Health Reform Matters: An Interview with Larry Gage

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For an insider’s perspective, Health Reform Matters sat down with Larry Gage, a health care partner in Ropes & Gray’s Washington, DC office. Over the years, Mr. Gage, the founder and current president of the National Association of Public Hospitals and Health Systems (NAPH), has been responsible for many Medicare and Medicaid reforms critical to the survival of safety net hospitals. Mr. Gage began his career as staff counsel to the Senate Labor and Human Resources Committee during the Nixon and Ford Administrations. During the Carter Administration, he served as Deputy Assistant Secretary for Health Legislation in the Department of Health, Education and Welfare under Secretary Joseph Califano. Thereafter, he left federal government and founded NAPH. Given his many years inside the beltway as a health care lawyer and policy authority, Mr. Gage offers unique insight into the politics of health reform.

Question: How would you characterize “health reform” in the United States?

LG: Health reform, which would create a framework under which all Americans would have access to health insurance, is a goal the nation has been pursuing (with great futility) for nearly half a century. Many have held the vision of true, universal coverage since Congress created Medicare and Medicaid in 1965, if not earlier. Unfortunately, politicians have been unable to agree on an acceptable approach to achieving this coverage.

Question: What do you expect to see in the way of substantive health reform over the upcoming months and years?

LG: Whatever we see will be a compromise. One likely compromise will be between those who favor a governmental, or single-payer, approach and those who would prefer to implement reforms through the marketplace and the private sector. President Obama’s campaign proposals preserved significant aspects of the current employer-based system, while expanding and reforming the current Medicaid program. Senator Baucus’ white paper similarly maintains the employer-based system and a role for private insurance companies. We have already seen compromising between the branches of government, as President Obama has been consulting and cooperating with Capitol Hill staffers while developing his health care agenda. This approach bodes well for achieving meaningful reform this time around.

Anyone interested in the likely substance of health reform should read (or at least skim) the reports recently released by the non-partisan Congressional Budget Office. The first, Key Issues in Analyzing Major Health Reform Proposals, analyzes the economic need for comprehensive health reform and how a combination of subsidies and mandates could achieve near-universal coverage. The second, Budget Options Volume I, analyzes the costs/savings of 115 health reform options. Health reform proposals likely will be developed with an eye towards these reports, as they provide ample data to both support and oppose many health reform initiatives. For example, the reports illustrate that two popular proposals, adopting health information technology and providing more preventative care, would lead to only modest reductions in overall costs or even increased spending over the next ten years.

Question: Process-wise, how do you expect health reform to proceed? For example, will it be incremental, occurring through many separate pieces of legislation, or should we expect a single comprehensive bill?

LG: Many observers who have been watching Congress develop and pass the stimulus and CHIP legislation, including myself, are of the opinion that we have already started down the incremental path. Those bills promise to close some important gaps in health coverage - albeit temporarily. But they clearly represent a “down payment” on reform. And some aspects of the stimulus package - like the HIT infrastructure spending - are clearly laying a foundation for nationwide health reform efforts.

Question: Could you share your thoughts on the current environment of health reform as compared with previous, largely unsuccessful, health reform efforts? What are the biggest obstacles?

LG: The environment for reform is as optimistic now as it has ever been. In part, this is due to increasing Democratic control of both Congress and the White House. But reform will require compromises, both with Republicans and within the Democratic party. And there are ongoing issues that will need to be addressed, including the spiraling costs of current programs; increased payer demand for attention to quality, patient safety and improved “value”; and the significant disparities of practice patterns and costs across the country. Expanding coverage to some populations among the uninsured, particularly immigrants, will require engaging in broader societal debates, ones that already are quite contentious. Yet you can’t have true reform without addressing these issues.

What is encouraging about the CHIP and stimulus bills is that they begin addressing many of these potential pitfalls. For example, HIT infrastructure spending should make it easier to assess provider quality and efficiency. And the CHIP legislation expands certain benefits to legal immigrants. Even the substantial concerns about entitlement growth is the subject of a bipartisan proposal, pushed by Senators Kent Conrad and Judd Gregg, to create a “base closing” type of commission that would present Congress with proposals to stabilize Medicare, Medicaid and Social Security and that could only be voted up or down, without amendment.

Question: The American Health Lawyers Association identified “Healthcare Reform and the Uninsured” as the #1 issue for health care lawyers in 2009. How will the firm’s clients be impacted by health reform?

LG: Our clients cannot help but to be impacted by health reform. Health industry participants - from providers to manufacturers - would see greatly expanded opportunities to sell products if coverage is expanded for the uninsured and underinsured. Many others - from financial institutions to employers to colleges and universities - also should have opportunities to benefit from reform, both directly and indirectly. My colleagues and I are following the changes closely, and because of the breadth of our expertise, we can analyze and advise on all aspects and implications of the reform measures. At the same time, concern over cost, quality, efficiency, and sustainability will mean new rules and constraints on all players. Ultimately, everyone will need to be prepared to compromise for health reform to succeed. I believe that one of Ropes & Gray’s strengths is our ability to analyze health reform proposals as they are developed and to help our clients understand both the opportunities and potential drawbacks.

Question: What are the prospects for bringing about health reform while in the midst of such a serious economic downturn?

LG: The challenge is daunting, but we have to remember that some of our most cherished national programs - like Social Security and unemployment insurance - grew out of similar periods.