Interview with James Roosevelt, Jr.

Interview by Ashhab Thakur

James Roosevelt, Jr. is the former CEO of Tufts Health Plan, and currently serves as Chairman of the Massachusetts Association of Health Plans and as a co-chair of the Democratic National Committee’s Rules and Bylaws Committee. He was interviewed by associate editor Ashhab Thakur about the climate of health insurance in the United States.

Ashhab Thakur (AT): I think it’s a really interesting time to be in healthcare, though an unstable time as well. Could you give me some insight into what you think about the current state of healthcare?

James Roosevelt (JR): It’s always been an interesting time to be in medicine. Ranging from new discoveries to being able to pay for everything we do, [healthcare] has constantly been unfolding. But this is now the most uncertain time we’ve experienced for healthcare. The ACA has affected the way healthcare is organized, and was planning to change healthcare further, but now it’s all a jump ball. I’ll get into more specifics, but I’ll completely agree with you, this is certainly the most interesting time for healthcare.

AT: Let’s take a look at Obama’s healthcare policies before moving onto hypotheticals: how has the ACA impacted the way that health insurance companies operate?

JR: So, starting with health insurance companies, or health plans, as we like to call them, we can break it down. So let’s look at health plans that are primarily commercial consumers, providing employer based insurance, or insurance that people pay for on their own, versus health plans at are also Medicaid advantage plans or Medicare managed care organizations. The one that I was the CEO of, Tufts Health Plan, does all of these. A fair number of health plans are solely commercial. The effect of the ACA on them has been that there are some taxes added in, which are not significant, and there are benefits that are required for even them, private health plans. That’s about the extent of the ACA’s effect on private companies, except that the ACA has inspired quite a bit of reorganization in how doctors are organized, and we’ll get back to that when we talk about how the ACA has affected providers.

Health plans that also offer Medicare advantage are significantly impacted, because gradually the ACA, starting a couple years and finishing in about 2020, is closing the so-called donut hole in Medicare prescription coverage whether it’s through Medicare advantage or Medicare part D. If the ACA is repealed, that hole goes back to the original size. Moreover, the ACA has reduced some payment to health plans, and therefore to doctors, in order to pay for subsidized coverage, which we’ll get to in a minute. But one way or another Medicare will exist, however some of the Trump and Ryan proposals would dramatically change how Medicare is used. Medicaid plans, and as I said Tufts Health Plan (THP) has a division called Tufts Public plans, are also a large share of the exchanges; they come from companies who do Medicaid plans and from commercial plans. But these are affected a lot if you’re a Medicare-Managed organization, you’re affected because funding for states for Medicaid, those who accepted the Medicaid expansion, is a huge chunk of the income to health plans. If that went away, there would be a lot of restructuring, possibly a lot of just cutback in the number of people covered, and therefore the number of people working in insurance.

Twenty million people have coverage who didn't have it three years ago. That is about 2/3 through the Medicaid expansion, 1/3 through the subsidized plans through the exchange. So when you read about the premium increases, about a month ago, that affects no more than 8% of the population. Because the people getting subsidies are just a small percentage of the people getting coverage through the ways we've described. In fact, there's just been an article published by a number of HSPH professors, because of the way the subsidies are calculated, when premiums go up, the subsidies will be recalculated in a way that actually may make the out of pocket expense less for people than before.

Of course nobody figured this out before the election. How an insurance company is affect depends on the line of business you're in, and the products that you offer. The Medicaid MCO plans that many states offer, you have to get your care through a managed care organization. And some of the southern and border states have gotten waivers from the federal government, to take the money and buy private insurance, which is basically the same as buying a Medicaid MCO plan. But here in MA for example, I'll use THP again, we offer both regular commercial plans on the exchange (the official federal name is the marketplace, and the Massachusetts name is the connector, but I'll call it the exchange) which are more expensive and not so popular, there are also plans through the Medicaid division with more limited networks but the premiums are lower, and everyone of the limit networks includes a major research/teaching center, a major academic hospital as well as community hospitals. we have the largest market share on the exchange with those types of plans, just as we have the largest HMO model, Medicare managed care, again we have a 50% market share in MA.

