Podcast

On Background (00:00)
All right. That’s what we need. All right. We are live. This is a special session of On Background. I’m Steve Parenti, the host of this program. With me today are three incredible former guests from On Background, Doug Coltikin, former CBO director, Marta Waziska from the Brookings Institution and Reena Conti from Boston University. We also have, if you will, in the studio audience, a bunch of students from our healthcare marketplace class.

Rena M. Conti PhD (00:22)
Thanks for

On Background (00:28)
But we’re going to start this conversation off. It’s just to get some perspective on this. We’re doing this in early March of 2026 and lots has been going on, but we’re going to try to keep it to healthcare. So we’ll start with ladies first on this question. Everyone gets around at this question. So it’s an uplifting question at least to start with. So we’ll go first to you, Marta. What do you think is working well in the healthcare marketplace today?

It’s a shame this is audio because it’s like the looks that you folks are giving, like there’s shaking of heads, there’s rolling of eyes, but…

Rena M. Conti PhD (00:55)
you

On Background (00:59)
Sorry, I didn’t mean to out you there, but… Go ahead, Marta.

Marta Wosinska (01:00)
Steve, you asked this

question in advance. Can you hear me? Can you guys hear me? Okay. You asked this question in advance of this call and I will tell you, still haven’t come up with an answer to it. So, hope that for an optimistic start to the conversation.

On Background (01:07)
Yes, yes.

Marta Wosinska (01:20)
I don’t know. don’t know. Maybe when Doug and Rina say something, it will inspire me, but it’s been a long day. It’s been a lot going on. So I’m not on the sort of positive side right now.

Rena M. Conti PhD (01:32)
I have positive things to say. Okay. So I have at least two very positive things to say about healthcare. The first is that we are seeing competition work in a variety of contexts. And the place that I am most attuned to competition and have been worried about competition not working is in the biosimilar space.

Marta Wosinska (01:34)
Go for it. Go for it, Rina. Inspire me.

Doug Holtz-Eakin (01:35)
So, we’re done.

Rena M. Conti PhD (01:58)
We’re seeing biosimilar competition work now over at least the past couple of years. We’re getting multiple entrants into biological competition markets. And we’re getting prices down to 50 % or more and market penetration of greater than 20 to 30%. That is a win. That is definitely not what we saw a decade ago. And that’s great.

That’s going to get prices down, that’s going to get spending down for all of us. So that’s a win. The second thing that I am tracking that I’m really excited about, hello?

Marta Wosinska (02:34)
That’s good. That was dog muting.

Rena M. Conti PhD (02:35)
that’s great.

Perfect. Thank you. The second thing that I’m tracking that I’m really excited about is inflation rebates in the pharmaceutical space.

The Inflation Reduction Act imposed rebates that drug makers have to pay on drug prices that are above inflation. They started in 2023 and we are seeing savings of somewhere on the order of two to three billion dollars a year on drug price going up since they started.

And what’s cool about those inflation rebates is that they produce savings for consumers at the pharmacy counter. They produce savings for payers. And they’re industry-wide. They’re not just for Medicare beneficiaries, but they’re actually for commercial payers. They’re for the state Medicaid programs. So those are, I think, two very good bright spots.

On Background (03:32)
Doug, see what optimism you have here.

Doug Holtz-Eakin (03:34)
So

I think the spot remains medical innovation and more broadly than just biosimilars, which is part of story, but devices, therapies, pharmaceuticals, bios, pharma. mean, I think that remains just an amazing bright spot of the US system and something that

I think it’s really important to preserve. So I put that on my list of things I’m really happy about and things I worry about.

Rena M. Conti PhD (03:55)
So I agree with you, Doug, and I want to point out there have been a couple of really exciting products that have come to market recently. There’s a new treatment in more than two decades for schizophrenia. That’s a totally new mechanism of action, and it’s really penetrating into the market, which is really exciting. There’s a brand new HIV prevention.

drug as well that I think is going to revolutionize PrEP and hopefully make it a lot more accessible to people. And now we also have the promise of in vivo gene therapy that is just about to come to market we think in the next year, which is going to lower costs and hopefully increase durability and also expand out the possibility of patients who face really dread disease getting access.

So.

Marta Wosinska (04:49)
Okay, so now I can chime in and actually on both, how could we forget about GLP-1s, right? On one hand, just, I mean, the innovation, right? mean, just so transformational in terms of changing what has become a major developed world, third world problem, but now it’s sort of really spilling to the rest of the world. And then also the incredible competition that we have seen in that space.

it hits both sides.

