Dr. David Cutler, Professor of Applied Economics at Harvard’s Kennedy School of Government

(Music)

Mark Masselli: Welcome to Conversations on Health Care. I am Mark Masselli.

Margaret Flinter: And I am Margaret Flinter.

Mark Masselli: Well Margaret, the holiday weekend is behind us. I hope yours
was enjoyable.

Margaret Flinter: It was. It's a great holiday for renewal and regeneration and a
time to reflect on things we are grateful for and looking forward to.

Mark Masselli: And once the holiday was over, Wall Street had a chance to
respond to the less than favorable job numbers released late last week. The
numbers did not reflect the kind of growth that analysts were projecting and the
market took a dip to reflect that.

Margaret Flinter: There was still modest growth in March in the health care
th
sector, about 2/10 of a percent or 26,000 jobs and I guess that follows the
steady stream of hiring increases at a time when many other industries have
remained contracted and maybe that’s the new normal.

Mark Masselli: It does sound like that. The health care has been leading other
industries in job growth during the down economy on average adding about
25,000 jobs per month over the past year and that trend is expected to continue.

Margaret Flinter: Well Mark, there is HealthCare Hiring and then there is health
care anxiety and that anxiety is still pretty high among those Americans who
struggle to afford health care. The IMS Institute for Healthcare Informatics
released a report last week showing a decline in the number of doctor visits and
prescriptions that they attribute largely to the challenging economy and long-term
unemployment. I think even people with insurance are still struggling with those
co-pays.

Mark Masselli: They are. And the analysis showed an almost 5% drop in
doctor’s visits and 1% drop in prescriptions being issued. But another not
surprising statistic, there was 7.4% jump in visits to the emergency room, the first
line of defense for many without insurance or access to primary care and that
costs all of us in the end.

Margaret Flinter: It does. And that’s something that our guest today knows a lot
about. Noted Harvard Health Economist David Cutler is an expert on health care
policy and reform. He has worked on crafting health care policy and legislation
going as far back as the Clinton Administration in 1992 and helped form the
legislation that included near-universal coverage in the State of Massachusetts.

Mark Masselli: And he advised the Obama Campaign on health care reform
strategies. He has a lot of knowledge and wisdom on the economics of access
to health care for all. He also has a pretty interesting analysis of the recent
Supreme Court hearings on the Affordable Care Act. Dr. Cutler will be with us
shortly. But no matter what the topic, you can hear all of our shows by Googling
CHC Radio.

Margaret Flinter: And if you have any comments, as always, please send us an
email at www.chcradio.com , we love to hear from you. In a moment, Harvard
Health Economist David Cutler, but first, here is our producer, Marianne O'Hare,
with this week’s Headline News.

(Music)

Marianne O'Hare: I am Marianne O'Hare with this Headline News. Dental X-
rays may be good at detecting cavities but they have also been linked to the
most common form of brain cancer. Yale researchers released a report this week
that linked multiple X-rays done in children under 10 to a higher incidence of
meningioma , a cancer of the lining of the brain. The study did look mostly at
adults who were exposed years ago to much higher doses of radiation than are
used in today’s dental X-rays.

Autism in America, a growing portrait. More recent statistics show one in 88
children have autism. That’s about a million kids in this country. But research
seems to be turning a corner. Researchers at UC Berkeley in California have
been able to grow neurons from stem cells generated from the skin of kids with
autism. In doing so, they are going to be able to observe neurons and synapse
responses in the Petri dish and work more readily on possible treatments for kids
on the autism spectrum.

Meanwhile, another study out this week, shows moms who are obese,
overweight, suffering from gestational diabetes or high blood pressure are almost
twice as likely as normal weight pregnant women to give birth to children with
developmental delays and diagnosis in the autism spectrum. Researchers are
now trying to identify the exact causal relationship, yet another reason for
expected moms to keep that weight gain down.

And the $64,000 question, how to battle obesity in one in three American kids
who is overweight, the answer may be just that, 64. A recent study by the
American Journal of Preventive Medicine determined eliminating just 64 calories
per day from the average kid’s diet would reverse the obesity trend. Those kids
with more to lose would have more exercise recommended as part of their weight
reduction. I am Marianne O'Hare with this Headline News.

