Some of them are paying full freight now. They might be able to get a discount because of the subsidies, but we’re increasing payments by tens of billions of dollars to insurers and increasing their profits. These companies are making bigger margins now on their ACA book of business than they are on their group health plans. And meanwhile, the federal government in 2020 supplied 74% of their premium revenue that’s going to be higher with the expanded subsidies. Now, for conservatives, corporate profits and executive compensation aren’t troubling in of themselves. But what’s concerning is this partnership between government and large corporations whose profit depends on government support of low quality coverage, basically high deductible Medicaid, we really do need to do better than that. We need to do more to give consumers a range of options, including low income consumers. We shouldn’t be just enrolling them in low bid Medicaid MCOs. We should be opening other markets to them. There are much better ways to spend the federal dollars subsidizing health insurance than we’re doing right now. And unfortunately, BBB simply throws more federal money after some very inferior insurance products.

Chip Kahn (35:47):

I asked you last year, and I’d like to ask again, this is really a political question because you’ve given your economic critique, but Republicans have consistently opposed the ACA framework that we’ve just spoken about, but you don’t hear a discussion right now from them about repealing a place. I mean, do we think conservatives have at least crossed the Rubicon and accepted that ACA is here to stay? And if so, what are the implications of that politically and for the sustainability of the ACA framework that you’ve just described issues with?

Doug Badger (36:23):

Yeah. I would distinguish, Chip, between conservatives outside Congress who are advancing real alternatives to the ACA and Republicans in Congress who as you and I very well know are more comfortable in criticizing Democrats than in advancing their own health reform proposals. Republicans in Congress are much more comfortable talking about taxes, trade, national defense, national security, inflation, and other sorts of things than they are about healthcare. And at the same time, on the outside, the medical industry, insurance companies, hospitals, doctors, and others have made their peace with the ACA that industry by and large supported its passage in 2010, opposed this repeal in 2017, supported its temporary expansion last year, and it’s today pushing to make that expansion more permanent in the Build Back Better Act. Republicans and Congress, I think, can see the writing on the wall that if they challenge the status quo in any meaningful way, they’re going to face fairly considerable headwinds.

Chip Kahn (37:34):

Talking about those Republicans a little bit more, as you say, they’re going to focus primarily on inflation and broader opposition to aspects of the BBB. Do you think they’ll talk about health at all in this developing political year? And if so, what aspects of healthcare do you think they’ll talk about?

Doug Badger (37:54):

Honestly, I do think they’re going to talk probably very little about healthcare. I think the number one topic unless… Of course, things change, it’s a long way, 10 months or so until the election. But if things remain relatively unchanged, I think inflation is going to be the issue that’s going to be most salient for voters. And it’s going to be the one that Republican are more likely to talk about. I think to some extent too, you’ll see some discussion of foreign policy and military policy. What irked people about the Afghanistan withdrawal was not that we were ending a war. I don’t think anybody… I shouldn’t say anybody, but there were very few people who wanted us to continue to be involved in that war, but how it occurred. And when you look at that along with things like increasing aggression on the part of Russia, on the part of China, Iran, and some of the other bad actors. And the fact that the U.S. can’t seem to formulate any effective response to any of these is going to be an issue that I do think Republicans are going to touch on.

Look, we as the American people are of two minds. We don’t want to to get involved in foreign wars, but we also don’t want the United States to be disrespected. And right now, the feeling is starting to settle in that… Goes back to ancient times in the 1970s when we had inflation on one side and we seemed to be getting humiliated on the world stage on the other. That is a potent political brew, and I do think that’s where Republicans are going to be putting their emphasis.

Chip Kahn (39:44):

One other aspect of the great political divide is the current contentiousness that leads to legal action and the fact that so many policies are heading their way up through the court system, the Supreme Court. Do you see this trend continuing? And what do you think the implications of it are?

Doug Badger (40:06):

It’s a disturbing trend, I think, and the reason I say that is because Congress has turned into a bystander. It’s almost as though members care more about how many Twitter followers they have and how many retweets they got this morning than they do about the business of legislating. And so a lot of that has gotten outsourced to the executive branch. That’s a real distortion of our constitutional order where it’s our elected representatives who are supposed to be making the hard decisions and sorting out the controversial issues. And it’s the executive branch that’s there to carry out the laws that Congress passes. Increasingly, and this is not something that’s unique to the Biden administration, it goes back certainly throughout the century, but it seems to be with increasing frequency, which is that the executive branch agencies, bureaucracies, and political appointees are taking over the legislative function because Congress has abdicated on that.

I don’t know how you change that. Congress doesn’t want to sally itself with difficult issues and they certainly don’t want to compromise because neither base understands compromise. But Congress needs to be more assertive where we’re going to see more of this stuff of executive branch agencies writing rules that clearly exceed their legal authority. And then the courts having to sort out what goes through and what is to be struck down.

