Crossroads conversation (full version)

Like many others right now, I’m worried about what’s happening with California and the safety net for poor people and seniors. And I’m discouraged that the level of discussion at the capital has been so polarized. Kim, you’re a Republican. Grantland, you’re a Democratic. Are there areas of agreement and commonality when it comes to the safety net?

Former Secretary Grantland Johnson: Ha, ha. Well, we only have a few hours—we need a few days.

OK, let’s start with this. If your agency was a Fortune 500 company, it would be 21st worldwide, in between IBM and Procter & Gamble, in terms of size and number of employees. Can one of you talk about the scope of what the agency covers?

Secretary Kim Belshé: We have 12 departments, roughly 32,000 employees, roughly $83 billion dollars in total funds. We represent basically about a third of the state general fund. Of note is that this third of the budget is afforded very few of the protections that other parts of the budget—such as K-through-14 education and public safety—are afforded. It’s an unfortunate reality that the agency charged with serving and supporting the most vulnerable of Californians is in some respects the agency most vulnerable to budget reductions.

Basically, this agency oversees services that touch the lives of really every single person in this state. A lot of folks think we’re only about poor people, public assistance, CalWORKs (which is the principal income support program for low income women and children), Medi-Cal (our state program for low-income, uninsured women and children) as well as seniors and people with disabilities. But we also oversee public health programs. We oversee food-safety programs. We oversee programs that all Californians rely upon and benefit from when it comes to their health, well-being and safety. We spend $83 billion dollars a year—that sounds like a really big number—but what most people don’t appreciate is a significant percentage of those dollars are federal funds, and what comes with those federal dollars are very prescriptive federal rules and requirements. So even in a very large bucket of money such as $83 billion dollars, there’s relatively little discretion in terms of how those dollars are spent. And with federal health reform and with federal stimulus funding, that flexibility has been further constrained.

When Gov. [Gray] Davis came into office earlier in the decade, the financial times were considerably better. There was an effort by the governor to really hold the line on spending, notwithstanding a lot of pressure from the Legislature. But that pressure ultimately led to some proposals to expand Medicaid, so California went beyond what the federal government required, because Gov. Davis ultimately agreed to do that, and from a social policy perspective, in my judgment, that was the right decision, to insure a stable and sufficient safety net of medical-care services.

Fast-forward to where we are today: The bottom has fallen out on revenues, the state doesn’t have the ability now to go back and revisit program expansions that were enacted during good economic times; those revenues have gone away and yet the spending continues and the federal government now is saying you have to maintain that level. Again, good social policy to maintain that eligibility, but the state doesn’t have the financial resources. It requires cutting in other areas or raising revenues, and we see how difficult either [of those can be].

Johnson: I think that is an accurate assessment. [The Davis administration] came into office in 1999, the dot-com boom was really underway, and it created a false sense of security. Now, one of the things that happened as a result of the dot-com bust was the state was faced with a financial crisis, the economy was in a downturn. … If you recall, the whole issue of a rainy-day fund really became a prominent part of that discussion: What do you do in good times in order to buffer you for the inevitable economic downward cycle? And the tension between the executive branch and Legislature is that the Legislature gets elected to make things happen, and that translates for them into spending. So the tension between the governor and the Legislature is always over this question of how do you hold the line and at the same time adequately sort of satisfy or satiate the desire to want to do something and that was the tension we faced, OK? And as much as the governor tried to hold the line, you know, he was getting buffeted from his own party by saying, “You’re just a scrooge,” basically. I remember we had a discussion in 2001, and I think the shortfall was something like $2.5 billion, and I said, “Look, make the cuts. Half the cuts are going to come from my budget, but I would rather have the cuts be made now than to wait.” Because the longer you wait … the difference between the expenditures and revenue exacerbates exponentially.

It seems clear that this budget is going to be much more severe, that there are going to be cutbacks as cruel as any in memory. Why don’t you both talk about the impact that’s going to have on typical Californians?

Johnson: I think it’s going to be a direct thing. I think that this administration is facing a much more difficult situation than we faced because all of the easy, low-hanging fruit; all the tricks that we used to play with the budget don’t work because we’ve exhausted them.

Belshé: Yes, as I said earlier, major portions of the budget enjoy particular protections. And those protections are, in part, a function of social-policy decisions and fiscal-policy decisions that the public has made. So when, in 1998, the people of California said Proposition 98 is consistent with their priorities and values—that put into the constitution some very clear constraints in terms of education funding. The people of California said that K-through-14 education is priority No. 1. That’s roughly 50 percent of the budget right there. … I think Grantland and I would say, from where we sit, it has resulted in education funding being treated quite differently than other general-fund support.

So what are those other areas of general-fund support? The next big chunk of money is higher education, and clearly, in recent years, higher education has taken some very difficult reductions, fee increases, etc., the net effect of which has led the governor and, I think, the Legislature to say, “We really can’t cut more deeply there.” So that’s another 10 percent of the budget. Public safety—no one wants to be associated with releasing dangerous felons into the communities, and the public has said consistently that it is a priority, and indeed many of the costs driven through corrections are a function of ballot propositions that the public has supported. So that’s another 10 percent of the budget.