(Music)

Mark Masselli: Today, Margaret and I are speaking with David Cutler, Professor
of Applied Economics at Harvard University and leading expert on the economics
of health care. Dr. Cutler served on the Council of Economic Advisors during the
Clinton Administration, was an advisor as well to the Obama Administration. He
is also author of Your Money or Your Life: Strong Medicine for America’s Health
Care System, which takes a historical and empirical look at the needs for health
care reform and what it should look like. Dr. Cutler, welcome to Conversations
on Health Care.

Dr. David Cutler: It's great to be with you. Thank you.

Mark Masselli: You know the nation’s been through a worldwide March
Madness if you will at the Supreme Court on the Affordable Care Act, and based
on the assessment of High Court’s hard line of questioning, either some or all of
the act could be in jeopardy. Now, you have been actively involved in health care
reform for over two decades. So tell us two things; why is it so hard to bring
about meaningful health care reform in America and what are your observations
about the hearings at the Supreme Court as well?

Dr. David Cutler: It's very hard because it's a complex problem. It's got a
number of different facets to it, it's trying to get people to agree on things, is
always very difficult, especially as politics grow more polarized. So I understand
why it's taking our country so long. Nobody is happy about it but I understand it.
I thought the Supreme Court debate had some moments that were good and
many moments that were discouraging. In particular, what struck me as an
economist is that a lot of the Supreme Court debate was about economics and
most of the justices did not appear to understand the basic economics of the
case. So they were debating things like externalities, which is a very, very
common economic situation that applies all over health care, and they just got it
wrong. And so they would make statements that were just incorrect. And I find it
troubling that they chose to go so deeply into a substantive issue without
educating themselves about the substance that they were dealing with.

Mark Masselli: Pull the thread a little on that for us if you will.

Dr. David Cutler: They had a whole day’s worth of discussion about is a mandate
different from a tax. For economists, there is really no distinction between them.
That is, I could mandate that you buy health insurance or I could say that if you
don’t buy health insurance, I am going to assess you a million dollar tax. My
guess is those two would have the same effect, in both cases you would have
health insurance. Indeed, the mandate in the Affordable Care Act is really just a
tax. But they twisted themselves into pretzels distinguishing between the two.
So a tax is clearly okay, a mandate is not clearly okay, you have to decide.

So then once they twisted themselves into that pretzel, they had to come up with
reasons why the federal government might be able to intervene in the market for
health insurance through a mandate where it couldn’t intervene in any other
market. And of course then they would say things like yes, but the government
does intervene in the broccoli market and in the cell phone market and so on, so
what's so different about it? And the reason why they got themselves in that
situation is because they let themselves analyze the underlying economics
wrong. Really what they should have been talking about is, is some intervention
in health care appropriate, the answer from every economics textbook is yes.
And then is a mandate a reasonable solution to that and the answer to that in
every economics textbook is yes. And so on the economics of this, it is
absolutely a perfectly clear case and it’s only muddled if you choose to make it
muddled.

Margaret Flinter: So given that they have wrapped up those oral arguments of
what's your projection on what happens next, would you like to do some crystal
ball gazing for us?

Dr. David Cutler: I wish I could since I would make money in online betting
market. But I don’t think -- the truth is I have no greater insight than anyone else
does.

Margaret Flinter: Well we are certainly eager to see how this plays out. And
maybe while that is working its way through, you have spoken in your books and
in your writing about reform and about value and we recently had Dr. Berwick on
our show, one of your Harvard colleagues, and both of you maintain that at least
a third of all health care expenditures are unnecessary or flat out waste. And it
seems to me that that’s often translated a little simplistically into we do too many
tests and we do too many duplicate tests. But you have really spoken to the
issue of value not just waste but what should we expect as a return, how do we
make decisions about health care reform based on value. And I wonder if you
would elaborate on that concept for our listeners a bit.

