May 11, 2010
To: Larry Summers
From: David Cutler
Subject: Urgent Need for Changes in Health Reform Implementation
I am writing to relay my concern about the way the Administration is implementing the new health reform legislation. I am concerned that the personnel and processes you have in place are not up to the task, and that health reform will be unsuccessful as a result....
My general view is that the early implementation efforts are far short of what it will take to implement reform successfully. For health reform to be successful, the relevant people need a vision about health system transformation and the managerial ability to carry out that vision. The President has sketched out such a vision. However,I do not believe the relevant members of the Administration understand the President’s vision or have the capability to carry it out.
Let me illustrate the problem you face and offer some solutions.
A central concern is the Department of Health and Human Services, the main implementation agency for reform. The Department is making a good start on the immediate deliverables of reform: high risk pools and coverage for young adults. But it is far behind the curve on the key long-term reform efforts, most notably reforming the delivery system to support higher quality, lower cost care. Let me give you a few examples.
1. A good deal of reform implementation needs to occur at the Centers for Medicare and Medicaid Services (CMS). You were dealt a bad hand here. The agency is demoralized, the best people have left, IT services are antiquated, and there are fewer employees than in 1981, despite a much larger burden. Nevertheless, you have not improved the situation. The nominee to head that agency, Don Berwick has never run a provider organization or insurance company, or dealt with Medicare or Medicaid reimbursement. On basic issues such as the transition from fee-for-service payment to value-based payment, Don knows relatively little...
2. The second major task of reform is to set up and run insurance exchanges. I am not encouraged by what is occurring there either. Running exchanges is a collaborative process.
.... Remember that most people will get their information about reform from their doctor and their insurance agent. If you cannot find a way to work with hesitant states and insurers, reform will blow up. I have seen no indication that HHS even realizes this, let alone is acting on it
3. A fundamental issue in making reform work is explaining reform to providers and showing them how to respond to it. The Department has done nothing along these lines. Most providers know very little about reform, and they are universally surprised to hear a positive philosophy about how they can benefit from health system transformation. Their most common comment is ‘why hasn’t anyone explained this to us?’...
4. Above the operational level, the process is also broken. The overall head of implementation inside HHS, Jeanne Lambrew, is known for her knowledge of Congress, her commitment to the poor, and her mistrust of insurance companies. She is not known for operational ability, knowledge of delivery systems, or facilitating widespread change. Thus, it is not surprising that delivery system reform, provider outreach, and exchange administration are receiving little attention....