HH: Joined now by United States Senator Lamar Alexander of Tennessee. He’s served in the Senate since 2003. Prior to that, he was two-term governor of Tennessee, former Secretary of Education. Right now, he is chairman of the Health, Education, Labor and Pensions Committee of the United States Senate. And in a couple of hours, he’s holding a hearing with a bunch of governors, Charlie Baker of Massachusetts, Bill Haslam of the great state of Tennessee, Gary Herbert of Utah, John Hickenlooper of Colorado, Steve Bullock of Montana, and I think that’s three Republicans and two Democrats. Senator Alexander, good morning, good to have you.
LA: Good morning, Hugh.
HH: Let me begin before I talk about the hearing today and the health care fix, the debt limit deal that was struck yesterday between President Trump and Minority Leader Schumer and House Minority Leader Pelosi – are you in disbelief? Are you dumbstruck? Because if I watch the news media, it appears that Republicans are concussed by this. I don’t think it’s that big of a deal, but what do you think?
LA: I was glad to see them agree on something. You know, the three big issues there, one is Harvey, all the people in Texas who have been devastated by that, two is the debt limit, three is keep the government funding so we can do our job. There are different ways to do that, but if they can do all three of those things at once and we can get on to tax reform, so much the better for me.
HH: And so I think the media is in a state of trying to find controversy every day, Senator. And as a result, every story has to be ginned up to a confrontation between the President and somebody else. And they miss the honest to goodness reality that a deal got done, and the government is open, and Harvey relief is going to come. Is the media poisoning Washington?
LA: Well, I don’t, I don’t know if they are or not, but insofar as I’m concerned, if the Democratic and Republican leaders meet and can solve three big issues on one day, I think that’s a step forward. And I think the President is learning that if he’s going to get something big done, he’s got to focus on one big thing at a time. And that one big thing needs to be tax reform right now.
HH: All right. Now there is, however, a fix that needs to be done in the insurance markets. You held a hearing earlier this week. You’ve got one today. I think in your mind, you’ve got a compromise deal with Patty Murray forming up. Tell us about where you think we’re headed, which side has to give what to get to where?
LA: Well, the, our focus is very narrow and very limited. We’re focused on the 6% of Americans with insurance who don’t get it from the government or on the job. That’s called the individual market. That’s where almost all the Obamacare debate has been the last seven years. And the premiums have skyrocketed. So have the co-pays and the deductibles, especially for people who get no government support to help buy their insurance. What we’re trying to do is to see if we can take one or two or three small steps in September that lower premiums in 2018. And that’s why we’ve had the insurance commissioners in yesterday, the governors today. We had 50 senators attend our meeting before the hearing, they’re not members of our committee, for the hearing yesterday, extraordinary turnout of both Democrats and Republicans.
HH: What do the Democrats have to give up? What do the Republicans have to give up to get these 6% of Americans some certainty, because I see that some insurers are jumping into the breach. A month ago, I could say that 14 out of 15 counties in Nevada, or something like that, had no insurer. That’s been fixed. The Ohio counties have been covered. I believe the Tennessee counties have been covered. I’m not sure about the Iowa counties, yet, but that’s not, that’s a Band-Aid. What do we need…
LA: No, it’s a Band-Aid. They’re all covered, and if we don’t act, if we don’t provide more certainty for 2018, the estimate is that half the counties in the country will only have one insurance choice. That means higher rates, because you can’t, you know, you’ve got a monopoly. So the Democrats have to agree to give states more flexibility, to not make so many decisions from Washington. For example, there was discussion yesterday of a new policy called a copper policy, which is basically catastrophic insurance to attract younger people into the market. That means the premiums are much lower, but you don’t get as many benefits. But that’s your choice. Republicans are going to have to give up for a while putting more money into the Affordable Care Act to pay for the cost-sharing reductions. So cost-sharing reductions for one year, more flexibility for the states, those are the, that would be the basis of a compromise.
HH: Expand, if you would, Senator, on the copper policy, because one of the things that President Trump campaigned on, and one of the things I know from my years running the Federal Employees Health Benefits program back in the 80s, is that you’ve got to have a catastrophic plan for young people, or they’re just not going to buy it. They think they’re indestructible, but they realize they might get hit by a bus.
LA: Yeah, well, maybe we need you back running the insurance around here. But no, that’s exactly right. I mean, the problem with Obamacare was that we had so many decisions were moved to Washington, and so many restrictions were put on the states in their approval of insurance plans, that the plans got so expensive that people got priced out of the market, and young people said you know, I don’t think I want that insurance anyway. I’m just not going to buy it. So if you give them, if you give healthy people more options, the catastrophic plan, they’ll come into the market. That lowers premiums for everybody.
HH: Yeah, people are economically rational actors. And if the cost of the premium is too high, they will pay the penalty rather than the premium, because they perceive the benefit as not being sufficient to justify the cost.
HH: They might be wrong. They might make a terribly ill-informed calculation if they become ill with a very chronic disease. But if they stay healthy, they’ve made a smart choice. What you’re suggesting is a bronze plan that would appeal to their innate economic common sense.
LA: Yeah, copper plan, they’d call it. Right now, we already have in the law, I’m looking for things that are in the law that we can change. You know, we’ve only got two or three weeks to do this. This is a pretty big challenge to do to get 53 members of Congress and the President all to agree in two or three weeks on this. So in the law, there already is a cooper plan, a catastrophic plan, but only for people 29 or under. Well, you can stay on your parents’ insurance until you’re 26, so that’s just a two year window. That doesn’t do anything. So we’d like to just take that age limit off and say anybody can buy it, a catastrophic plan. That’s one thing to do. And then another thing to do is to make the 1332 waiver, now this sounds very wonky, but there’s a waiver already in the law which allows states more flexibility. And Alaska and Minnesota already have used that waiver to take the federal money they’re already getting, use it a different way, and lower premiums about 20% in their states for the next year.
