HKS professors Amitabh Chandra and Soroush Saghafian say we need data analysis and smart policy design to create transformational change in health care; without them even well-intentioned measures like the Inflation Reduction Act are destined to fall short.
Featuring Amitabh Chandra & Soroush Saghafian
September 20, 2022
40 minutes and 56 seconds
The COVID-19 pandemic has stretched the U.S. health care system and health care systems across the world to the breaking point and beyond. If there’s a silver lining, it's that there is now the urgency and will among politicians and policymakers to pursue meaningful changes that could result in improved access to more affordable and higher-quality health care services. Some recent examples in the United States were the health care provisions in the Biden administration’s Inflation Reduction Act—which were hailed as a breakthrough in part for finally breaking the pharmaceutical industry’s stranglehold on any attempt to control prescription drug prices.
But as health care policy enters what is widely seen as an inflection point, Harvard Kennedy School professors Amitabh Chandra and Soroush Saghafian say even well-intentioned, quick-fix policy changes may end up doing more harm than good. Policymakers instead need to pursue change with care—deeply analyzing the weaknesses COVID exposed and using that data to design intelligent policy that can create truly transformational change. Professor Chandra is the director of Health Policy Research at the Kennedy School and his research focuses on innovation and pricing in the biopharmaceutical industry and value and racial disparities in health care delivery. Professor Saghafian is the founder of the Public Impact Analytics Science Lab at Harvard and his work combines big data analytics, health policy, and decision science to discover new insights and provide new solutions to various existing problems.
Soroush Saghafian uses and develops operations research and management science techniques that can have significant public benefits. He is the founder and director of the Public Impact Analytics Science Lab (PIAS-Lab) at Harvard, which is devoted to advancing and applying the science of analytics for solving societal problems that can have public impact. His current teaching focuses on using machine learning and big data analytics tools for solving societal problems. His research focuses on the application and development of operations research methods in studying stochastic systems with specific applications in health care and operations management. He has been collaborating with a variety of hospitals to improve their operational efficiency, patient flow, medical decision-making, and more broadly, health care delivery policies. He also serves as a faculty affiliate for the Harvard PhD Program in Health Policy, the Harvard Center for Health Decision Science, the Mossavar-Rahmani Center for Business and Government, the Harvard Data Science Initiative, the Belfer Center for Science and International Affairs, and is an associate faculty member at the Harvard Ariadne Labs.
Amitabh Chandra is the Ethel Zimmerman Wiener Professor of Public Policy and director of Health Policy Research at the Kennedy School, and the Henry and Allison McCance Professor of Business Administration at Harvard Business School where he directs the joint MS/MBA program in the life-sciences. His research focuses on innovation and pricing in the biopharmaceutical industry, value in health care, medical malpractice, and racial disparities in health care. Professor Chandra is a member of the Congressional Budget Office's Panel of Health Advisors, a research associate at the National Bureau of Economic Research, and the chair editor of the Review of Economics and Statistics. Professor Chandra is also an elected member of the National Academy of Medicine and the National Academy of Social Insurance. In 2012, he was awarded the American Society of Health Economists (ASHE) medal, which is awarded biennially to the economist aged 40 or under who has made the most significant contributions to the field of health economics.
Ralph Ranalli of the HKS Office of Public Affairs and Communications is the host, producer, and editor of HKS PolicyCast. A former journalist, public television producer, and entrepreneur, he holds an A.B. in Political Science from UCLA and an M.S. in Journalism from Columbia University.
The co-producer of PolicyCast is Susan Hughes. Design and graphics support is provided by Lydia Rosenberg, Delane Meadows and the OCPA Design Team. Social media promotion and support is provided by Natalie Montaner and the OCPA Digital Team.
Soroush Saghafian (intro): The consequences of COVID for, let's say, rural hospitals are very different than for urban hospitals. A lot of these rural hospitals that ended up closing because of COVID, they are the hospitals that are essentially also the large employers in those rural communities. A lot of people also lost their jobs, lost their work, lost their only income. I think for me, COVID gave us the ability to think about all of this more proactively.