And so basically what’s left is health and human services, which is relatively unprotected. And for those of us who believe in these programs and recognize their value in terms of the health, well-being and safety of the people of California—particularly the lowest-income, the most vulnerable—well, this is going to be very tough. And so that’s why you see some incredibly difficult proposals on the table, such as dramatic reductions in the In-Home Supportive Services Program, the outright elimination of the CalWORKs program, additional reductions in Medi-Cal, which reflect all that we think is left that can be done given court decisions and federal maintenance of existing laws. But when you have program growth of 13 percent in Medi-Cal, 14 percent in CalWORKs, 71 percent In-Home Supportive Services over the last 10 years, there needs to be some reductions. It can’t only be a revenue conversation, and there are some folks who seem to only want to make the budget solution only about revenues.

This goes back to how divisive things have gotten. What can we do about the polarization?

Belshé: This is not unique to California. We are very polarized. The action of trying to find compromise and that middle ground, of moving to the middle, it’s a pretty lonely place to be, it seems, in California. And it’s not a position that is valued and rewarded.

Johnson: It’s punished.

If we project out into the future of health care in California, we seem to be heading for a train wreck. We have the baby boomers and their increased health-care costs, much higher administrative and marketing costs for insurance companies and the health sector, and rising costs of technologies. Is there a solution that puts us in a good spot 10 years from now?

Johnson: That’s why some people want to have a constitutional convention and go back and do the state constitution over again. Because it’s gotten so complicated with these decisions that are made separately and, in most cases, without regard for their interaction with other decisions. It’s gotten very, very difficult to make rational decisions in terms of the budget. So everybody gets involved in kicking the can down the street and, meanwhile, the structural deficit continues to grow no matter what administration is in office.

What would you say to our European friends, our Canadian friends, who are able to give health care with 4 percent less GNP than we’re able to do here in America, because of the system that they have created? Clearly, the incredible health-care costs in the private sector—has it made it harder to compete internationally?

Belshé: I guess my attitude is—if you’ve seen one country, you’ve seen one health system, every country has pursued health reform or health coverage, delivery, financing in very country-specific ways that reflect their histories, their institutions, their values, their development. So we’re not Canada, we’re not Mexico, we’re not the Netherlands, we’re not England, we’re going to be something that’s uniquely U.S. And what has been uniquely U.S. for far too long is that we don’t have universal coverage, that we have a very uncoordinated, fragmented, expensive system of care that does a very good job in a number of areas and does a really bad job in a lot of areas. I don’t think many Americans would want to turn in our health-care system for another country’s, but they recognize properly that we have some real faults in the system, particularly in terms of access and equity and health disparities.

Federal health reform, warts and all, bells and whistles, positive and negative, the law is the law, and we are moving forward as responsibly and thoughtfully as we can to implement it. It’s going to be the next administration that determines, and the next Legislature that really will determine what reform, come 2014, will look like. But the promise of reform in terms of near universal coverage, in terms of much stronger incentives to orient the delivery system, and financing to focus on health outcomes and improvements rather than just the delivery of service, investments in community-based prevention and wellness to improve health outcomes and the overarching affordability provisions, I think there’s a lot of promise in reform, notwithstanding its many problems.

At the end of the day, in 2014, are we going to look like Canada? No, we’re not. We, as a matter of policy in this nation, have said we’re not going to have a government-run health-care system. That is not the path we’re on. It is uniquely U.S., and it reflects both private sector and public sector. It builds upon—President [Barack] Obama and Congress could have gone in a very different direction, but they didn’t—they said, “We have a very strong private-sector marketplace, we’re going to build upon that,” while recognizing government has a role to support a foundation for the lowest-income Americans and to create a regulatory structure within that private sector—those private-sector providers can compete, so it’s going to look very uniquely American. It’s not going to look like Canada; it will probably look more like the Netherlands, or Switzerland has a similar type of model in terms of saying individuals have a responsibility to purchase insurance for themselves and their families; insurers have a responsibility to guarantee access to those products regardless of health status, age, occupation; government has a responsibility to provide a foundation of support for lowest income of residents as well as some financial support for lower-income working people.

So it’s the same kind of shared responsibility construct that I think Gov. Schwarzenegger and former Speaker [Fabian] Nunez tried to institute in 2007. It’s that similar shared responsibility principle and views that President Obama enacted.

Johnson: Yeah, they hit very close; they got very, very close. I was one of those that predicted that they would actually get it passed in California, and I was wrong, but it was at the last minute that it just fell apart. And that was unfortunate, because I really do think that on the heels of Massachusetts’s reform, California was really poised to lead the country down the path of health-care reform. Again, I think it was a missed opportunity.