HH: Let’s get wonky, Senator Alexander, because this audience understands when you allow states the flexibility to design their own Medicaid programs, for example, you get better Medicaid programs. That was my experience as a regulator in California in Orange County.
HH: Are Democrats choking on that, because they typically hate the waivers?
LA: Well, they, the Democrats, you know, Democrats don’t trust the states. Where I come from, most people don’t trust Washington. So that’s the challenge we have. We were able to break through that on education two years ago. We fixed No Child Left Behind. And the Wall Street Journal said it was the biggest devolution of power to the states in 25 years. We need to do more of that with health care, get more decisions back to the states, more flexibility, more choices. That’s really been the fundamental difference of opinion for seven years in the Obamacare debate.
HH: Now is there, is this going to go through regular order? Or is this going to be attached to the existing reconciliation instructions that would allow for a 51 votes for passage?
LA: It wouldn’t be, I don’t think it would be reconciliation, because Republicans wouldn’t think it was enough. The Democrats would not like it, so it’ll have to get 60 votes. But what I’m hoping is that after our four hearings, two this week, two next week, that we can sit down and say okay, are there a couple of things, three things we can do to it that would actually help people, 18 million Americans who buy on the individual markets – songwriters, self-employed people like that next year, in 2018, and if so, let’s have 15 Democrats, 15 Republican go to the leaders and say we’ve got a plan, we’ve got to do it by the end of September, find a way to pass it.
HH: Well, that would be very encouraging. I’m thinking as Tom Price said on Meet the Press one day I was there, there are five health care systems in America. One of them is this individual market. It’s the smallest. It’s not the VA. It’s not Medicare.
HH: It’s not Medicaid. It’s not group, but it’s the smallest, it’s the one that gets the most attention, is the one that’s on life support, right?
LA: Right. I mean, it’s the house is on fire, so you put out the fire. But the sort of tragedy is we’ve been in, we’ve been stuck in this political stalemate for seven years arguing about 6% of the people who have insurance. We should really have been focused on the things that really drive up the health care costs. And it’s gone from 9% of our Gross Domestic Product in 1980 to 20% in 2025, is predicted. And that’s where the problem is. The problem is with drug prices. It’s with unhealthy lifestyle and wellness incentives that employers could give employees. It’s with the administrative burdens that are all over health care. That’s where the health care costs are, not with the insurance. We can’t lower the price of health care much by fixing insurance.
HH: Harvard Business School Professor Clayton Christensen was my guest. He wrote The Health Care Innovator or The Prescription Innovator, I can’t remember what it was. But he also believed in supplying the market with more nurses assistants, physician assistants, people able to write script, people able to take care of ear infections. Is there anything you can do with your colleagues across the aisle to increase the ability to provide supply of medical care via not quite MDs but still finely qualified professionals who can deal with a lower care issue?
LA: Well, there should be. I’m not sure what the answers are, but those are the hearings we should be having. I mean, the shortage in America today is for primary care. We have lots of incentives for the high specialties, you know, the serious heart, lung, sub-specialties, even cancer, lymphoma, all that kind of stuff. And doctors get paid pretty well for that kind of thing. They don’t get paid very well to be primary care for the things that are basic. And when we’ve got 60% of our health care spending goes to take care of 5% of the people who are sickest, we need more people like you just described at primary care doctors to be able to help people with a whole variety of illnesses, and especially to encourage them to stay well. I mean, the best way to lower health care costs is for people to stay well, not to treat them after they’re sick.
HH: Well, I hope you get attention for these hearings. It seems to me that again, Beltway-Manhattan media elites complained that regular order was abandoned. And you’re pursuing regular order, and it’s not getting much attention, so I salute you. Let me ask you about the…
LA: Well, when the plane crashes, it’s news. When it lands safely, it’s not. We get quite a bit done here. But that’s not really very much news. So I was delighted yesterday that we had, literally had 50 senators of both parties working together to try to find a result. Now maybe we’ll not get it done by the end of September, but everybody felt pretty good about what we were trying to do, because we’re trying to help people by lowering their insurance prices, and do it for 2018.
HH: Well, let’s talk about the tax cut that the President was stumping in North Dakota about, down to 15% in the corporate rate. Again, if we don’t go, I had Kevin Brady on yesterday, good guy, but if they attack the state and local income tax deduction, we’re going to have a blowout. Can we do a simple bill just to get the corporate tax rate down, because that’s what’s going to drive the economic recovery?
LA: Well, it would, but it’s hard to do, because so much of our American businesses are not, are not C corporations. They’re what we call pass-through corporations. They’re operated as partnerships or individuals. So you can’t have too much difference between the corporate tax rate and the individual tax rate for those businesses. But I think there’s a solution to that. And Republicans and the President and the Democrats, I would hope, need to focus on this. This is the single most important way we can move the economy. We had to deal with health care, because we said we would, and it’s a mess. But a natural Republican issue is lower taxes and simplified tax reform as a way of creating jobs and getting the economy moving. I think we can do it. But the President needs to focus on that, not try to do 15 things. Do one thing until it gets done.
HH: Hope you are right about that, Senator Lamar Alexander. Thank you, Mr. Chairman. Good luck in your hearing today with the governors.
End of interview.