Dr. David Cutler: Yes, thank you, it’s an absolutely central issue. What we want
from health care is not to spend less because less is always good. It’s not. What
we want is to get more value for our dollar. We want to be able to say when we
are spending money, it’s going to something that it really should be going toward.
And our best guess is that about a third of the dollars in the medical care system
are not going towards improved outcomes. That involves people getting too
many things like for example readmissions to hospitals that don’t need to occur
or surgeries where the literature suggests the surgery is not doing any better
than non-surgical options. It involves poor prevention, people getting sick when
we could have prevented them earlier on and it involves administrative costs that
are just a nightmare. All of those are very big important parts of the health care
system. The question then is how to get rid of them and there are ways to do
that. It’s not easy. It’s not as easy as saying, oh just import drugs from Canada

because drugs from Canada are cheaper. We should be able to import safe
drugs where they are more cost effective. But that’s not the big part of it. The
big part of it is really making the system of medicine be that doctors and other
care providers can do the right thing, not that thing that pays them a lot of money.
The thing that pays people lot of money is doing more interventions, more
serious things, more testing, more surgeries. The thing that is underdone that
that we should add to that is doing a better job preventing and thinking about the
best way to treat a patient.

Mark Masselli: You know Dr. Cutler, you have had an interesting perch on health
reform attempts over the last generation at the Council of Economic Advisors, or
during the Clinton Administration you were certainly engaged in the attempts to
pass sweeping health care reforms. In the ‘90s, you have had a bird’s eye seat
in Massachusetts in the health reform initiative that’s going on there and you
have been an advisor to the President Obama’s Administration as they have
worked through the Affordable Care Act. How does the ladder measure up to
what you believe the ultimate needs for health care in America need to be?

Dr. Davit Cutler: Health care reform is going to be a process more than a single
step. I think the Affordable Care Act does very well as the first step what will be a
series of steps, not all legislative steps, that is things that go on in the private
sector with private insurance, things that happen in state governments with
Medicaid programs, things that happens in physicians’ offices and hospitals to
allow them to do better care and with fewer resources. So I am encouraged by
what we had but realize, as everyone does, that this is the start of real health
care reform not the end of real health care reform.

Margaret Flinter: I want to look at two things from where we sit. Looking at
Massachusetts seems to be working quite well and we have spoken with Dr.
Gruber, he has been on our show as well. But I would be interested from your
perspective both as an economist, as a person who works in Massachusetts, as
a father and a consumer of health care, what's your perspective on how well
health reform in Massachusetts is working and the degree to which it actually can
and should serve as a model for where we go from here.

Dr. David Cutler: In 2006, Massachusetts decided to address the issue of
coverage. So we decided we wanted to cover all the uninsured, and we put
significant effort into doing that and it worked very well. We covered three
quarters of the people who were uninsured; it cost per person about what we
thought it would cost; the market has worked the way we thought it would work.
So it’s been a very big success. As a state, we put off the issue of what to do
about the cost of it. We said, we would deal with that another day. That day has
come. We had a huge recession which strained our commitment to do
everything in state government including afford the coverage that we had
committed to. We have the highest medical costs anywhere in the country; we
had it before, we have it now. So now, we are starting to address that, and it’s

going to be difficult. It’s easier to cover people than it is to save money. I believe
we will be successful. There is a lot of goodwill and ideas about how to do it and
the question is going to be how do we best carry those out. Once again, I
suspect the nation will be looking to Massachusetts on this because just as it
looked to Massachusetts on coverage because Massachusetts did coverage
before anyone else, I suspect the nation will look to Massachusetts on the cost
dimension too, where we are really just starting things but where there is a lot of
good stuff that’s already happening.

Mark Masselli: We are speaking today with Harvard Economics Professor David
Cutler, author of Your Money or Your Life: Strong Medicine for America's Health
Care System. He is also voted by Modern Healthcare Magazine as one of the 30
people who could have a powerful impact on health care. Professor Cutler, you
write that there are three major hurdles to tackle in the health care system: cost,
access to care and quality care. If we could, let's look at the first cost with health
care expenditures approaching 20% of our nation’s GDP, and yet, you say
focusing on containing spending isn’t necessarily the right approach when you
are looking at reducing cost, that value for dollar spend should be the focus. Can
you pull the thread a little for us on that concept?

Dr. David Cutler: Spending less is good; spending less when you are cutting
back on necessary things is not good. What we need to do is to figure out how to
spend less where it's not helping us but conserve and even do more where it is
rd
helping us. What we should be doing is systematically eliminating that 1/3 or so
spending which is not associated with any better outcomes.