One of the things I’ve learned going back to the ’70s is that there’s this mythology that major institutional change occurs because of some sort of big-bang occurrence. You know, there’s a huge breakthrough. But the reality is [more about] reforms that you enact incrementally. The evaluation has to be: Does it takes us closer to the ultimate endpoint that we desire to achieve? Rather than believe you’ll get there in one fell swoop, it really is a series of incremental progressive enactments of policies and reforms that again moves you closer and closer to the endgame.

A fascinating debate around 1973-74 was around the question of health-care reform. And I argue that it’s not so much the structural under pinnings that really drives the public-policy debate, it really is a values question. The public has to reach a value judgment—it makes its judgments as a public on the basis of what values it embraces at a given particular historical moment. So back in 1973, Richard Nixon’s conservative alternative to the bills in those days and I remember the [Congressman Ron] Dellums National Health Service Act proposals was an employer-mandate-based approach. That was the conservative alternative. And there was no debate over whether or not the goal was universal coverage, that was the goal—how do you get the universal coverage as a country? And the proposals on the tables were those proposals. Democrats on the left rejected the Nixon alternative because of what he proposed, and he was therefore not trusted. … And No. 2 in conjunction with that, on the other side, the social-service side, he was proposing a family-assistance plan, so called “negative” income tax, which would have established an income floor for families below which no family would be allowed to sink. But it was rejected again, because he was the messenger and he wasn’t trusted.

There was a quibble over, “Well, it wasn’t a high enough initial floor,” I mean, the floor wasn’t substantial enough, and I remember discussing this a few years ago and I said, “You know, didn’t we blow it in the ’70s when we rejected the employer-mandate proposal as an alternative proposed by Nixon?” And we rejected the family-services assistance plan which had been drafted by Patrick Moynihan, who was working for Nixon. And I said, in hindsight, wouldn’t we jump at those alternatives today? And of course the answer is “yes.” But because we confuse the messenger and the message, we didn’t understand why those were important compromises that would have moved us as a society forward in the direction that would have changed the basic underpinnings in terms of assumptions and possibilities.

So today, if we embraced those in the ’70s, those proposals in the ’70s, we’d be having an entirely different quality of discussion today in 2010. The reason I point that history out is the fact that we lose sight of the prize, the societal prize, because we get hung up in our perceptions and our subjectivity and we lose sight of how to get from here to there, from A to D. We get enamored with structures; we get enamored with examples from other countries; and we lose sight of the fact that we have the roots, you must have the roots, your institutional changes, and your culture and your history. It has to fit, OK? The key is that, not what it looks like, but does it fit and work for you given your historical and cultural context?

Belshé: I think you’re right, Grantland, I think we, as a state, typically move forward toward change more incrementally. It’s one of the reasons I agree with your comments about governance reform. I am a huge believer in governance reform—I think there is no issue more important. … One of the happy virtues of our dysfunctions around, say, getting a budget done is that the public pays more attention to the fact that the system isn’t working. We’ve seen this growing attention to governance, and we saw all the discussions around the initiatives and around the idea of a constitutional convention, and I think that’s been very healthy and important conversation that the media and other civic leaders have been advancing. It’s unfortunate that when those initiatives, both the incremental and the big-bang constitutional convention initiatives, weren’t able to move forward, it’s like the issue fell off of the media’s radar—seriously—it was striking to me.

How the conversation seemed to kind of end.

I’m attracted to the idea of a constitutional convention from kind of a conceptual level that, yes, a thought experiment: Let’s start over, and let’s bring the people of California together in a creative, focused way to really redefine the structures and the institutions by which we govern ourselves. But if past is prolonged, that is not how we effect change. It is more incremental. And as I really think, as it relates to governance, it probably, the path likely, will continue to be first reapportionment, then open primary, maybe term limits, maybe campaign finance, maybe initiative reform, which I think is so necessary but so hard, because the public actually likes making decisions and they like being grumpy with their elected officials even though one of the reasons why the elected officials have such a hard time doing their job is because of the constraints the public has imposed upon the Legislature and governor.

To what extent is our health-care problem not going to get solved until we have a better kind of discussion with the general public about the cost of health care, end-of-life decisions, all of these kind of incremental things? We did some focus groups at SN&R after the state health-care bill went down in 2007. And one person said to me, “When I discuss health care, the first thing I have to do is to disconnect my brain from my tongue.”

Johnson: If you ask me what my personal preference is, my personal preferences would be for a single-payer system, which is the ultimate form of government-run health-care system, but that’s not going to happen, I’m convinced of that. It’s just not going to happen. It’s a nonstarter, so why even get fixated on that? From a rhetorical standpoint it’s great, but from a practical standpoint of reaching consensus, in terms of moving us forward, you don’t start with single-payer. It’s just politically a nonstarter, both from a political standpoint and also from a value standpoint. The conflicts are so great, the growth is so great that if you really want to talk about a sustainable consensus, then you’ve got to talk about approaches that allows folks to really engage in a way that’s realistic. I’m wedded to this notion of pragmatism, not from a standpoint of pragmatism that means expediency, but from the notion that pragmatism says that, you know, John Dewey, Henry James, Pierce approaches to American pragmatism in the philosophical sense. I think that makes a lot of sense to me.

