John Desser: Health Savings Accounts and Market-Based Healthcare Solutions

DC EKG

In this episode of DC EKG, host Joe Grogan interviews John Desser, Vice President at Health Equity, about the history and future of market-b

Key takeaways

• HSAs promote healthcare value by making consumers sensitive to both quality and price through direct spending control.
• The implementation of the Affordable Care Act was hindered by a lack of bipartisan consensus, specifically following the death of Senator Ted Kennedy.

Main topics

• Health Savings Accounts (HSAs)
• Affordable Care Act (ACA) critiques

Notable quotes

I think generally the misaligned incentives in healthcare generally, I think a lot of those get addressed if every American has an HSA.

Conclusion

The episode highlights the potential for market-driven tools like HSAs

Transcript preview

Speaker 3 (0:00) I just think generally the misaligned incentives in healthcare generally, I think a lot of those get addressed if every American has an HSA. The first thing that happens is that we start asking about value. We start saying, is this a good quality item and is it price appropriate for what I'm getting? And not enough of us do that in health care in this country because of the third-party payment system. My employer's paying for my coverage. My employer's paying for most of my insurance premium. Where the government is. Where the government is. And so I actually have an incentive to consume a lot of health care because it's part of my compensation package. More health care Speaker 1 (0:37) doesn't necessarily mean better health care. It Speaker 2 (0:38) doesn't necessarily mean better health care. Speaker 1 (0:39) It doesn't necessarily make you healthier. That's correct. Speaker 2 (0:41) I Speaker 1 (0:41) think the data shows over and over again. Sometimes it leads to worse outcomes. Speaker 2 (0:46) This is DCEKG, exploring the intersection of politics and healthcare by diagnosing Washington and prescribing solutions. We take a deep dive into the legislation, regulation, and innovation impacting policymakers, providers, and patients. Now, America's health policy expert, Joe Grogan. Speaker 1 (1:10) Welcome back to DCEKG. I'm your host, Joe Grogan. And today we are joined by John Desser, an old friend of mine and the Vice President and Head of Government Affairs at Health Equity. John, thanks for joining. Great to be Speaker 3 (1:25) with you, Joe. Speaker 1 (1:26) Before we get into the meat of the many interesting health care policy fights you've been involved in and what you're doing now. Just give a little bit of a background on how you got into health care, your start, just the beginning of the John Desser story before we talk about the here and the now. I got into health care by Speaker 3 (1:47) accident. I was a foreign policy major at Northern Arizona University. I read John McCain's bio because he had just replaced Barry Goldwater in the U.S. Senate. Oh, nice. And I thought, that's a cool story. I'd like to work for that guy. I get to Washington. This is the summer before my senior year, so the summer of 89. And I get assigned to health care. So I went to the office manager to complain. And I said, Debbie, I'm a foreigner. There's been some mistake. I'm a foreign policy. And she looks at me and patiently smiles and she says, John, David McIntyre is the health LA. He's a lot of fun. He's going to give you cool things to do. Speaker 1 (2:27) Tony Cordesman, who runs military affairs Speaker 3 (2:30) for McCain, is very harsh, not a nice guy to interns. You'll be doing photocopying all summer. Try health care. If you hate it, let me know. Good advice. And that's 35 years I've been in health care because of Dave McIntyre's personality. Very Speaker 1 (2:46) few conservatives have chosen health care. We seem to have all fallen into it. Right. It seems like we all want to do foreign policy and economics. Speaker 3 (2:54) But it's not that easy to. Take conservative market-oriented principles and apply it to health care because there are some unique things about health care in terms of price elasticity and of demand and that sort of thing. But you can still apply market principles to health policy. And so I've been around that world for a few decades now. Grace Marie Turner, who was a real leader in that, and she and I collaborated to found the Coalition for Affordable Health Coverage back in 2002. The essential idea of that was, well, since HillaryCare was defeated, we had alternatives at the time. Now that we're in charge, why aren't we moving forward with those? Right. And you may remember this, but there was a tripartisan bill, Frist, Brough, Jeffords, Speaker 1 (3:39) that Speaker 3 (3:40) provided refundable tax credits to people who were medically uninsured to go out