So people have chosen, you know contrary to the hype in the media which takes about a government takeover of healthcare through the ACA, the ACA is really based on a market driven system. Which is heavily privatized. and so there has been growth in Medicare advantage, Managed Medicare – all run by private insurers and all administered by private providers. So that's the insurance company side of it. And for high-end hospitals, like one in middle of Manhattan that can choose to only take high-rate consumer insurance plans, you're going to do well. But hospitals like Massachusetts General and Brigham Women's and Children's can also do well, because they can negotiate high prices for their goods, since they're in such high demand. And, statistically speaking, while the quality of care there is no better than a community hospital like Mt. Auburn, they can charge higher rates due to the nature of their care (often using cutting edge research).

AT: Furthermore, how has this past administration impacted Social Security, Medicare and Medicaid & the future of Medicare and Medicaid?

JR: So what you've begun to see under Obamacare is quite a large number of experiments in realigning what needs to be done to raise the quality of American medical care because as most people know these days, we do not rank tops in the world for quality of healthcare. Some of that has to do with the economic diversity of our population, Scandinavia has a lot less economic diversity than us, but some of it has to do with how coordinated our medical care is, and how good people's access is to get it.

So both by direct regulations under Medicare and experiments coming out of the Center for Medicare and Medicaid expansion in Baltimore, which is part of Obamacare, and just by dealing with the new world of how do you get paid by health insurance companies, doctors have been reorganizing themselves gradually, sometimes reluctantly, but steadily into larger groups where there's more attention to quality scores, more coordination and more attention to physician extenders, physician assistants and nurse practitioners, to follow up with patients. You know, there's not good data on a very high percentage of patients, particular older patients but even younger ones as well, they go home and are totally confused about their treatment. They go home and they take their old medication as well as what was just prescribed. A call from a nurse practitioner to say, are you taking your "X, Y, and Z medications" and are you taking anything else? prevents all kind of complications and readmissions in hospitals. And those sorts of things go a long way.

And Medicare, just in the last 6 months, came out with a very significant reorganization of how doctors are paid. that is just beginning to be implemented. All of this is Obamacare related. it's very hard to tell when you listen to President-Elect Trump but even if you listen to Speaker Ryan or others in Congress who have had deeper involvement in the legislation, when they talk about doing away with all of Obamacare, are they talking about these things that are talking about higher quality and lower cost healthcare? When they talk about doing away with intrusive regulation, a fair amount of this is intrusive regulation. So what they're talking about doing, that's very much a work in progress.

AT: What do you think is going to happen to the state of Social Security as money begins to run out? What would you do as a lawmaker? JR: Interesting, I was in Washington for the days immediately after the election, and aside from a fair amount of gloom, there was a lot of discussion about what this presidency means for various forms of social insurance. That is, Obamacare, Medicare, Medicaid, and Social Security; that is the universe of social insurance. The consensus is, that Medicare is going to be affected a lot. The Ryan proposal [this refers to the American Healthcare Act bill which was pulled – this interview was taken before that event] and others do propose giving people one set amount of money and letting them decide how much Medicare coverage they want to buy. Let me rephrase that – how much Medicare coverage they’re able to buy.

There’s also a proposal to what is called “block-grant” Medicaid, which gives states a certain amount of money per Medicaid recipient and so on. There is less concern generally in the policy community in Washington about an assault on Social Security. However, I was very involved when President George W. Bush traveled to 49 states trying to rally support for privatizing Social Security. In fact, every time he visited a state and there was media focus on his plan, the popularity of privatizing Social Security dropped dramatically. Privatizing Social Security means shifting people over from an insurance plan where you pay a tax which is the equivalent of an insurance premium, out of every paycheck, and then when you reach a certain age or you’re disabled, or you are a child of a parent who is deceased, you have a claim for a certain amount of money. Privatizing means you put your money gradually into an investment vehicle, and if that vehicle is doing well in the stock market when you retire you might be really well off. And if you had to retire in 2008 or 2009, the entire rest of your retirement would be dramatically less comfortable, questionably not even sustainable.

So, the belief among the policy community in Washington is that this fight will not happen again, but I am not so convinced of that because again, if you go to the orthodoxy of the Republican platform of the Heritage Foundation, of Cato, of some of the Republican policymakers in the House, privatizing Social Security has been a consistent goal. It probably won’t be question number one that they deal with, because Obamacare has been so much in focus, but it’s going to be on the agenda, at some point.

AB: Thank you so much. It was great speaking with you!