So along that line, would you say the Obama health-care bill was with incremental changes—is what we need now?

Johnson: It reflected what was possible.

Belshé: I think a lot of folks will say it absolutely isn’t pragmatic, it’s hugely ideological. Where you stand depends upon from where you sit, and where I sit is in a seat where in a state in 2007, we worked really hard first in 2006 developing a reform strategy and framework with the governor, which he then proposed in January of ’07 and then spent 13 months trying to get it enacted and came closest, as Grantland can recall. That approach reflected our best thinking about how to build upon the system we have. So our starting point was, the answer is not at either one of the ideological extremes, the answer to our states coverage costs and health outcome challenges was not going to be a market-based approach, it wasn’t at the other end of the continuum going to be a government-run health-care approach, but rather the answer was in the middle. And going back to my earlier point about the middle is a relatively lonely place, because the dialogue in the Legislature was very much grounded in the ideologies in market-based and government-based.

And what Gov. Schwarzenegger and Speaker Nunez said is you know what, there is absolutely a role for our existing public- and private-sector insurance plans, but we’re going to change the rules, you’re actually going to have to insure everyone and we’re going to put some bands around your market activity. There’s absolutely a role for government to support the lowest-income individuals and to create that regulatory framework. And there’s a role for the marketplace, albeit with a stronger regulatory structure, but a marketplace that really focuses on competition and choice and market efficiency. So what President Obama ultimately enacted is really not that dissimilar; there’s a lot of very strong democratic principles and priorities and some very clear Republican principles and priorities. It is not an either/or, it was very much a “both ends.” So in that respect I would characterize it as: Yeah, it was pragmatic and it was reflective of our institutions and our history and our norms and our political realities. It is very comprehensive. It is sweeping. How this unfolds is still a very big question mark, but we at the state level are endeavoring to put the essential building blocks in place and do everything we can as a departing administration to facilitate the handoff to the new administration so that they can then either build upon what we’ve done or potentially move into a different direction. Only time will tell.

But the bottom line is what we’ve had to date is not working, it is not sustainable to have 20-plus percent of your population uninsured and countless more underinsured. It is not sustainable for individuals, for families, for businesses, for the state budget to see health-care costs continue to grow at a rate well in excess of wages and inflation. It is not sustainable to see the kind of health disparities associated with disparate access to necessary services. So is it a perfect bill? Absolutely not. Is it everything that everyone would want? Absolutely not. Are we going to give it a go? The law is the law, we’re giving it a go, and I think one of the most important things that will need to occur is to engage the public in this conversation about this sweeping new federal policy change, because it’s going to affect all of us. It has implications, we all have new roles and responsibilities—they may not come into play until 2014, but the world will be changing. Reform will only be supportive, sustained over time if there is a social consensus in support of it. And I don’t know who would submit that there’s a strong social consensus for reform today. And if it’s not there come 2014, when everyone’s going to be required to have insurance, and other changes that are incumbent upon them, that will be a disaster, but I think that the principal barrier right now is that it’s big, complicated and difficult for people to understand, and whether it’s the media, civic organizations, business organizations, providers, foundations, the Legislature—we need to have a community conversation about this new federal law, what it means for individuals in terms of their own selves, their own families, their businesses and the broader community. Why it makes sense, where it may not make sense, what our roles are in terms of the decisions we make.

So do you think Americans are not so supportive of health reform because they have a different kind of value system? Or because there’s so much bad information out there about what’s really being discussed?

Belshé: I really believe there are strong ideologically held positions on both ends of the continuum who just oppose reform because it’s not market-based and because it’s not government-run. And then I believe there’s a lot of people in the middle who aren’t really quite sure what it all means for them. What they do know is that they’re very concerned about health-care costs, they’re very concerned about their inability to find a doctor, they’re very concerned about their employer changing plans or losing coverage. I mean there are very deeply seated concerns—I don’t think people yet have a good enough feel for it, so, given the problems they care about, to what extent does reform actually address them? And notwithstanding the rhetoric about how reform is going to slow the rate of growth in health-care spending, that is simply not going to be true for the foreseeable future, cause reform is not going to really be implemented for, it’s going to take some period of time while heath-care costs continue to grow. So I worry that there’s a real disconnect between the rhetorical promise of reform in terms of your universal coverage, more access, more affordability, etc. and the near-term realities, which is, pretty much, they’re going to keep going up.

Johnson: Well, I think it’s both. I think Kim is correct, and I also think that my sense is that it’s going to require a sort of process; people have to live reform in order to understand and embrace reform, and that sounds strange. But the volatility of the rhetoric was so great, and the debate was so great, and we know that people react much more emotionally than rationally. That’s why there’s always politically this race to control the narrative, you know. And so also something so complex and so fundamental as health-care reform requires a while for people to begin to understand the potential benefits of health-care reform. And the other point is that by definition inherently, incremental reform is incomplete reform. It also means that it’s a moving target, it’s a process that is constantly being improved upon and reworked. And one of the things that an optimist or a hopeful basically suggests is that as the rhetoric dies down, and as people’s pragmatic side takes hold and policymakers are able to engage in real thoughtful examinations in terms of how do we tinker with this, how do we move this forward, how do we improve upon this? Let me give you an example—the notion of comparative effectiveness.