Amitabh Chandra (intro): To improve health care in America, we need two things. We need aspiration, and we need evidence. I think we have a lot of the aspiration. What Soroush is saying is we don't have the evidence. Let's not lose the aspiration we have. I think embedded in the Inflation Reduction Act is a well-intentioned aspiration that we want to reduce the price of a variety of drugs. We don't use the best evidence to figure out how to do that.
Ralph Ranalli (intro): Welcome to the Harvard Kennedy School PolicyCast. I’m your host, Ralph Ranalli. The COVID-19 pandemic has stretched the U.S. health care system and health care systems across the world to the breaking point and beyond. If there’s a silver lining, it may be that there is now the urgency and will among politicians and policymakers to pursue meaningful changes that could result in improved access to health care that’s both more affordable and higher quality. A recent example in the US were the health care provisions in the Biden Administration’s Inflation Reduction Act, which were hailed as a breakthrough for, at a minimum, finally breaking the pharmaceutical industry’s stranglehold on attempts to control prescription drug prices. But as health care policy enters what is widely seen as an inflection point, Harvard Kennedy School professors Amitabh Chandra and Soroush Saghafian say even well-intentioned quick-fix policy changes may end up doing more harm than good. Instead, policymakers need to pursue change with care, by deeply analyzing the weaknesses COVID exposed and using that data to design intelligent policy that can create truly transformational change. Professor Chandra is the director of Health Policy Research at the Kennedy School, and his research focuses on innovation and pricing in the biopharmaceutical industry and value and racial disparities in health care delivery. Professor Saghafian is the founder of the Public Impact Analytics Science Lab at Harvard and his work combines big data analytics, health policy, and decision science to discover new insights and provide new solutions to various existing problems. They’re here to talk through this important historic moment in health care policy, both in terms of challenges and opportunities.
Ralph Ranalli: Soroush, Amitabh, welcome to PolicyCast.
Soroush Saghafian: Thank you. Thanks for having us.
Amitabh Chandra: Thrilled to be here.
Ralph Ranalli: We've had a couple of major events over the last couple of years that have affected health care. The first that I'm thinking about was the COVID-19 pandemic, obviously a huge one, which in a number of ways stretched the U.S. health care system and health care systems across the world to their breaking points and sometimes beyond. We've recently had the passage in the United States also of the Inflation Reduction Act, which included some seemingly significant affordability provisions for both prescription drugs and health coverage. It seems to me that we're at an interesting inflection point for health care, especially in the United States. Would you agree with that? How would you characterize, just to start, the current moment for health care policy, both in terms of challenges and in terms of opportunities? Maybe, Amitabh, I'll let you tackle that one first.
Amitabh Chandra: That's a great question. I think the key takeaway for me is that the COVID pandemic certainly accelerated a variety of trends that we had already been seeing. We had already started to use telehealth, and we have really accelerated the use of something like telehealth. We had already started to bet on mRNA vaccines before COVID, but COVID might allow us to achieve their full potential.
I feel very differently about the inflation reduction. I really don't think that it is nearly of the same magnitude as the COVID epidemic. It's actually tiny. I mean, it is called the Inflation Reduction Act because we're in a period of high inflation. It's called the Inflation Reduction Act of 2022, but it's really going to do nothing in 2022, or 2023, or 2024. If you look at how much the Inflation Reduction Act will really reduce our deficit, it's going to reduce our deficit by about $20 billion over the next five years. And that is tiny. That is tiny. Over 10 years, it'll reduce the deficit by about $300 billion, which sounds like a lot of money because it is to all of us. But in the context of the balance sheet of the United States government, we're talking about undetectable differences. There's a colossal amount of overselling of the Inflation Reduction Act—which is different from saying it's a bad act. We should probably spend some time talking about all the good ideas in it. But, it's a tiny piece of legislation relative to the enormous dent that COVID-19 has put into the health of the economy and the health of all Americans.
