Venrock Partner offers take on Senate health bill debate and how ACA can be fixed (Q&A)

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Before he joined venture capital firm Venrock and became a partner investing in healthcare startups, Dr. Bob Kocher served as special assistant to President Obama for healthcare and economic policy from 2009 to 2010 and played a role in the development of the Affordable Care Act. Given another rollercoaster week for ACA repeal and replace machinations in the Senate, we thought it would be helpful to check in with Kocher to get his perspective. Kocher responded to questions in a couple of emails. What follows is a lightly edited Q&A.

What do you make of Trump’s comment this week: “We’re not going to own it. I’m not going to own it. I can tell you the Republicans are not going to own it. We’ll let Obamacare fail, and then the Democrats are going to come to us.”

Trump is responsible for the performance and premiums of State Exchanges.  The regulations that Trump enacts governing the individual insurance market, the day-to-day operations of HHS’ insurance exchanges, and efforts to reduce political uncertainty around policies like funding cost-sharing rebates, enforcing the employer and individual mandates, and extending reinsurance all have enormous effects on the premiums.  Also, HHS has a great deal of latitude on how to design the purchasing experience and can make it harder or easier for individuals and brokers trying to help people buy insurance.  How Trump chooses to oversee the Affordable Care Act could easily have a larger impact on premium growth than underlying medical trend.

What aspects of the Affordable Care Act need to be fixed at this point?

The ACA is working well in most places and premiums under the ACA have grown more slowly than prior to the ACA.  Moreover, premiums today are almost exactly what the Congressional Budget Office predicted.  To make the ACA work even better, and to reduce future premiums, five things should be done:

  1. The Trump Administration should enforce the individual and employer mandates
  2. The Trump administration should commit to funding cost sharing rebates (failure to fund these will lead to 10 percent to 15 percent increases in premiums)
  3. Ask Congress to reinstate the risk-corridor funding, that Marco Rubio removed, like we do for Medicare Advantage
  4. Ask Congress to extend and make permanent reinsurance funding like we do for Medicare Advantage
  5. Require plans to bid on large regions or entire states to create larger risk pools and more plan options in less populated counties.

How do you expect the healthcare reform debate to unfold from here?

I think Republicans will find it politically advantageous to move on to other agenda items and work with Democrats to enact these five policies as part of the end-of-year flurry of must-pass government funding bills.   

What aspects of the healthcare reform debate are getting overlooked or missed that you think are important? 

The fundamental problem is that healthcare costs too much. Premiums under the Republican health care plans are forecast to go up even faster than the ACA.  Premiums today are already over $17,000 per year for a family.  That is simply unaffordable.  We need to redesign healthcare to be lower cost.  We know that healthcare can be delivered at lower costs since groups like Kaiser, Geisinger, Group Health, ChenMed, Healthcare Partners, and CareMore have delivered care that is about 30 percent lower cost with great outcomes done this for years.  We need policy makers to argue more about how to create incentives to drive down cost and less about what cost sharing should be for individuals.

Has the healthcare debate on Capitol Hill shown that the shift to value-based care is at risk or can overcome the current uncertainty?

I think the shift towards payment models that reward better outcomes at lower cost is certain. The legislation that drives this change is MACRA and it is not being debated.  MACRA passed Congress with bipartisan support and Secretary Price committed to enact it faithfully during his confirmation hearing.

Does the Senate’s lack of success (so far) with the ACA repeal and replace effort say more about the GOP and the members of this party, the ACA or the divisiveness of the healthcare debate in general?

I think that most Americans think the ACA is working.  Having access to high quality insurance with subsidies to make care more affordable is valued by Americans.  The thought that they would suddenly have to pay both more out of pocket when they go to the doctor with higher deductibles, pay higher annual premiums, and have plans that cover fewer conditions is scary. The rhetoric of “repeal and replace” may have sounded good politically but it is sure unattractive when you consider the reality.

You noted in an editorial you wrote for The Wall Street Journal last year that one thing you got wrong about Obamacare was how the change in the delivery of healthcare would and should happen:

“I believed then that the consolidation of doctors into larger physician groups was inevitable and desirable under the ACA….What I know now, though, is that having every provider in health care “owned” by a single organization is more likely to be a barrier to better care.

Is there anything that can be done to improve this situation through amendments to ACA?

While we anticipated ongoing consolidation of healthcare providers into larger systems, we thought that these systems would also embrace the new payment models the ACA launched.  These new models reward coordination of care that can be made easier through scale and being part of a single organization that can do everything from primary care and hospital care to rehab and hospice.  In reality, these larger systems have discovered that they have the market power to say no to health plans trying to get them to take part in new payment models and to raise prices.  We now need to do more work on creating local market competition and price pressure.

What are the chances that after the repeal effort fails, that a truly bipartisan effort may emerge to deal with areas of the U.S., where the healthcare exchanges are not working well because too few insurers are participating?
I think there can be bipartisan support for solutions to make Exchanges work better and to lower premiums for consumers. Just like Democrats and Republicans have come together to fund reinsurance, risk corridors, and reduce uncertainty for private health plans in Medicare Advantage and Medicare Part D, fortunately, these same solutions will work again for Exchanges. I think we can achieve bipartisan support to bolster the ACA and that Republicans will have the desire to do these things soon.

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