What’s that?

Johnson: Comparative effectiveness research, in other words, are evidence-based practice. People were saying stuff like death panels, people are going to require rationing and withholding those services—the reality is that rationing takes place right now. It takes place in a nontransparent way, and certainly in an arbitrary and unfair way, where people are denied access to valuable services that could make a difference or, you know, there’s overprescribing the things that are done that really don’t make a difference, but that who’s going to withhold it because if you have certain resources, you have access to it, if you don’t have certain resources you’re out of luck—you’re SOL, as they say. We know that in California, for example, if you live in different areas, different regions, health-care practices, you know clinical practices, are different. We know that in different parts of the country there are variations in terms of how health-care services are delivered and how clinicians engage in practices, what judgments and decisions they make. So one of the issues we have to overcome is the fact that health-care clinicians operate in silence, they really don’t talk to each other in a way that really effectively improves clinical practices and the outcomes for the patient. And so one of the things that would be a tremendous breakthrough was just the idea that people share knowledge in a much more efficient and effective way to improve on clinical outcomes, so that the American public gets the best of our medical knowledge applied to these specific cases. I mean that would be just an incredible breakthrough. We’re nowhere near there.

Belshé: And we saw how difficult this discussion is about what works and what doesn’t and how do we determine effectiveness—is it clinical only? Is it financial—how do we think about costs when we think about effectiveness? And so going back to my comment about the role of the public—we absolutely have to engage the broad community, why reform makes sense, what are the benefits, but also what are their responsibilities? And one of their responsibilities is how they access and purchase health care. And you can’t just buy and have insurance pay for whatever you want. Insurance needs to be moving. Incentives need to be moving toward rewards or encouraging the right care at the right time by the right provider. And so what that means is if the U.S. preventative services task force comes out, as they did last year, and say we’ve looked at all of the data over decades and concluded that breast-cancer screening for women under 50 is not effective. And so our super smarty-pants, I mean they are the glitterati, national glitterati in this field, their determination is that it’s for 50 and above, with some exceptions. And there was a bipartisan outcry about rationing.

Johnson: People freaked out.

Belshé: And you even had Republicans who opposed reform standing on the well of Congress supporting legislation to require insurers to cover mammograms for women under 50. And that’s an area where the evidence is really quite clear about what is and isn’t effective. And what should and should not by extension be supported. Now if a woman under 50 wants a mammogram under this thought experiment, I mean this is the theory, then they can pay out of pocket if they don’t meet the clinical guidelines. So the reaction we saw, the task-force recommendations, the reaction we saw to the proposal that providers be reimbursed for engaging in the time required to talk to their patients about end-of-life issues, that then became “death panels.” It underscores how sensitive and how political these issues can become. But it also speaks to how the public needs to assume some responsibility here. The public cannot have it all—but we do. We want access to coverage, we want affordability—this idea of comparative effectiveness, this idea of evidence-based practice of medicine is something we’re all going to have to become a part of and understand. So that when the doctor says “No, Kim, you’re 40 or whatever, and so when you turn 50, then you’ll get your mammogram,” I need to be able to understand why, what the evidence is. I’m going to need to get information, whether it be from that physician, my health plan, the Web, so that I’m not saying “Well, I want it, and I want it to be paid for.”

Do you think how Oregon was talking about doing their health care a few years ago where they were—

Belshé: They explicitly called it “rationing”…

Johnson: Oregon got a federal waiver—the administration gave them a federal waiver—they explicitly ration. They say, “Here is the line, below that, we’re not paying for it, and above this line, we’re not paying for it.” There are certain things, we get to a certain point and we’re not paying for it.

Correct me if I’m wrong, but in the Oregon model, we only have X amount of dollars, and we’re going to make a determination where we get the most value for those dollars. So it may mean less protracted end-of-life decisions and more dental care over in Oak Park or whatever—spending our money where it can be used most effectively—are we going to move toward that system?

Johnson: I don’t think it will be the Oregon model as such. I think the question the Oregon model raises has to be addressed. The reality is that right now there’s a tremendous amount of inequity in terms of how deployment of a finite set of resources occurs. Right now it’s on the basis of relative wealth, you know, and also circumstance. I mean, you know, if you’re positioned in a certain way and you have access to certain information and you have access to certain services because of your financial capacity, or you work, for example, and your employer is able to provide employer-sponsored care and you happen to be employed with that employer, then you’re in good shape. If you are in or you have preconditions that many of us have and on the individual insurance market, it’s very expensive to afford those plans, those premiums. And if you can afford it—great. If you can’t, then you’re in trouble.