and buy their own health insurance. And I remember when Bush was running for office in 2000. there was a debate between Dean Clancy and another economist about whether Bush should be for refundable tax credits. And at the end of the discussion, this is while he was governor, I'm told, he listened to both sides and he said, well, it sounds like it's bad economic policy, but good health policy. Let's go with it. And so that's how the tripartisan bill came about. And our... Mitch McConnell, who I admire, and especially for his efforts on judiciary issues, but not really necessarily a visionary on health care, never moved forward on the tripartisan bill because of the cost. And the cost was scored to be $90 billion over 10 years, which was a tenth of what Obamacare cost. Right, right. And so the fact that we didn't move forward. Easy, Speaker 1 (4:44) easy Speaker 3 (4:44) attempt. The fact that we didn't move forward when we had the gavel, I think, was a huge mistake. But when Bill Thomas became chairman of the Ways and Means Committee, he said, we've got to stop saying that our policy on health care is we want to do what the Democrats want, just spend a little less. He was right. And instead say, let's spend as much as they want, maybe more, but spend it our way to really make markets work in health care. Yeah. Speaker 1 (5:10) Bill – losing Bill Thomas in the House was really a huge blow and not just in the House but it would have been – his voice would be really important in all these debates we've been having the last decade. Huge. Huge. OK. So then in this – How long did you work for Speaker 3 (5:27) McCain? So Speaker 1 (5:28) I worked for McCain Speaker 3 (5:28) for three years. Three years. Doing health care. Then I went over to the House, worked for John Kyle for a year doing health care. Oh. Speaker 1 (5:33) Then Speaker 3 (5:33) I was mentored by a guy named Tom Donnelly, who was assistant secretary for legislation at HHS under Reagan. Right. And I worked with him for 10 years at the Jefferson Group, managing the health care practice. It's there that I was representing eHealth, Health Equity, Ceridian, Aetna, Assurant, a variety of health care clients. all of whom sort of agreed not only on the refundable tax credits for the uninsured, but also this idea of updating the Archer MSA law. Right. I first got exposed to... John Goodman and the Archer MSA concept in like 93 when we were debating Hillary care. Right. And Speaker 1 (6:12) I'd say just for those medical savings account, Archer, Bill Archer, was he chairman? He was chairman of the Ways and Means Committee at the time. And Speaker 3 (6:19) he was negotiating with Ted Kennedy over this MSA concept. And Kennedy, you know, was a tough negotiator. And so he got a lot of restrictions put in place on the MSA law. That was part of HIPAA. Speaker 1 (6:32) And Speaker 3 (6:32) so when Archer MSAs were signed into law, they were kind of limited and weren't growing very fast. And a company called Fortis Health, which later became Assurant, which is headquartered in Milwaukee, Wisconsin, came to us and said, we need to make updates to the Archer MSA law. And I said, great. Well, why don't you write out the things that need to be changed and give them to me? made 14 suggested changes. I organized all of my clients and other interested parties, and we went and saw John McManus and Joel White at the Ways and Means Committee and said, we all think that MSA law should be updated. And I started ticking off this list. And they said, could we have that? I said, sure. And I handed it to them. Didn't hear from them again. That was like November of 02. January of 03, Bill Thomas introduces the HSA Act. And the whole, all of the things on the list were included in his legislation. And then later, of course, Bill Thomas was so smart and such a good legislator that he knew the place to put that was the Medicare Modernization Act. Speaker 1 (7:36) Right. Speaker 3 (7:37) Because President Bush wanted a prescription drug benefit for Medicare, but he knew conservatives would be a little bit nervous about the cost. Speaker 1 (7:46) Right. So Speaker 3 (7:46) to make them happy, Bill Thomas added the HSA provisions. Speaker 1 (7:50) Right. And he, of course, was a huge booster and a key architect of the Part D legislation. It wouldn't have gotten done without him. So, OK, so then you – was that when you made the pivot to go work in the Bush administration? Speaker 3 (8:06) Yes. After 10 years at Jefferson, I started talking to Ed Moy at the White House and he was trying to find a place for me. And he was like, you could do legislation with your eyes closed. You should be a counselor to Levitt. And so I interviewed with Rich McKeon and Secretary Leavitt. And I thought, being a counselor sounds like a