Chip Kahn (41:47):

Boy, this tension that you’re talking about now is really reflected in the court action, the question of the role of government, of the legislative branch and the executive branch. We see this in healthcare that affects hospitals directly. Now at the Supreme Court, we have American Hospital Associations 340B case. We have the Empire case. We have vaccine mandates being issues before the court. Prognosticating is dangerous here, but on these issues that touch legal principles like Chevron and others in terms of the extent of power an executive can exercise, what do you think will be the potential outcome in this newly conservative court of these sort of fundamental questions about governing even if we have a Congress that is on a lunch break?

Doug Badger (42:42):

Well, a year ago or even six months ago, I would’ve said that the court would serve as a backstop and say, as they did, for example, with the CDC eviction moratorium. Look, you don’t have legal authority, CDC, based on some vague statutory wording to assert this power. And by the way, that was a power that was originally asserted in the Trump administration and then revived during the Biden administration. But I’m not so sure that’s true. I am not a seasoned court observer. I’ve looked more at what Congress and the executive branch do. But it strikes me that the chief justice is always looking for some way to find a pathway he can steer the court that sort of splits the difference and doesn’t antagonize one side or the other too much. And he sees that, I believe, as preserving the court’s authority, the esteem in which people hold the Supreme Court. But the problem is it involves now the judicial branch in a form of legislating to the extent that they are green lighting agency actions that clearly are not authorized by law.

Chip Kahn (44:04):

You talked a little earlier about the Republican or more conservative healthcare thinkers. Obviously, we have Republican policy makers, but if the Republicans take one or two of the chambers in the upcoming midterm elections, these thinkers, yourself included, have been brewing a lot of ideas. What kind of health policy do you think a Republican house or a Republican Congress if they took the Senate too would be likely to pursue next year?

Doug Badger (44:38):

Well, I would like to say that they would pick up and try to do a better job for the American people than the ACA with using these funds, deploying these funds a little bit differently, and with broadening options that are available to consumers. But the reality is the Congress that gets sworn in a year from now in January 2023 is going to be focused on November 2024, which is when the next presidential election occurs. So my suspicion is that they will be looking for issues where they can score political points against Democrats. And there are any number of those and force President Biden to veto legislation that might be popular. I don’t know that that’s possible, very much of that possible in healthcare.

One thing I would say, though, is that there is some area, narrow as it may be, of bipartisan consensus in healthcare, not always congenial to hospitals, I might say. But the Medicare part D program, which I played a role in writing clearly has gone off the deep end because some of these very expensive drugs are shifting costs away from the prescription drug plans and the pharmaceutical companies and onto the government. And MedPAC and other outside observers have suggested a restructuring of the Medicare benefits to shift the cost of the most expensive drugs back onto the industry in the form of discounts and onto the prescription drug plans. That’s got bipartisan support. Version of that is included in the House-passed BBB Act.

That’s something that if you took it out of that context, combined it with some other things where pharmaceutical companies exploit loopholes in the law to [inaudible 00:46:37] competition from generics, that kind of thing could pass. And as you know, there’s a good deal of bipartisan consensus on hospital prices, particularly price transparency, site of service, and a variety of other issues where Congress has stood back and let the administration take the lead. But Congress could fashion bipartisan legislation that’s thoughtful, that is based on input from the affected players and maybe do some real good for Americans. Again, I’m not dreaming. I don’t have stars in my eyes about the possibility of bipartisan consensus, but there is room for that in the healthcare area.

Chip Kahn (47:23):

An issue that is obviously related to what you’re bringing up now that the politicians, at least to this point, have been either reticent or willing to let slide is the date of insolvency for the Medicare trust fund. Do you think anyone will seriously discuss policy to address this in the near term? And what direction would you like this to go?

Doug Badger (47:50):

Well, we’ll commiserate like two old men should. The last time the Medicare trustees forecasted insolvency was five years out was 1997. And as you recall, the Republican Congress responded with a Balanced Budget Act of 1997, which among other things addressed the looming insolvency of Medicare. This year, or last year I should say in 2021 when the trustees said, “Well, five years from now, Medicare is unable to pay full hospital benefits,” it was greeted with a bipartisan yawn. Republicans may have made some noise about it, but not very much. And Democrats were talking about how they were going to vastly increase Medicare spending and increase the scope of the program. I don’t know how you function in a world where the basic responsibilities of Congress don’t even seem to arouse any meaningful debate, much less any sort of effort to move forward.

But honestly, again, when we’re here a year from now in 2023, I don’t see that Congress wanting to take that on in the bipartisan way. I hope they will, but I think more likely, they’re going to be edging up to the drop dead date in 2025 and trying to pass some sort of emergency legislation that they slap together in order to keep the benefits flowing.

Chip Kahn (49:27):

To close out, we touched on the role that health might play on the Republican side, but sort of thinking more broadly, do you think that healthcare will play a role in the fall elections, at least beyond COVID? Obviously, there’ll be a lot of discussion of COVID. But beyond COVID, do you think it has a role or we’re going to see the other issues that you talked about?