OK, now one of the enactments, one of the policies that is being enacted under the health-care reform, is that type of denial will no longer be acceptable. That’s a big breakthrough. The reality is that, you know, it still begs the question, there’s a finite set of resources, we can only afford to do so much and there’s growing evidence that in many cases, many instances that certain procedures are in certain circumstances just don’t have much effectiveness. And so the question becomes, do you still continue to deploy those procedures even though the evidence indicates that they’re not going to make much of a difference? Those are the kinds of conversations …

Belshé: And I would argue that that’s different than rationing …

Johnson: That’s right, my point is that I don’t think it’s the Oregon model as such. It will be the question of, a different set of questions that have to be proposed in order to come up with some consensus.

Belshé: But when I say it’s not rationing, I’m thinking of the comparative effectiveness agenda, the evidence-based medicine agenda, in terms of being really focused on what does the research tell us about what works and what doesn’t. To me it’s a different discussion than this is what we can afford to pay for vs. what we can’t afford to pay for. One seems to be grounded in what does the data tell us. What does the research tell us about what works? The other way of approaching it is just saying this is more of a fiscal entry point, this is what we have the money to pay for and what we don’t, there may be things that actually work and are very effective, but we draw the line at medical service No. 267, because we just don’t have enough money for 268, even though that also is an effective service. Do you see the distinction?

Yes, I do. So where are you on this?

Belshé: Well, what with, I think it speaks to, I really think it speaks to the looming time bomb, the cost time bomb. The emphasis to perform, we can achieve near universal coverage, we can improve access, we can improve outcomes and we lower costs or slow the rate of growth, because when people say we’re lowering costs, that’s really lowering the rate of growth, that is a tall order to achieve. Now some will say, look at health reform and say there is no meaningful cost containment in federal health reform. At the same time, and there’s some truth to that for me from a systemic perspective, at the same time reform does include periods, pilots, demonstrations and provisions to advance cost containments, testing a variety of different models. Because you know what, it’s complicated, it’s hard, there is no silver bullet, if there was it would have been instituted a long time ago. And the unhappy truth is one man’s really great cost containment idea is another man’s income stream.

You’ve been secretary for seven years. Level one, I take from what you just said, that things that we’re currently doing that make no sense, based on the evidence of what happens after we do them—we should stop that.

Belshé: Absolutely.

OK. And level two is, let’s call it for the sake of this discussion the Oregon model, which is we don’t have enough money to fund everything, so do we have to make choices—

Belshé: I guess if I may, there’s a couple of points—I think rationing is such a distant bogey man …

Johnson: We’re not there …

Belshé: Yeah, I don’t validate that as a viable policy option. I don’t think there, I haven’t looked at this recently, for years, actually, in terms of the experience …

You don’t validate it in terms of, well, (a) you don’t think it’s politically possible, or (b) you don’t think it’s the best solution?

Belshé: I don’t think it’s the best solution. And I also don’t think it’s a viable policy option, but I think principally because specially in the near-universal coverage context, because I actually believe that to make this system overall more efficient and cost effective, you actually do need to get everyone in and get at the cost shifting that occurs that gets at the reality that people who are uninsured or are underinsured end up in emergency rooms at far more expense, for poorer health outcomes, etc. So I think universal coverage, which I think we tried to do in California, is the right starting point in terms of advancing a more cost-effective and efficient delivery and coverage system. I think in that environment there are opportunities to achieve efficiencies and savings in the administration of health care, in the organization and delivery of health care, in terms of the coverage of services.

That’s the evidence-based medicine piece. But the organization and delivery of care, what is often referred to as payment and delivery system reform, in my judgment that’s what we have to get right. That’s where the bending the cost curve, to use that popular term—that’s really what it’s all about. It’s getting people out of this fragmented, uncoordinated fee-for-service system into a more coordinated delivery system, where the incentives are aligned to reward the delivery of services, again to use the term, it’s the right care at the right time by the right provider in the right setting. And that’s where you hear about these things like acountable care organizations, medical whole health homes, it’s this idea of care being far more coordinated and integrated across the continuum. That’s where the savings are going to be.

And like incremental changes, how much would it be if we increased the salaries of general practitioners and decreased the salaries of specialists, in terms of where people are going for medicine? Is that part of the incremental changes you would like?

Belshé: Well, I know what you are jumping, piggybacking on, our comments about incremental—to be very clear, I don’t view what was enacted into law for federal health reform as incremental. I view it as sweeping. I think it is the most sweeping social-policy change in over a generation, so I would not view what we are now endeavoring to enact as incremental by any stretch of the imagination. This is big and consequential—it affects every individual, every family, every level of government, etc. So I’m sorry, I’m reacting to the incremental thing …

Johnson: For the record, on that point we do disagree, because I do think it was incremental reform. It was major. Yes, it was consequential, But still from the standpoint that I think we have to be, I maintain that the incremental falls short.

Belshé: You said what you would ideally like this to be is single-payer, which I thought was your government-run health care that I thought you said is not achievable?

Johnson: I don’t think what was enacted was government-run health care.

Belshé: No, I know.