On Background (05:15)
Alright, now the fun part of it. So, what problems are there in the system? Let’s try to keep it constrained to only an hour apiece, please, and then we’ll go. kidding. You want to leave off, yeah. If you want, Doug, we’ll start with you. The ladies have served it up, so.

Rena M. Conti PhD (05:24)
Yeah

I’m looking at you, Doug.

Doug Holtz-Eakin (05:27)
you

Rena M. Conti PhD (05:28)
Thank

Doug Holtz-Eakin (05:31)
I-

Okay, I will be brief. I’m worried about all things insurance. You can’t find an insurance market that I’m happy with, whether it’s federal programs, Medicare, Medicaid, ACA, things going on in the commercial insurance space. I think this is something that we really do need to get serious about. among the things that is driving me crazy is that we, the taxpayer and the federal government,

Rena M. Conti PhD (05:33)
Thanks.

Doug Holtz-Eakin (05:59)
subsidize every insurance policy in America in some way. And I think we need to have a real adult conversation about rationalizing those subsidies and deciding just how much are we going to pay of each insurance policy’s premium. Right now it’s just the Wild West and it makes no sense.

Rena M. Conti PhD (06:16)
I agree with you that my, also my biggest worry is shakiness in the insurance market and I have an extra special worry about Medicaid.

⁓ in two ways, three ways actually. The first is we are already seeing state data suggesting people really are dropping out of state Medicaid plans and also the ⁓ exchanges. And that is gonna likely lead to more uninsurance. Uninsurance creates burdens on families, obviously, but it also burdens our hospitals.

And where the money is gonna come from to subsidize that care, I don’t know. But it’s not good for families and it’s not good for our healthcare system. And also with the Medicaid cuts coming and additional issues related to some uncertainty on how FDA is considering.

new treatments for kids and for rare disease. I’m worried that the Medicaid cuts plus additional rebates, liabilities plus regulatory uncertainty is going to make the innovation market, especially targeted to kids and rare disease, even more fragile than it’s been. That would be moving backwards.

Marta Wosinska (07:35)
Yes, I’ll just sort of add again, tying the pieces together. I am, you know, innovation is great, but somebody is going to pay for it. Right. And so, you know, again, it’s that clash of, know, we’re getting a lot of great things coming to market, but how are we going to pay for this and that tension, you know, constant tension, whose responsibility is it is it upon the patient? Is it the employer’s responsibility? You know, how much is it? How much the government should

be doing this and it gets into a lot of conversations that we’re very uncomfortable with and that come with a lot of moral judgments. anyway, that’s what makes it really challenging.

On Background (08:17)
Alright, now we get to the hopeful round. Anybody wants to come in there? What gives you hope about this market? I mean, you’ve already kind of hinted at some of it already, mean, but just the things that excite you on the horizon. I know there’s a lot of innovation that’s there, but whoever wants to dive in first.

Rena M. Conti PhD (08:32)
Well, I guess I’ll go first and say I really love all the price transparency pushes that we’re seeing at all levels of our health care system. And I am really excited that we now have tools that can aggregate those prices and start to create tools for shopping, whether it be at the employer level or at the consumer level.

I think that will drive competition and more innovation and maybe rationalize prices as well.

Marta Wosinska (09:05)
Did you plant this question, Steve, with her or rather the answer? No, I’m just…

On Background (09:09)
No, no, no, really. No, not

Rena M. Conti PhD (09:09)
No.

On Background (09:11)
really.

Rena M. Conti PhD (09:11)
No, really.

Marta Wosinska (09:12)
no, no, no.

I mean, I am sort of half jokingly saying this because, you know, Steve is the Mr. Transparency, right? And so, yes, thank you. Thank you, Steve, for seeding a lot of these ideas out there.

Doug Holtz-Eakin (09:24)
That seems really unfair. He paid me to give that answer.

Rena M. Conti PhD (09:26)
Steve, we need hats.

Doug Holtz-Eakin (09:28)
I’m

On Background (09:29)
What you’re going

to get is little pirate patches. That’s what you’re going to get. At the next podcast, you can put your pirate patches on. So there’s QR codes on the other side for products. It’s fine.

Rena M. Conti PhD (09:32)
You

I love it.

On Background (09:41)
Doug.

Doug Holtz-Eakin (09:42)
So

I want to pile on that answer. I like the price transparency, but what I think is important now in the discussions about health policy is the increasing recognition that good health policy has to be good economic policy. For most of my career, somehow there was this idea that

Economics didn’t apply to healthcare, the provision of health services, the production of new innovations. This was a magical world where different things could apply. And if you just tell the system what to do from Washington, that’s insanity. And that seems to be going away. And, you know, when we had the last big round of national healthcare reform ⁓ post 2008 campaign, when the ACA debate happened, there was this.