Doug Badger (49:51):

Well, I’m the world’s worst political prognosticator, so people can easily discount what I’m going to say. And it’s certainly hard to know in January, as I mentioned earlier, what will matter to voters in November. Obviously, as you say, if COVID is still raising havoc next fall, it’s certainly going to be a tough issue for President Biden and for his party, but I’m going to be a little more optimistic and say we’ve returned to some state of normalcy by then. But I do think at that point, economic issues are going to dominate. As unpredictable as the course of the pandemic has been, the economy does look more predictable, and that means inflation will likely still be with us and potentially unpleasant economic consequences that would accompany any move by the fed to curb inflation through monetary tightening. Healthcare is always going to matter to voters, but my suspicion is that this time around, it will be a second tier issue unless the economy dramatically improves.

Chip Kahn (50:55):

Doug, we really so appreciate you spending time with us and sharing your perspective and expertise. Where can people go to learn more about the work you’ve been doing?

Doug Badger (51:05):

Well, the two organizations I’m affiliated with, The Heritage Foundation is at heritage.org, and the other one where I hold a senior fellowship is with the Galen, G-A-L-E-N, Institute. And that’s galen.org.

Chip Kahn (51:21):

Great. Well, I’m sure our audience will go, and I hope that they’ll look for your very learned writings, particularly on the ACA and insurance. So with that, such a pleasure to spend the afternoon with you.

Doug Badger (51:33):

Thanks, Chip. Always great to talk.

Chip Kahn (51:33):


Announcer (51:41):

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Chris Jennings, Founder and President, Jennings Policy Strategies

Chris Jennings is an over three decades-long health policy veteran of the White House, the Congress and the private sector. In 2014, he departed from his second tour of duty in the White House where he served President Obama as Deputy Assistant to the President for Health Policy and Coordinator of Health Reform. He served in a similar capacity in the Clinton White House for nearly eight years.

Outside of government service, Mr. Jennings has been a senior health policy advisor to ten Presidential campaigns; the 2008, 2016 and 2020 Democratic Platform Drafting Committees; and multiple gubernatorial and Senate candidates. Most recently, Vice President Biden appointed Mr. Jennings as one of his members of the Biden-Sanders Unity Task Force. Recognizing his pragmatic nature and experience with key Democratic policymakers, the Bipartisan Policy Center (BPC) sought Chris to serve as a senior advisor on a number of health reform projects, including reports and recommendations on access, delivery reforms, cost containment and long-term care.

From his positions in the executive branch, Mr. Jennings helped implement the Affordable Care Act’s access and delivery reform provisions (for President Obama) as well as played leadership roles in the development, passage and implementation of bipartisan health reforms, such as the Children’s Health Insurance Program, the Health Insurance Portability and Accountability Act (HIPAA), the Prescription Drug User Fee Act (PDUFA) of 1997 and major Medicare reforms in the Balanced Budget Act (BBA) of 1997 (for President Clinton).

In his decade of service in the U.S. Senate, he served as the Deputy Director of the Special Committee on Aging for three Senators (Glenn, Pryor, and Melcher) and led major reform efforts in the areas of long-term care, prescription drug coverage/cost containment and rural health care. In this capacity, he also served in a major role for the U.S. Bipartisan Commission on Comprehensive Health Care (also known as the “Pepper Commission”).

Jennings Policy Strategies (JPS) is a nationally respected health care consulting firm committed to assisting foundations, purchasers, health systems and other aligned stakeholders develop policies to ensure higher quality, more affordable and sustainable health care. He has consistently worked to develop administrative, legislative, and private sector policies/interventions to ensure better stewardship of and a greater return on investment on the nation’s $4 trillion investment in health care. In addition to his consulting work and his collaborations with think tanks Mr. Jennings is a frequent contributor on health reform issues to publications such as the New England Journal of Medicine, Health Affairs and The Atlantic.

Doug Badger, Fellow, Galen Institute

Doug Badger’s career in public policy spans more than three decades and includes stints as a policy adviser to the White House, the U.S. Senate, the Department of Health and Human Services and the Social Security Administration. He has a distinguished track record of creating and advancing conservative, practical ideas to help lower American’s health costs and expand their choices.

Doug served as Special Assistant to the President on the National Economic Council, where he advised President George W. Bush on health-related matters, including the creation of Health Savings Accounts. He later served as Deputy Assistant to the President for Legislative Affairs, where he helped formulate Administration policy and legislative strategy on a broad range of issues, including health care, energy, taxes, financial services, pensions and employee benefits, intellectual property, trade and telecommunications.

After leaving the White House, Doug became a partner at The Nickles Group, where his practice included where his practice included health care, intellectual property and financial services. He also has been a partner at Washington Council Ernst & Young, where he had a similar practice.

Doug also served for a decade as a U.S. Senate aide, serving as Chief of Staff to Assistant Majority Leader Don Nickles and Staff Director of the Senate Republican Policy Committee.