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Contact Us Spring 2001; Volume 2, Number 1
Features: Interviews
Interview with Nancy-Ann Min DeParle
Conducted by David Sclar
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HHPR: Let's begin with a macro-level question. There's a lot of talk in the world of health policy about a "crisis" in health care. Are we approaching a crisis in long-term health care in particular?
NMD: Having worked in and around health care policy for more than a decade, I am very reluctant to use the word crisis because it seems to me that it's overused in health care and in other contexts as well. If demographic and economic and health care trends continue as they have been, which is a big if, then we are facing an extremely challenging period in which it's going to be quite apparent that we've not figured out how to finance long-term care, nor really what the government should be providing or what individuals and families should be expected to bear.

We've been really fudging the issue for the last twenty/thirty years through a combination of Medicare and Medicaid for addressing patients' long-term care needs. Those two programs probably shouldn't be bearing the full extent of the load, and we can tell from the demographics of the aging baby boomer population that there are going to be a lot of people who will need and want some sort of assistance. I'd like to think that the health status of those people is going to be better. So maybe it will be later in life that they will need some sort of assistance, maybe what they'll need will be something along the lines of personal care assistance or home health, as opposed to a nursing home, per se. But there are going to be needs, and we haven't figured out how we're going to finance them.

Unfortunately, we haven't done a lot to encourage people to think about it themselves, and it's a subject that even the Baby Boomers don't seem to want to talk about. People don't want to think about that period in their lives; it's very hard, even for policy makers. I think those people who specialize in this area feel frustrated because people don't want to face the issue.

There is hope on the horizon: there are some bipartisan efforts, President Clinton has had proposals, Senator Kennedy has been very commited to making progress, and I believe President Bush has some proposals to extend some tax credits and to do some other things to encourage people to think about their long-term care needs for when they get older or become disabled. Those kinds of things will help, but I don't think we've fully faced up to the extent of the problem. So while I would not call it a crisis, yes, I think we're facing a major challenge there that we haven't even begun to think about seriously.

HHPR: You mentioned that Medicare and Medicaid are currently sharing most of the load. Is there a way to take the load off them in particular or is that goal included in the other legislation you mentioned?
NMD: The other legislation is designed to encourage individuals to go ahead and purchase long-term care insurance, for example, so that when they need home health care or a nursing home, they already have insurance for that eventuality. Medicare only covers nursing home care on an intermittent basis. It doesn't really cover long-term care. Medicaid does cover it, but only for poor people, and the way most elderly get into a nursing home and are covered by Medicaid is by spending down all of their assets. And so the theory behind these legislative efforts is to try to get people to plan in advance so that they've paid for some insurance up front and they don't have to bankrupt themselves and their families before they are eligible for some assistance. And consistent with the principles of insurance, the earlier one begins to purchase a policy, the lower the premiums, the more affordable the whole proposition is. Additionally, the more people who do it, the more affordable it will be for everybody. Because we just don't have that kind of a long-term care insurance market in this country yet, tax incentives are being debated as a way of getting us to that point, and as I said, I think there is some bipartisan agreement on the issue.

Right now, what we have is just a system that has arisen where some people who need nursing home care are getting it privately, but it's $50,000 a year if someone really has to be in a nursing home around the clock. Some people pay privately, but a lot of the long-term care costs end up being borne by Medicaid. That isn't really the way that it should be; there should be more advance planning, and it shouldn't necessarily be the state or federal government's responsibility. There are other things that could be done. You could expand benefits under Medicare. Tax credits, I think, are a good starting point. It's a shame that we didn't get it done 20 years ago, because then we'd probably have a more robust market out there. But we need to do it now.

Medicare Reform
HHPR: There are a lot of legislators talking about Medicare reform. As you know, we have an article in this issue by Dr. Bruce Vladeck, in which he disputes those criticisms and says that Medicare actually works quite well. What are your thoughts on whether or not Medicare "works" or what kind of reform is necessary?
NMD: Well, I agree with Bruce in that I think it is always easy to say that programs need reform, but then I think that you need to step back and ask some questions about what it is we are trying to do here and precisely what trade-offs the reform would entail.

From the perspective of the beneficiary, what would make this program better? It's clear that beneficiaries need prescription drugs. That's a form of reform that I can agree to, and there's lots of different ways to do that, and there should be a debate about that. It's also clear that the program, while fiscally healthy for the next 20 years or so, will need additional revenues to be solvent in the future. We'll have enough to last through the first wave of the baby boomers' retirement through 2025, but after that, we'll need more money. It's prudent right now to begin thinking about how we would do that. What's the appropriate mix of costs that we should expect beneficiaries to bear? Is the tax structure sustainable? Are there changes we could make to the way we pay providers that would be more cost effective? All those things need to be looked at on a continuous basis.

