The Second Term: Joseph Newhouse on Healthcare Policy

January 24, 2013
By Doug Gavel, Harvard Kennedy School Communications

President Obama's second term in office began on Inauguration Day, January 21st, and the list of policy challenges facing his administration is daunting. Aside from the difficult task of addressing the nation's economic woes, the president and his administration will also deal with the increasing complexities of global climate change, a rapidly changing energy market, entitlement and tax reform, healthcare reform, and the repercussions from the still simmering "Arab Spring." Throughout this month, we will solicit the viewpoints of a variety of HKS faculty members to provide a range of perspectives on the promise and pitfalls of The Second Term.

We spoke with Joseph Newhouse, John D. MacArthur Professor of Health Policy and Management about healthcare policy issues confronting the president in his second term.

Q: What are the top priorities for a second Obama administration in the area of healthcare policy?

A: First, successfully implementing the Affordable Care Act. Second, over the longer term reducing the rate of growth of health care costs, especially federal costs, while preserving access to high quality medical care for beneficiaries of federal programs, especially Medicare and Medicaid.

Q: What will be the potential challenges/roadblocks in the way of implementing those top priorities?

A: Successful implementation of the Affordable Care Act poses both substantive and political challenges. Readers, especially Medicare beneficiaries, may recall the operational problems of Medicare Part D in its first few months of operation in early 2006. Implementing the Affordable Care Act is much more challenging, even if the country were not divided on its merits and many Republican governors and legislators opposed to it. Getting individuals to comply with the mandate by purchasing health insurance, to use an Exchange, and to manage the logistical problems of individuals who will move back and forth between a Medicaid policy and a private policy are some of a host of daunting issues. And the Republican House of Representatives may try to block funding for implementation of certain parts of the Act.

Health care costs have risen at rates well above the growth of GDP and federal tax revenues for decades; going forward this will necessarily stop in some fashion, although what the mechanisms will be is speculative.

Q: Where do openings/possibilities for compromises exist in those areas?

A: The Administration might decide to delay implementing the Affordable Care Act in some states for a period of time. Both parties bases seem dug in on Medicare and Medicaid; compromise there is more difficult, though there is some agreement between the Administration and the Republican Congress on expanding the role of managed care in Medicaid.

Q: Are there lessons that a second Obama administration can draw upon from the first administration, or from history, when constructing its healthcare policy over the next four years?

A: We have not had legislation on the scale of the Affordable Care Act since the enactment of Medicare and Medicaid in 1965. At that time there were large Democratic majorities in both houses of Congress and a Democratic administration. Medicare was an entirely federal program. But not all states participated in Medicaid immediately. The Administration might look to the Medicaid example, since it seems to me highly likely that if the Affordable Care Act is implemented in all states in 2014, there will be a number of untoward incidents that will not serve the Administration well.

The rate of growth of health care costs are an extremely difficult problem both substantively and politically. I am skeptical that much will be done in the next four years.

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Tuesday, Jan 20, 2009

Tuesday, Jan 20, 2009

"I am skeptical that much will be done in the next four years," writes Newhouse.

Joseph Newhouse, John D. MacArthur Professor of Health Policy and Management

Joseph Newhouse, John D. MacArthur Professor of Health Policy and Management