Ralph Ranalli: Well, I think people are saying about the Inflation Reduction Act, if you look at the optimistic takes on it, that it may be a tiny step, but it's a tiny step in a space where we were getting no steps at all. And that particularly in the area of controlling prescription drug costs in the United States, it was seen as breaking the grip ever so slightly of big pharma in terms of drug pricing. Do you take any positives away from just the spirit of it, as opposed to the admittedly tiny magnitude of it?
Amitabh Chandra: It is true that it's the first time that Pharma, the Trade Association of Pharma, and Bio, the other trade association, have actually lost. In that sense, is there some significance to Congress passing legislation that hurts the revenues of the pharmaceutical industry, is that salient? Absolutely. But, that's quite different than saying, "We have taken a big piece out of the industry." Let me just explain and put all of this into context. If you think about how much money we will save as a result of the act's provisions in the drug pricing part of the act, over 10 years we'll save, if you're optimistic, about $300 billion. That's about $30 billion a year. Just to be clear, those savings won't kick in for many years. But let's just assume that over the... Let's just be optimistic and say they'll kick in right away, which, just to be clear, the act, it's not written that way. But, we're going to be saving about $30 billion a year. That sounds like a lot of money. But look, annual spending on drugs is about $450 billion a year. This is less than 10%.
Then the question becomes, is this the right way to even do it? There are a variety of drugs where the government is appropriately worried about that high price. But what you see in the Inflation Reduction Act is an extremely arbitrary way at getting at solutions to reduce the price. The idea here, and the act is, let's pick 10 medicines in 2026 and negotiate the price of 10. Let me assure you that we're having problems with many more than 10 medicines. Then when we get up to 2029, when the full act takes place, we're talking about negotiating the price of 20 medicines. We're talking about 10 and 20 medicines. We know that there are thousands of medicines out there. Again, is that really the right way to go about doing it? Then, is this really even negotiation? Because as you know, the way the act works, if a manufacturer does not give the government the price that the government wants, then the government is able to put a colossal excise tax on the manufacturer. Is that really negotiation? The tax is colloquially described as being somewhere between 65% of total sales for drugs all the way up to 95% of sales. Is that really negotiation? That's something we really have to grapple with. I think we call this negotiation, but is it really negotiation if I walk up to you, or my friend Soroush, and say, "Soroush, I'm going to beat you up if you don't hand me your wallet"? Then Soroush hands me his wallet. Is that really negotiation? Other companies don't negotiate in this manner. Negotiation means you offer a price. And if you don't get the price, you don't get the drug. You don't get to then use the full taxing authority of the United States government to get the price that you want. If you start to do things like that, it will affect the pharmaceutical companies' incentives to be in the pharmaceutical business.
Soroush Saghafian: Maybe I wanted to just add a little bit of perspective to this, Ralph, is that I think it will help just to step back a little bit and think about the health care sector for a little bit. We are spending about $4 trillion. That's 20% of our GDP. If you think about it per capita, it's about 2.5 times the average of other OECD countries. At the same time, the latest sort of ranking show that in terms of life expectancy at birth, let's say, we are 31st. You look at the maternal mortality or infant mortality, you look at the obesity rate, you look at the heart disease rates, you look at HIV, diabetes, across all this outcomes, we are not doing well. Now, prices are obviously one part of the problem, but it's a very small part of the whole picture to me. There are three things in the act that I think are trying to get to the expenditure. One is that, well, obviously will give more power to Medicare to negotiate Part D and Part B drugs. The other thing is that, well, it will expand some eligibility for low income Part D subsidies. For instance, it was 135%. Now they're saying, "We are going to move it to 150% of the federal poverty limit.
The other part of the act that I think is effective is putting a cap on the expanding. But all of this all together, if successful over 10 years we are thinking about... The latest estimate is about 287 billion. Or if you're optimistic, as Amitabh said, let's say 300 billion over 10 years. That is not much. To get to the main issues of the health care to me, I think we have to think more about how to be efficient and effective, not just reducing prices. Obviously, it's important to do that, but it doesn't get us to where we want to be in a big picture in terms of the health care.