Rena M. Conti PhD (10:11)
Thank

Doug Holtz-Eakin (10:25)
notion that somehow we could separate bending the cost curve from covering people. And these are two different things that the government would decide which one to do. And we decided not to bend the cost curve. Now, let’s get markets to seek value. And seeking value will control costs and it will make it easier to cover people. And that’s just a really important change in the mindset surrounding this debate.

On Background (10:47)
One question. Go ahead, go ahead.

Marta Wosinska (10:47)
So I don’t know if I can change. Okay, go ahead, go ahead.

Oh, I was going to potentially change the conversation a bit. I mean, the area that I’ve talked to you, Steve, a couple of times ago, a couple of times is around drug shortages. And I think I am having been in this space for such a long time.

Speaking of economics, know, finally there is recognition that drivers of shortages are economic.

I think we’re still far away from actually doing something about it. But I think the recognition on the part of policymakers that this is not just, let’s, well, actually here, actually the pushback is, know, transparency alone is not gonna get us there. We also need to change incentives. And so I think the recognition of having to change economic incentives is a really important piece.

On Background (11:41)
Yeah, I mean, I do agree that think economics is being taken a lot more seriously. mean, a little bit is ⁓ one of the sort of grandfathers or godfathers, I guess, of health economics, Mark Pauley from Penn, you know, has already said like, and probably Doug, you remember, it’s like, how far can we go? There’s a certain point where, you know, we’re really at a threshold. And granted, we keep on seeing the costs go up, but there’s a certain element where at least all the right questions are, I think, getting asked.

Rena M. Conti PhD (11:46)
you

On Background (12:10)
You know, it’s people are now thinking about insurance design in ways that actually make sense. I mean, it used to be that you can say that we can’t talk about health care of regular insurance. It’s so different. I’m like, well, why can’t we actually? I mean, it’s, know, there’s that’s what the HSA piece is there. And actually some of the comments coming back from the students are sort of talking about this too. So.

Rena M. Conti PhD (12:31)
you

On Background (12:33)
Let’s throw it open to the gallery here. There’s a few questions here. Actually, there’s several that are rolled together. I assume all of you saw, and you’re all seeing comments too, think too, the great healthcare plan that came out from the administration. So the…

There’s a focus there on most favorite nation pricing. There’s a focus there on other things, but I’m going to stick to some of the questions here. Austin has a question. Do you expect Trump Rx to expand its offerings and pass on savings as consumers of more common prescriptions, such as Lipitor and antidepressants? The floor is open.

Marta Wosinska (13:10)
So I’m happy to talk a little bit about Trump Rx and what it really does. it’s actually, let me just back up and talk about MFN clauses in the first place. The most favorite nation clauses, the idea is that the US is going to get, at least on paper, that’s the idea, as good of a price as some other reference.

The challenge with this is there’s, guess, two pieces to that. You need to remember that the US by far is the largest market.

And what this means is that it becomes very costly if the other country really has to, you know, if the manufacturer has to exactly offer the same price as they offer to somebody else, it becomes very costly for them to do it. Great paper by Fiona Scott Morton long time ago about an MFN clause that was put around best price in Medicaid after OBRA 90.

You know, it was actually an idea from, I understand from drug manufacturers to say, look, Medicaid, don’t negotiate prices instead of negotiating. You will just get the best price that anybody else gets. So this got put in place. It sounds like a great idea. The problem is that Medicaid was maybe 12 % of the market at the time. And the players, were giving individual, you know, the really deep discounts were like some critical access hospitals somewhere in the middle of nowhere. were just like these individual hospitals, maybe

Kaiser was getting it, they’re still tiny in comparison. And I think the VA and what ended up happening is all those small players, it became too costly to give them the discount. And so their discounts disappeared and nothing happens to Medicaid getting those prices. And so, you know, my very first expectation is, that, you know, there’s going to be a pressure for other country prices to rise rather than our prices to fall. And you’re already hearing this.

This goes back to sort of the economics. What do we ultimately want here? Do we want fairness or do we want lower prices? I think we want lower prices, but you the fact that Europeans pay higher prices and it’s unfair, there’s sort of two ways to solve it. One is we pay lower prices. Another one is that they pay higher prices. Is that what we want?