Margaret Flinter: Professor, I had the opportunity to go back and reread your
book Your Money or Your Life recently. And I was struck by your reference, I am
going to go to a specific area within health care because I think it’s (14:48
inaudible) to what’s going on as we look at the Medicaid expansion and how we
use Medicaid as one vehicle to expand coverage and care. And you spoke about
the IOM report on prenatal care and that if we invested in making sure that all
women or nearly all women had access to prenatal care, the return on that
investment was so huge, it was just an absolute no-brainer. And it led to
significant policy change in the country to a great increase in access to prenatal
care under Medicaid. Then it links to another comment that you have made that
when medical interventions are developed, we are much quicker to adopt them
into practice than we are when we learn about social changes or lifestyle
changes or other behaviors that need to change. And as we look to a big
expansion of Medicaid, if things continue on with the Affordable Care Act, what’s
your thoughts about how we are going to move things forward with the value
proposition around getting people to change their behaviors, an essential
element within health reform?

Dr. David Cutler: It's an essentially important question, which is how do you get
people to use insurance the right way? One of the things we noticed in

Massachusetts is that when people got insurance coverage, what they did was
they used the emergency room more, and you say, well why is that, they had
insurance coverage, I don’t understand what were they doing in the emergency
room. And the answer is that was the only way people knew how to get care.
They didn’t know where primary care providers were; they weren’t convenient to
them; the hours weren’t appropriate, so on. So what we had was an increase in
people who felt comfortable using the emergency department. That’s good, they
should feel comfortable, it's not a bad way to provide primary care but it's a very
bad way to think about integrating someone into the care system as a whole.

I like to actually myself and ask others the question, which do you find more
enjoyable: interacting with health care or buying a used car? And most people
now think that buying a used car is more enjoyable, and that’s really telling you
something about the state of the health care system and its service aspect.
That’s going to have to change.

Mark Masselli: And Professor Cutler, you have been talking a lot about quality of
care as well in your writings. But your quality approach has drawn the praise of a
number of different organizations GE and Kaiser others. Talk to us about what
you mean when you say quality in health care.

Dr. David Cutler: I mean a couple of things but number one is doing what you do
so that it works. It used to be when you bought American car, there was always
something wrong with it. You bought it, you drove it home, two days later you
had to bring it back because something had to be fixed. Well, what automakers
and everyone else in the world figured out is people don’t like that, and it's not
cheaper to do that. So quality is doing it right the first time. And in health care,
there is a lot of not doing it right the first time. In addition, quality is the service
end of quality, that is do you feel like you can actually use the system or would
you prefer to be interacting with a used car dealer. And then I think a third
dimension is quality is avoiding stuff that you don’t need to do. So in addition to
doing stuff and doing it right and making it be feasible for people, it's only doing
those things that you have to. And I will just give you an example of that. It is
generally believed as attested to by most clinical studies that approximately 90%
of people with some types of back pain do not need surgery. They don’t need an
MRI; they don’t need the orthopedist; they don’t need months and months of
recovery, what they need is physical therapy. And yet, a large number of people
still have surgery because that’s the way the process drives them and nobody
said, hey look what’s actually better for this patient, better health wise, not to
mention financially, is to dispense with the fancy stuff and go to the stuff that we
know works right away.

Margaret Flinter: Professor, you recently gave a talk at the Innovations in Health
Care Think Tank at Harvard on whether there is hope for health care reform and I
think we could safely say that the picture that you painted was of a somewhat
plotting system where change is slow to happen and even as we are in this

moment of suspended time. You mentioned earlier the good stuff was starting to
happen in Massachusetts. We talked about the coverage, the degree to which
coverage has been achieved in Massachusetts but we would be interested in not
just the coverage but the care. What are the transformations that you see
underway in Massachusetts that really, what are the changes in the
transformations that you see within care systems itself that should give us some
cause for optimism?

Dr. David Cutler: The care systems are really starting to think about how do we
deliver better care that people can access networks for them. So you are seeing
the big care providers saying how do we see more people on a primary care
basis not just when they show up in the hospital. You are seeing efforts to link
medical records across different settings so that information about you follows
where you go from one place to another. You are seeing use of decision support
services so that doctors say aha, here is automatically the right thing to do for
you; we don’t have to go research it all and find out exactly what to do with this
situation but we have at our fingertips what the Library of Medicine suggests. We
need to get better at providing the care we do because otherwise we won't be
able to afford it and we will just have to cut in other ways.

Mark Masselli: Professor Cutler, we like to ask all of our guests this final
question. When you look around the country and the world, who do you think our
listeners should be keeping an eye on in terms of innovations in the health care
system?