Ralph Ranalli: I'm glad you said that because I did want to return to that big picture. Soroush, in February, you looked at pandemic-related hospital closures and the changes they're causing and what information came out of that that could be useful for policymakers. But you also said there were unique opportunities for researchers to conduct studies that can shed light on what you call different implications, trade-offs, and consequences of various strategies that can be followed. Going back to COVID, turning away, I guess, from the IRA for a minute, what do you see in the big picture as the opportunities created for research that informs policy coming out of the pandemic?
Soroush Saghafian: That's a very good question. First of all, I think COVID was a very serious stress test for hospitals. We learned whether the hospitals can be flexible enough to essentially handle demand shocks like COVID. Are they flexible enough to shift their resources from elective surgeries, for instance, to something that is more urgent? If you think about this as in supply chains, we think of them as disruption risks. We try to stress test supply chains. But in hospitals, we haven't done much of this, and so this was a serious test for us to see whether the health care systems, the providers are able to handle demand shocks.
The second thing was the government tried to now support hospitals that are really in bad situation, because as you know, may know, a lot of hospitals had to stop their elective surgeries and try to handle more of the COVID patients, which in terms of their profit there, the margin is really low for hospitals. It put a really heavy financial stress also, not just operational stress, but also financial stress, over hospitals. The government then tried to introduce this CARES Act, which was Coronavirus Aid Relief and Economic Security Act, which gave $175 billion to health care providers that are dealing with all the financial consequences of coronavirus and other thing. Now, what is important here is that we have to learn how to use money like that, how to use our limited resources more efficiently. That is, how do we allocate this to hospitals and to different providers? The consequences of COVID for, let's say, rural hospitals are very different than for urban hospitals. A lot of these rural hospitals that ended up closing because of COVID, they are the hospitals that are essentially also the large employers in those rural communities. A lot of people also lost their jobs, lost their work, lost their only income. I think for me, COVID gave us the ability to think about all of this more proactively.
The last piece is about how do we support R&D activities of vaccine providers, of other organizations that are trying to, for instance, now use AI methods and other methods to predict the next pandemic, and to allow us to alleviate it by either developing related vaccines in advance or by trying to just have some alarm systems when these things come up. I got a call in February from the government of Bahrain. They ask us to analyze some data because they thought there's going to be a pandemic. This is before WHO announced the pandemic. There are signs and there are technologies now that we can use to be ready for the next pandemic. I think that's very important for us to put all these lessons together and try to make sure that the next pandemic is not going to change everybody's life as COVID did.
Amitabh Chandra: That's such a great point. Can I jump in?
Ralph Ranalli: Absolutely.
Amitabh Chandra: I, just listening to Soroush, realize that it is so easy to criticize various parts of the COVID response. We were definitely underprepared for it. That said, we know that these pandemics will happen again. Even before COVID, there was SARS. There was MERS. there was H1N1. There was Ebola. Pandemics have affected other parts of the world. They've not really shown up on our shores since the influenza pandemic over a hundred years ago, so we should be prepared for the next pandemic. One way to prepare for the next pandemic is to learn what we did well and what we did badly in this pandemic.
Soroush mentioned the $187 billion that the federal government allocated to providers, hospitals, and doctors. Well, that was an extraordinary piece of legislation because Congress was able to work together during the pandemic to pass the legislation. Now, what we failed on, though, was we failed in figuring out who should get the money. If you look at who should get the money, one of the things that we found was that the money went to extremely well-resourced hospitals, not the ones that Soroush is worried about, and not the ones that Congress is worried about, and not the minority-serving hospitals and doctors. The money disproportionately went to wealthy hospitals in Boston, and wealthy hospitals in Los Angeles. The lesson is let's compliment Congress for the CARES Act and the speed of the CARES Act. But the next time something like this happens, pandemic or catastrophe, let's be sure that the formulas we're using to determine the allocation are not as biased, not as blunt. It's not that we sent the money out even randomly this time. We sent the money to wealthy places. That was easily avoidable.