Johnson: And I also think from a standpoint of costs, quality, transparency, and accountability and access, and illuminating disparities and inequities, we’re not where we need to be. And I argue that we have a long ways to go to get to that model of health care, of a health-care system, of a truly coordinated health-care system. We are still not a system. I think that, for example, the fact that specialists and practitioners don’t really talk to each other, the fact that we have a health-care system that still focuses on disease as opposed to patient outcomes, is what I’m talking about. We’re not there yet, OK? The fact that the pharmacist and the physician aren’t part of the same team, you know, is an example of a fragmented, of what I would view as an unacceptable, fragmented approach to health care. The fact that there’s no continuity between personal health care and behavior health, whether it be mental health or substance-abuse treatment, the fact that they are not coordinated and not integrated, to me speaks to some significant shortcomings of our health-care system. The fact that we have such variations on a regional basis, in terms of clinical practice, and the fact that people function, clinicians function in these silos or examples are to me uncoordinated, fragmented health-care system that does not work to the benefit of the patient, is for me evidence that we have a long ways to go.

But is there one health increment that we have—

Johnson: It is, absolutely it is, and also I think this further dialogue and further experience and further knowledge to be gained by trying to put into place these reforms and I think that I have, I am certainly hopeful if not optimistic that as a country we will benefit and we will progress in terms of our understanding of what we need to do in order to really improve the quality of care, the continuity of care, the accountability and transparency of care, and the reduction in terms of inequities and disparities that exist in our health-care system. As opposed to health-care provision in this country—you know, for example, this whole notion of reimbursements and incentives is important. In order to get the market to give us the response that we would desire to have, we really are still learning how to do that.

We are nowhere near, anywhere near optimal in terms of our performance, in terms of incentivizing the kinds of responses that begins to approximate the level of the kind of quality and the kind of accountability of care that we would like. You know Michael Porter, the Harvard business guy a few years ago made a noble effort to talk about this whole notion of our incentive and payment systems and said “Look, we’ve got it wrong. You know, physicians and health plans and hospitals and other providers—we’re asking the wrong questions. We’re approaching it incorrectly. We need to rethink the way in which we reimburse and finance our system in order to get the kind of outcomes”—well, it’s the difference between this—cost effective analysis vs. cost benefit analysis. You know, they’re great on paper, and they’re useful, but to be mechanical and purist and rely just upon one measure or one model is a mistake analytically; it’s a mistake because it doesn’t factor all the variables.

But as a society we desire to factor, to take into account those factors in order to come up with the kind of outcomes and the kind of approach that we feel comfortable with. Again, you know, the analytical side is one, but the value side has to be factored in, too, in the equation in order to come up with the proper balance and mix, that says, “OK, we feel comfortable with this approach.” That takes time, it takes experience, it takes practice. And, you know, the old notion of the paradigm we operate on today will not be the paradigm that we operate on tomorrow, because today’s paradigm will inform us in terms of where we have to move to next. And it is that approach, it seems to me, that will characterize the way in which our health-care system and reform the health-care system—to health care will evolve over time. There again, it is historically how we moved in terms of our inquiry, again at the risk of sounding mechanistic, I’m suggesting that it is about replacing what we understand today with what we learn tomorrow and that’s how we propel our efforts forward.

Belshé: And that’s true at the policy level, and it’s also true at the practitioner level and true at the consumer level.

Johnson: All those things are part of the mix.

Belshé: And so your comment about general practitioners and the need to increase salaries relative to specialists, that in my mind is an example of a really critical, more micro issue that emerges, as we’ve seen in Massachusetts. In a near-universal construct people have an insurance card, they’re looking for a doctor, not in the emergency room, they’re looking for a physician, and everyone needs a medical home and research is increasingly clear. But do we need a lot of specialists or do we need more primary-care practitioners? We definitely need more primary-care practitioners. We’ve got an aging population, how are we doing with geriatricians? Not terribly well. How do we think about the continuum of providers? This gets to the consumer—the consumer, I think, we’re seeing over time and in recent years it’s just about going into doctor, Jeff, but you have actually got a medical assistant or a nurse practitioner, or maybe I’m not even going to come in and see you, I’m going to be using a telemedicine, I’m going to be communicating with you via e-mail. So technology, allied health professionals as well as medical professionals. It’s rethinking provider supply from a provider prospective, and that’s going to require the consumer to also change the way they interact with the medical professional community. And I think we haven’t talked much about it, and I know were running behind, we’re going to need to close, but the whole role of information technology, is in my mind, another example of—we are, everything we do is grounded in technology yet when you go to the doctor, I don’t know if this is changing, it’s all about your paper chart, and your paper prescription, and your paper this and your paper that. That world is changing. Federal stimulus No. 1 invested resources and workforce development; they also invested a tremendous amount of money into information technology and information exchange.

So after your seven years here, what advice would you give to the next health and human services secretary?

Belshé: You should ask Grantland that first because … that was a conversation we should have had seven years ago. (Laughs.)

So Grantland, what should you have told Kim but didn’t tell her?

Johnson: I didn’t want to scare her…

So if you had told her, she might not have taken the job?!