But I have trouble with some of those reforms that have been proposed, because it seems to me that those reforms are really designed more to privatize the program. I simply don't accept that the government's role in this program has been oppressive or negative. Can there be improvements? Yes. But I think that in a program of this magnitude that has done so much good for so many people - all you have to do is look at the health and economic statistics for seniors now and before Medicare was enacted to see that it has done a lot of good - the government has an inherent role. And I think turning it over to the private sector in the way that some have suggested would not only be a mistake, but would also end up costing us a lot more.

So, the issue is, are there things we can do to make the program more efficient and better for beneficiaries and to make it even more fiscally solvent for the future? Reform that meets those standards would be something I would be in favor of. But all the talk about the program being in a crisis - I don't buy that at all. I think that Medicare is actually as healthy as it has ever been, and we have to be very honest about what we're doing. My recommendation would be that we keep first and foremost in our minds, as we approach any reforms the question of, "How will this affect beneficiaries? Will this really help them?

Medicare Prescription Drugs
HHPR: You mentioned that the creation of a Medicare prescription drug benefit is on the forefront of the reform agenda. Both of the candidates during the Presidential campaign talked about providing a Medicare prescription drug benefit. Is that a debate you expect to continue into this year? And is there a possibility that the new administration could pass a prescription drug benefit this year?
NMD: Well, both candidates did promote prescription drug benefits, but the benefits were quite different. Given the [close] outcome of the election, it isn't clear which benefit people are really for. Maybe that's because this is a difficult question. I'm not sure there is a consensus yet on how to do it, and, in fact, I believe there is not a consensus either in the congress or among the American people. There is a consensus that it is needed. So, yes, I think that means there is going to be a lively debate about it this year.

President Bush said that he was going to put together a commission to give him a report within ninety days, so I expect we'll have that report and perhaps even some hearings about it in Congress by this spring. But it still promises to be a very difficult discussion when it comes to actually crafting legislation that can pass the Congress. There are some polarizing issues about, again, to what extent should the government be involved in this, should we just give out vouchers or allow people a certain amount of money to spend toward prescription drugs, or should there be a defined benefit with uniform premiums and co-pays? The Democratic view has been that, like the rest of Medicare, there should be a defined benefit program and prescription drugs should be integrated into the Medicare program. The Republican view has been to have something more removed from the traditional Medicare program. Among the Democrats, there are a lot of concerns about that. So whether or not something can pass this year, I think, is an open question. I guess I would have to say, at this point that I doubt there's enough time to work out that kind of consensus. But I would expect there to be an important debate about it.

The Next HCFA Administrator
HHPR: I have a couple of questions pertaining to the Health Care Financing Administration (HCFA) where you were Administrator from 1997 to 2000. I'm wondering if you have anyone in mind who you think is a likely successor to your post as Administrator. Also, what are the most important skills involved in the job? What challenges is that the next Administrator going to have to face? And do you have any advice for that person?
NMD: Well, I haven't thought about a specific person - there are a number of people who would be very good in the job. The type of person who would enjoy it is someone who is prepared to manage a challenging set of programs: there's Medicare, obviously; there's Medicaid; there's the State Children's Health Insurance Program; and there are a whole set of issues related to hospital standards, nursing home standards, and insurance markets. It's a very rich mix of health policy issues. It's a unique job in the government in that most jobs are either pure policy or operations. Generally, agencies are either making payments or they're thinking about policy and how legislation should be worded. There's usually more of a clear division.

The HCFA Administrator really does both. You have to be interested in managing the place and making sure the trains run on time. And, for us, the trains running on time means Medicare payments get paid because when you're responsible for essentially 1/3 of the health care economy, if those dollars don't flow, it has a paralyzing effect. But, at the same time, in addition to all the operational aspects of the job, there's a lot of policy involved, there's a lot of issues about what's best for beneficiaries. How do you best educate beneficiaries about Medicare? How do you make sure people get the treatments that they need? If there are things that the law doesn't allow us to provide, then what is the agency's role in trying to promote that, such as trying to promote a prescription drug benefit for our beneficiaries? So there's a unique mix of policy and operations, and the kind of person who would enjoy it would be a person who can shift back and forth between those challenges.

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Spring 2001, Volume 2, Number 1
Table of Contents
Editor's Note
Features: Medicare Symposium
Features: Interviews
Features: Health Care for the Elderly
Health Highlights
In Focus

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