Soroush Saghafian: Absolutely.
Amitabh Chandra: I think the other point that Soroush is making, which is something that I don't see a lot of discussion around, is that the elective surgeries that got delayed, some of them never came back. Hospitals have closed in rural areas. Some physicians have retired. Many nurses have retired. What do we do about the fact there was a 70% decline in mammograms, a 70% decline in colonoscopies? The consequences of those delayed diagnosis will reverberate for years to come.
Ralph Ranalli: That's remarkable.
Amitabh Chandra: And we have to. This is the moment to think about how to bring all of those people into the system. Because the next time there's a pandemic, even if we allocate the money properly, there will be many preventable cases of non-communicable disease. I'm talking about heart attacks and cancer. I'm not talking about COVID. I think the issues that Soroush raises are incredibly complex, incredibly rich. Connecting COVID to the Inflation Reduction Act, it's not like the Inflation Reduction Act takes on these really big challenges.
Soroush Saghafian: Absolutely.
Ralph Ranalli: It seems to me that where the Inflation Reduction Act discussion that we've had so far and the COVID response criticisms that we've explored so far explored, where they intersect is a disconnect between good intentions and good policy. We want to put money somewhere. We have to solve a problem. But in the middle, we've got bad policy that's making things, in some cases, worse, but definitely not as good as they could be. How do we get to those good policies using what we've learned, and how do we get them adopted in a way that's helpful and meaningful.
Soroush Saghafian: I can answer that question based on some sort of research that we did. Let's think about what Amitabh mentioned about hospitals closing. I agree with all the great points Amitabh is bringing up. Let's first think about what happens when a hospital closes. The surrounding hospitals now have to handle the patients that used to go to those hospitals. Now what do those hospitals do? There's a lot of discussion by policymakers about these hospitals that close, they are not efficient. So let them close so we only will have efficient hospitals and efficient providers remaining. We did this research to see whether that's correct or not. It turns out that what the surrounding hospitals, remaining hospitals do... Do they become more efficient or not? At some level, we find that they become more efficient. Because with their current resources, with their current number of beds, providers, et cetera, they are serving more patients. Per resource, essentially, they are serving more patients. From that perspective, you can argue that it's good to... For the efficiency of the system, it's good to let those hospitals close.
But, it turns out that what they do is that they are not essentially improving their efficiency by, for instance, increasing their bed utilization. What they do is that they just speed up the care. Speeding up the care can be a good thing or it can be a bad thing. If you're removing some of the extra steps that are redundant, extra tests that we know some providers do, not value-added, essentially, steps, that's a good thing. But what we find is that they're cutting some value-added steps for most of the patients. If you look at the impact on things like mortality or readmission rate and things like that, we are seeing that there's an increase. Now policymakers have to think about those things, that if you're allocating money to prevent hospitals from closing. They've been thinking about access to care, but that's only one dimension. As Amitabh mentioned, these policy questions are extremely complex. You have to think about various dimensions of that. One dimension is access that they think about, "If a rural hospital closes, people lose their access." But there are other things. There's quality implications. There are implications in terms of outcomes that we need to think about. Previously, we've had policies to help rural hospitals from closures and things like that. If we want to summarize them, none of them have been working, essentially. What it tells us is that we still don't know how to allocate money, how to allocate limited resources.
To me, if you want to make the health care system more efficient... Well, what does efficiency mean? It means that you are using your limited resources more intelligently. You have to learn how to allocate those limited resources intelligently. I think we need more research and more thinking rather than thinking about these allocations of money and other policies that we've had as immediate thinking of, "We need the money. Let's pass this legislation. Let's allocate the money." Then what happens is what Amitabh is saying, is that the MGHs of the world, Mayo Clinics of the worlds, they get the money. The hospitals that would remain and would be efficient, they don't get the money. To me, we need more thinking and more research in this area.
Ralph Ranalli: Amitabh, how do we get to that place where good policy research is informing these decisions in a much more robust way?