lot of work and no staff to help you. Speaker 1 (8:29) And I Speaker 3 (8:29) just had twins and another one was on the way. So that made me a little nervous. And then they said, how about ASPE be in charge of health policy? You know, that'll challenge you a little bit, they said. I thought, well, that sounds interesting, actually. And I was, you know, in charge of 30. PhDs in health policy, all of whom went to great schools. And it was just a matter of explaining to them what the policy agenda was for the administration, they didn't have to agree with it, but I needed their help to implement it and to map it out. Speaker 1 (9:03) And Speaker 3 (9:03) I found that if you work with career civil servants and give them the benefit of the doubt and say, I need your help, I was never disappointed by that. And oftentimes, some of us go into those jobs and we're so concerned. about how they'll push back and they won't be helpful or they'll leak things that we don't even get them involved in the process. That was not my experience. I chose to believe the best and hope for the best. And if I got burned, then I would deal with that. Right. Speaker 1 (9:32) That Speaker 3 (9:33) never really happened. Speaker 1 (9:34) Right. Frequently, the leaks are other political appointees, especially those with the highest national security claims, in my experience. There was one guy, Joe, named George Speaker 3 (9:44) Greenberg. who got his PhD from Harvard University when I was three years old and had been in that office ever since. And now I come in in my 40s and I'm his boss. And so I would just Speaker 1 (9:57) go to him. Speaker 3 (9:58) I'd say, George, what do you think? How should I communicate this to the rest of the staff? Speaker 1 (10:02) And Speaker 3 (10:02) he was like the gray-haired, you know. sage who would give me counsel on how to interact with the health policy team and get stuff done. Speaker 1 (10:10) Right. There are people like that all over the government for whatever reason have made it their life's work and have accumulated a tremendous amount of knowledge and wisdom over their careers and just want to be asked and helpful. A hundred percent. Okay. So you're public servants, right? So then you leave Bush. Do we leave Bush or do we want to talk about what you did at Bush? You Speaker 3 (10:32) implemented Part Speaker 1 (10:33) D. Speaker 3 (10:33) There's a couple of things that were fun at Bush. I was not directly involved with the implementation of Part D. Others did that, like Michael Reilly and others. Very successful. I came in at the tail end of that. Alex Azar interviewed me but then left. Speaker 1 (10:44) Got it. Speaker 3 (10:45) And I replaced Ben Sass on a project dealing with the uninsured because Ben's wife had fallen ill. Speaker 1 (10:50) Right. And Speaker 3 (10:50) Ben, of course, is ill now and we pray for him. Speaker 1 (10:53) Absolutely. Speaker 3 (10:54) Seen amazing spiritual growth in him while he's fighting this. terrible cancer. And that's been amazing to watch. But his wife had fallen ill. And so I took over the uninsured project where we were negotiating with, I was just telling you about this, Joe, with then Senator, well, still Senator Ron Wyden, now the ranking member of the Finance Committee at that time. He had just introduced legislation to cover all Americans, universal coverage, but using private health insurance and using the employer exclusion. to pay for health insurance for all Americans. And Levitt was very intrigued by this. So we had multiple meetings with him and his staff. And then Levitt turned to me and said, look, I don't think we can go to the White House and pitch to the president a universal mandate to have health insurance. So there's no way they'll accept that. Can you find out how many people would become uninsured if we don't have the mandate? I said, sure, no problem. So I went to the Lewin Group. which had done the first estimate and showed that it was universal coverage. And I said, how many people lose coverage if you remove the mandate? So we made a contract with them. Two months later, they came back and they said it's zero. Speaker 1 (12:02) And Speaker 3 (12:03) I said, how is it zero? He said, the Wyden bill makes it so economically logical to sign up for coverage because you only get the money when you decide which policy you're going to take. And they make it so brain dead easy to sign up. Every time you vote or every time you get your driver's license, you're asked what health insurance you want and here's the money to pay for it. That everybody – we decided everybody is going to get insurance and the mandate isn't worth the paper it's written on. Speaker 1 (12:33) And Speaker 3 (12:34) so that was a huge relief to us. And so then we took that concept to the White