Johnson: I consciously low-ball the challenge because reality is that until you get into these roles, you don’t really know how to do these roles. It really takes practice, I mean, once you get into it, you figure out how to navigate it—that’s the thing, that all you can hope for is that people are committed, they’re intelligent and they are honest about it. And the reality is that you can ask that they be hardworking, you can’t ask any more from anybody else because you grow into the role, you shape it to fit your personality, your style, your background and experiences, you bring to it your own set of expectations and you shape it, you know. But again all you can ask for is competency, hard work, and honesty and intelligence, and you figure it out. You just figure it out.

Are there a couple of things that you wish you knew—

Johnson: There’s a whole bunch of stuff I wish I had known before—in hindsight, you know, in hindsight, I can tell you all the mistakes that I made like, “How did I not know, how could I be so stupid?” I can remember years ago, when I first got elected to city council, right, Lloyd Connelly was still, I believe, a judge before he was elected to the Assembly—he helped me get elected to city council, and I remember I said how I would look back and reflect on mistakes I’ve made, and he says everybody goes through that. That’s just life, OK? You’ll always be able to look back and say had I known then what I know now, I would have avoided that mistake. Well, you know, that’s just the way it is. Again, he says all I can tell you is that you work as hard as you can, you try to be as competent, as capable as you can, you try to listen to people and you pick their brains and you learn from their experiences, you try to apply it or appropriate it, that’s the best you can do. Circumstances will dictate limits of what you can do. And the key is that you look in the mirror and you say “Hey, I did the best that I could, given the circumstances that I function under or within.” And that’s the best you can do. You can always say that you could have done it better, because you could have done it better, but the reality is that as human beings we only have so much capacity and so much capability, and circumstances will always tend to overtake what you can do given historical circumstances within which you operate. But you can beat yourself up endlessly, second guessing.

Belshé: And if you don’t others will, so a thick skin is important in all of these roles and, you know, I think serving in state government broadly is a privilege. And I think serving in a leadership position is particularly an honor. As Grantland says, the circumstances and the times—you don’t get to pick when you serve, the times pick you. I care deeply about state government, I care a lot about this agency, the people who work here, the commitment they have to service and to the people of our state, a great commitment to the people who rely upon the services and support for which this agency is responsible.

This has been an extraordinarily challenging time given the state fiscal circumstances, and I would also submit that the political context as well, some of the governance issues we’ve been talking about. But to lead is to choose, and I have chosen to lead during good times and not so good times. And the people who serve with me have chosen to stay and contribute. And we come to these jobs, we come to this agency with a commitment to the underserved and to the vulnerable. We care about the populations who rely upon the work we do, and that makes it very difficult to be serving at a time of extraordinary fiscal constraint that has necessitated very deep and difficult reductions in services that upon which these populations rely. But you can’t spend money that you don’t have, and the legislature and governor, republican and democrat alike have had to enact some very difficult reductions. They have also stepped up and exercised leadership and which I believe supporting a budget, even a difficult budget is leadership. Saying “no” is easy. Saying “yes” to difficult revenue and expenditure decisions, that is hard, and in my mind that is leadership. We have endeavored to bring ideas forward to protect programs, not to protect them from any reductions but to try to find ways to lower costs, while insuring ongoing support for people most in need. So what is my advice to the next secretary? Yes, you need to have a pretty thick skin, you also need to recognize that we have budget structural deficits that will endure for years to come and so these very difficult questions that we have been endeavoring to engage as a society and a body politic around in recent years, they’re not going to go away with a new governor and a new legislature. Very similar issues are going to be present. And so my council is identify a couple of really important “big” ideas that are going to take time politically to get enacted and programmatically to get implemented. Start early, be relentless, stay the course but it’s with a eye towards promoting the cost effectiveness and efficiency of these programs so that they’ll be there for the people who’ll need them… I have over my door, it says “Go forth and do good work for the people” and it’s like it’s a reminder that good times and un-good times, that’s why we’re here. And we don’t get to pick and choose, the fiscal times have chosen us. And we can’t climb into a cave and say the budget affects us, it absolutely does, it does more so that other agencies and departments. But it’s our responsibility to come up with constructive and responsible options as possible, and at the end of the day it’s the governor and the legislature. It’s the same thing as when Grantland was in office.

Lots of people in Sacramento read SN&R, and that includes probably thousands of your employees. Any message you’d like to say to them?

Belshé: I so respect and admire the people who serve with health and human services, because they care about the programs and they care about the people. So my message to my peeps is one of respect and admiration for the work they do during extraordinarily difficult times.

Johnson: I concur wholeheartedly with that. I think we tend to really underestimate and underappreciate and trivialize the role of public servants. These folks work incredibly hard and are really dedicated and do not get anywhere near the credit that they deserve. They work under extraordinarily difficult and complicated circumstances. You know, they are the “B” team. They’re there when we come onboard, they are going to be here when we leave. Without them as the bedrock, it just doesn’t work. Nothing happens. And so we have to give a tremendous shout-out to public employees, both at the leadership level and at the level of the front lines—we owe them a tremendous amount of gratitude.