Amitabh Chandra: To improve health care in America, we need two things. We need aspiration, and we need evidence. I think we have a lot of the aspiration. What Soroush is saying is we don't have the evidence. Let's not lose the aspiration we have. I think embedded in the Inflation Reduction Act is well-intentioned aspiration that we want to reduce the price of a variety of drugs. We don't use the best evidence to figure out how to do that. We let Congress figure these issues out at moments of incredible urgency. We're taking on prescription drug prices and calling it the Inflation Reduction Act because inflation is high right now. Prescription drug prices being high is probably an issue that has affected Americans for a long time. It doesn't have to do with this current spike in gasoline prices. Passing major pieces of legislation at the wrong time doesn't seem like a good recipe. But, I think that a lot of the pieces to get the right legislation are already in place in the United States.
I'm a big believer in the work of the technocratic agencies, for example. I'm thinking here of agencies like the Congressional Budget Office, which scores the Inflation Reduction Act and had bad news for Congress. It said, "You think you're saving all this money. You think you're going to cure us of inflation. You're not. Because at the end of the day, you're going to save about $290 billion over 10 years. That's not going to do anything to the deficit. And most of the savings come many years from now." Take another technocratic agency, like the FTC. The FTC has been very worried about hospitals consolidating in part because they're running out of cash, or they say they're running out of cash. Because one of the things we know from our colleague, Leemore Dafny's work, is when hospitals merge, they often raise prices, and some might actually lower quality as well. The FTC has been acutely aware of that phenomenon. That's a good thing because they prevent hospitals from merging and raise prices. Another technocratic agency that really did extremely well during COVID was the FDA. I think the FDA's emergency approval pathways, the partnerships that it forged with vaccine manufacturers is exactly the template not only for the next pandemic but for the approval of all drugs. Often, I think FDA scientists know a lot more about the sorts of worries that you might have about an untested medical technology than physicians or patients might have. I think three technocratic agencies certainly give us, or give me, an enormous sense of optimism. Relying on Congress's aspirations paired with these technocratic agencies is the right formula for taking on the very big challenges ahead of us.
Ralph Ranalli: Now, Soroush, in terms of finding evidence, you're affiliated with, among others, Harvard centers that study health policy but also decision science and data analytics. You teach big data and machine learning. How do those areas come together to provide useful insight into real world health care?
Soroush Saghafian: One of the big issues, as Amitabh pointed out, in improving the health care sector is to use evidence. That's where I think about the use of data and use of technology... We have ignored that. There are enormous opportunities that we are thinking of for the future of health care. For instance, we are now working on projects related to... And a lot of other researchers are doing that as well. In terms of using evident AI technologies that are trained over datasets, and now we are putting them on mobile apps. We are trying to prevent patients from going to the hospitals because their phones can be their doctors. If you think about the traditional ways of... Unfortunately, our policies are designed for the traditional health care system where the delivery of care is bounded by the physician and the patient being at the same location, being either the hospital or the office of the physician or things like that. With the new technologies now, with the algorithms, with the cell phones, variables, et cetera, we don't have to have the patient and the physician provider be at the same location. The cell phone can now be the provider.
We need to use more evidence of how do we train these algorithms correctly. That's where part of the things we are doing in my lab is trying to train these algorithms correctly over large amounts of data so that they intervene correctly, they prevent patients from needing to go to the hospital. As I mentioned, COVID did a stress test on hospitals. Their beds were full, and so they couldn't handle the demand. Now, maybe if their cell phones were their providers, we could prevent them from going to the hospitals.
Ralph Ranalli: Didn't COVID act—I know this is probably the worst analogy—but almost as an icebreaker …
Soroush Saghafian: Absolutely.
Ralph Ranalli: ... to retrain people that they didn't necessarily have to go physically to see their doctor, but they could have a telehealth appointment, still feel comfortable that they were getting good health care?