Dr. David Cutler: You know what I would keep my eye on is the physicians and
business people, who are running medium to larger size medical systems and
medical groups. And their life is going to be difficult. But the question is, are they
treating this as an opportunity to get better because that’s what they can now do
or are they hunkering down and hoping to ride out the storm? And that’s who I
will look at to see how this is all playing out.

Margaret Flinter: We have been speaking today with Harvard Economist, David
Cutler, leading expert on Health Economics, author of Your Money or Your Life:
Strong Medicine for America’s Health Care System and voted by Modern
Healthcare Magazine as one of the 30 people who can have a powerful impact
on health care. Professor Cutler, thank you so much for joining us today on
Conversations.

Dr. David Cutler: My pleasure, thank you.

Mark Masselli: At Conversations on Health Care, we want our audience to be
truly in the know when it comes to the facts about health care reform and policy.
Lori Robertson is an award-winning journalist and Managing Editor of
FactCheck.org, a non-partisan, non-profit consumer advocate for voters that aim

to reduce the level of deception in US politics. Lori, what have you got for us this
week?

Lori Robertson: Well Mark and Margaret, this week, we will talk about an old
claim about the federal health care law that we keep seeing again and again.
Republicans say that the law kills jobs or that it's job killing. And this is
something that we have seen and heard from Republican Presidential Candidate
Mitt Romney, we have seen it in ads from the U.S. Chamber of Commerce and
also various claims from lawmakers in Congress. But the claim that it's job killing
is greatly exaggerated. What experts say is that the law will cause a small loss
of low wage jobs and also some gains and some better paying jobs in the health
care and insurance industries. The non-partisan Congressional Budget Office
said that the law would cause a small reduction in the amount of labor in the
economy and that would come about primarily by reducing the amount of labor
that workers choose to supply. So what that jargon means is that more workers
would decide to retire earlier or work fewer hours when they no longer need
employer-sponsored insurance and can obtain it on their own with help from
federal subsidies. That means fewer people willing to work or willing to work as
many hours not a destination of the jobs that are available.

At the same time, we have also seen claims about small businesses being
devastated by the law but that’s also off base. Businesses with fewer than 50
workers are exempt from the requirement to provide coverage or pay a penalty.
And really small businesses are already getting tax credits under the law to help
them provide health insurance for their workers. So despite all of that, we expect
to see more of these job killing claims again throughout the election. I am Lori
Robertson, Managing Editor of FactCheck.org.

Margaret Flinter: FactCheck.org is committed to factual accuracy from the
country’s major political players and is a project of the Annenberg Public Policy
Center at the University of Pennsylvania. If you have a fact that you would like
checked, email us at www.chcradio.com , we will have FactCheck.org’s Lori
Robertson check it out for you here on Conversations on Health Care.

(Music)

Margaret Flinter: Each week, Conversations highlights a bright idea about how
to make wellness a part of our communities and everyday lives.

What does a group of motorcycle enthusiasts have to do with treating the ill in
Sub Saharan Africa? As it turns out, plenty. Riders for Health is based on the
premise that no one should die from a preventable or treatable disease simply
because of lack of transportation. When you look at the numbers of deaths due
to untreated malaria, tuberculosis and AIDS in Africa, one of the biggest barriers
to patients receiving life saving care is transportation. Often patients who are
sick must walk long distances to reach clinics and clinics often go without

necessary medicines because of a poor delivery infrastructure. Riders for
Health, an international group formed from the world of motorcycle racing,
realized that if you provided a fleet of vehicles, and more importantly, put a
preventive maintenance system in place, health workers would be able to take
their expertise out to their populations.

Unidentified Speaker: What we do is to focus on running and managing vehicles
that are able to get that health care to the people who so desperately need it.

Margaret Flinter: Since the program began, over a thousand motorcycles and
four-wheel drive vehicles have been deployed across a dozen African countries
and thousands of patients have been saved by this simple but ingenious concept.
Riders for Health offers a transportation solution to a medical problem. Now
that’s a bright idea.

(Music)

Margaret Flinter: This is Conversations on Health Care. I am Margaret Flinter.

Mark Masselli: And I am Mark Masselli, peace and health.

Conversations on Health Care, broadcast from the campus of Wesleyan
University at WESU, streaming live at www.wesufm.org and brought to you by
the Community Health Center.