Soroush Saghafian: Absolutely. Amitabh pointed to this that we were thinking about telehealth before COVID. There were regulations that prevented them from being under mass use. Policymakers then decided, legislators, that we have to remove these things because we cannot work with those restrictive policies anymore that restricts telehealth, for instance. I think, again, going back to the point that a lot of these policies and regulations have been designed for the traditional health care system, with COVID ... I think one of the silver lining things was that it allowed us to rethink these things and try to think about the future of the health care systems in a little bit more sort of proactive way.
Amitabh Chandra: I think where that takes us, Soroush, is that if you think of a technology like telemedicine being a substitute for an inpatient encounter, when I think about all the delayed cancer diagnosis that happened, I think, "Wow. Doesn't that mean that we as a nation should be investing much more in at-home testing for cancer?" I know there's a very active debate between a company called Cologuard, which allows you to do ... It's a substitute for going to the physician's office for colonoscopy. I think a lot of physicians would say it's not a substitute for an actual colonoscopy. Maybe it is. I'm not here to take a position on that. But, isn't the point that that kind of innovation, if we made it better, would be a way to get people access in ways that reduce the dependence on the office visit, which may be better than the at-home test? But, adherence with the office visit is going to be exactly zero if there's a pandemic, or if you are a poor person who can't get to the doctor's office.
There's many reasons to think that better medical innovation, not only in the sense of diagnostics but also in the sense of treatment, is where we want to be. The Inflation Reduction Act, for example, reduces the out-of-pocket on insulin, to $35 a month. I think that's a wonderful thing. I think it's an absolutely wonderful thing. But, it does make me ask two questions. First, why is it even $35 a month? I mean, who's overusing their insulin? Just to be clear. Which insulin patient is like, "Because I face the $35 a month, I use my insulin optimally." It sort of highlights how terrible even the thinking around this well-intentioned idea was. Second, what about all the other medicines that patients need where the out-of-pocket is incredibly high for them? But third, why are we still treating diabetes with insulin? Why have we not figured out how to cure insulin? Literally cure it, not just treat it. What would it take for our scientists at Harvard and around the world to think about ideas from regenerative medicine to create better cells in the pancreas that actually secrete insulin so that a diabetic would go in for a procedure and, in some ideal world or in some future world, will just never had diabetes again? That is where we want to be, because it's only then that we have really reduced disease. To your point, Soroush, it's only then that we've reduced a lot of these disparities, a lot of these wedges that actually affect the less privileged a lot more than the more privileged.
Soroush Saghafian: Yeah. I wanted to also add the other aspect of this, which is in terms of malpractice cases, for instance, in the hospitals and other providers. If you want to improve the health care system, a large part of the costs are coming from malpractice cases. It hurts patients. It hurts providers. You think about the number of lawsuits that physicians are going through. Think about how many patients die because of malpractices and things like that. Well, guess what? We have AI now. We have a large amount of data. We have the ability to train all these algorithms over large... We have IBM Watson, which was sold to a private equity company recently. But, we have the ability to use all this technology to remove malpractices, but also, to Amitabh's point, improve drug development, find cures. Now, a lot of these companies are realizing that, well, AI is enabling us to speed up drug development, find new cures for diabetes and other diseases. From a policy perspective, I think it's important for policymakers to think about those things. When we talk about efficiency being intelligent allocation of resources, why are we putting all of our efforts to reduce prices but not thinking about other important aspects?
Ralph Ranalli: I wanted to wrap up by just asking you both—with all this learning that we've done over the pandemic and all the tools that are available to us now, what is your hope, your best-case scenario for what we can achieve in terms of making a health care system that works better than the one we have now? Soroush, maybe you want to take this first.
Soroush Saghafian: Yeah, sure. I think part of it for me is being more optimistic about using technology. We have now projects that are trying to focus on using AI for predicting new pandemics and things like that. We have to think more carefully about how technology can help the health care sector, how the private companies that are developing all these technologies can help the policy aspects of things and can integrate things. For me, I think these technologies that, for instance, Amitabh mentioned, allow us to find better solutions for diabetes, trying to move patients out of hospitals. There are many researchers that are now working on home health, which means that the hospital is going to be at your home. You don't need to go to the hospitals, that's the traditional way. I think for me, one is about moving from traditional systems to more innovative ways of delivering care.
The second part for me is about using data to improve the quality of care. We haven't done much about that. For instance, the Trump administration started doing transparency on prices. They said, "All the hospitals and providers have to announce their prices." Nothing on the quality side yet. We've had a lot of papers published on public reporting of hospital outcomes of the quality of care, but we haven't done much about it. How do we improve the quality that is delivered to the patients using technology, using evidence and data? To me, those can help. I'm also very optimistic about moving towards value-based payments. The traditional, again, ways of delivering care in the US have been all about volume-based. The more patients you serve, the more profit you generate, the more incentives you have. The push to value-based health delivery, to me, hasn't gone that far. There are issues, obviously negative things, about it that need to be resolved. But at the end of the day, we have to think about if we want to have an innovative system, how do we move from this old volume-based delivery to value-based delivery.
Ralph Ranalli: Amitabh, I'll let you have the last word.
Amitabh Chandra: I agree with everything Soroush said. If I can just add to what he said, I want us as a country to grapple with two challenges, but the first is long-term care. We discussed it in a very short way when we were trying to pass the Affordable Care Act, but it got taken out. But the reality is that we have millions of Americans who as they age are suffering from Alzheimer's, Parkinson's, other forms of dementia, other mobility problems. They don't need hospital care. They don't need to go to the doctor, but they need long-term care. And the United States does not offer a long-term care benefit. Medicare does not offer a long-term benefit. The United States hss really not grappled with the colossal cost of that long-term care benefit. Because it's going to be expensive, we say we don't want to do it, but I think that's a very cruel solution. I think it also impedes exactly the innovation that Soroush wants us to engage with.
The second thing that I would encourage is more innovation, not just for the diseases where we have innovation but the diseases where we have no innovation. Go back to Alzheimer's, for example. We don't have a meaningful disease-altering drug for Alzheimer's. One is still likely to be several years or decades away. One thing that I've learned from COVID is that relatively small amounts of money can actually induce massive amounts of innovation. That was my big takeaway from COVID. I mean, if you go back to Operation Warp Speed, the government said, "Here's about $13 billion that we will give manufacturers who are successful, who successfully develop COVID vaccines." We had something like five to 10 manufacturers jump into that race, and we got many successful vaccines out of it. That was people chasing a $10 to $13 billion prize. Now, what if we used that kind of thinking to announce similar prizes? I realize the government didn't call it a prize, but it was functionally a prize because you only were able to tap into the money if you developed a successful vaccine. What if we said, "We're going to use that kind of thinking to create other vaccines for other diseases"? Maybe it's hepatitis B. Maybe it's river blindness. Maybe it's medicines that delay cognitive decline in dementia. It might not take a lot of money to create a transformational change in the amount of suffering that patients have right now, but that will require us to spend more, not less. That's something that we have to come to terms with, is that if the extra spending was worth it, then we should absolutely be doing it
The consequences of COVID for, let's say, rural hospitals is very different than for urban hospitals. A lot of these rural hospitals that ended up closing because of COVID, they are the hospitals that are essentially also the large employers in those rural communities. A lot of people also lost their jobs, lost their work, lost their only income. I think for me, COVID gave us the ability to think about all of this more proactively.
Well, let's hope some of these great policy ideas actually are able to make a difference. I want to thank you both for being here. It's been enjoyable and an education. I really appreciate it.
Soroush Saghafian: Thanks for having us. Thank you.
Amitabh Chandra: Thank you for a great conversation.
Ralph Ranalli (Outro): Thanks for listening. Please join us for our next episode, when we’ll welcome Harvard Kennedy School Professor Daniel Schneider for a discussion about The Shift Project and his research on the ripple effects that precarious employment and unpredictable scheduling have on workers and the broader economy. If you have a suggestion for a future show or a question, please email us at policycast at H-K-S dot Harvard dot E-D-U. And until next time, remember to speak bravely, and listen generously.