Maybe, but I think at end of the day, we to would like to pay less. So that’s one piece that I sort of wanted to flag is that, you know, that that that play is there. There’s not enough necessarily transparency, especially around Medicaid side. You Medicaid prices are very low because of inflationary base that we not discussed. So and there’s not transparency around it. I actually am expecting that for a lot of I mean, I know Humira, for example, is a penny priced drug. Right. So I, you know, I’m expecting for some of these

drugs were paying much more. Ryan, going to your point about Austin, Lipitor and antidepressants, those drugs are generic. We pay a lot less for generic drugs than Europeans do. if anything, it’s the other way around. that would mean higher price, yes.

On Background (16:11)
could Marta Marta could

Marta can you repeat that again because I think people don’t they really don’t know that I mean you’re an authority so I mean you’ve written about this in Brookings and all this so just one more time

Marta Wosinska (16:16)
yes.

Rena M. Conti PhD (16:21)
you

Marta Wosinska (16:23)
So think

of the drug market as two separate planets. There’s the brands that are patented. And they are the higher price. have a limited monopoly power because of patents and all sorts of exclusivities. And then there are generics. Most of the drugs that we use are generics. Probably 90 % of all prescriptions are generic.

And they are also way cheaper than what Europeans pay. think it’s ASPE at HHS did a report. I think they found that they’re, Reena, you might remember, either 40 or 60 % cheaper, right?

Rena M. Conti PhD (16:59)
Yeah. So

we did the first paper and then ASPE replicated our results with a larger group. What we found was that our prices were 20 % lower and for the most commonly used sets of products, which includes mental health drugs, diabetes drugs, and others, ASPE found a little bit, the prices were even lower, but they took

a much larger group and weighted them. the point is that we pay lower prices for drugs that are used very commonly. also use drugs more intensively than Europeans do as well.

So on the-

Marta Wosinska (17:41)
So yeah, so it wouldn’t help all that much

here, right? We would end up paying more if we were to use it. One other thing that I was going to mention about ⁓ Trump, or something that I remember, to some extent it’s being pitched as, they are paying lower prices, but who is they, right? So even if the prices are truly what is being paid in Europe, those prices are what the government is paying.

When you’re a consumer going on Trump rx, if you were to compare yourself to somebody, well, would you be comparing yourself to the UK government? Or would you be comparing yourself to a UK? You know, patient?

And that’s a very different price. mean, a lot of Europeans don’t pay anything for drugs. They might have problems accessing them, right? There is a lot of restrictions around it, but in general, they are not going to pay pretty much anything for it. So that’s another sort of thing that I think is muddled and misunderstood about really these kinds of cross-country comparisons. And we’re going to pay the same prices as the Europeans do.

Rena M. Conti PhD (18:39)
So I…

On Background (18:39)
Doug, you want to

chime in here? I know your head was nodding in different ways.

Doug Holtz-Eakin (18:43)
I just

want to repeat the smart thing that this woman I know named Marta said, is Americans, more than 90 % of the prescriptions that are filled are generics and we pay less for generics than anyone on the planet. And it gets lost in this whole debate over drug pricing. Can’t be emphasized enough. Number two, I think the Trump RX has been misunderstood.

You know, an obvious comparison is, it cheaper there or through my insurance? And for the person out of pocket, can be much cheaper insurance. What Trump Rx guarantees is access. You can get a drug and, it cannot, you know, there’s no way to stop that. It may not always be cheaper. And so that’s important to keep in mind.

Rena M. Conti PhD (19:07)
Mm-hmm.

And actually, I would argue that there are some drugs that are advertised under TrumpRx that really are a good deal for people, and that’s because insurance generally doesn’t pay for them. And there, the two categories are hormonal support, which includes those drugs for menopause and for fertility, and separately the…

the GLIP ones, especially the drugs that are being offered by Lilly.

Doug Holtz-Eakin (19:48)
Yeah.

Marta Wosinska (19:48)
So if I can add one more thing about sort of who it’s good for. So I completely agree with Rina that for drugs that are not covered by insurance, you can get a much better deal in that way. There’s another group of patients for whom it could possibly be beneficial, but could actually be pretty harmful if they’re not careful. And those are patients in high deductible health plans.

On Background (19:48)
Some good.

Marta Wosinska (20:11)
And if they go to Trump RX and buy drugs there, the price is going to be lower. But at this point, at least that I am aware of, they’re not going to be advancing through their deductible. So let’s say that I am buying a drug that normally costs a thousand dollars on Trump RX. get it for 500 and my deductible, let’s say is a thousand dollars.

What that would mean is if I buy it in January, by February, my copay, now I’m past my deductible, my copay might be $50, right? But if I bought it on Trump Rx, I am basically at zero. I can go, you know, I spent $500, but I’m basically at the same point in my deductible with my health plan, meaning I could now spend $1,000 or I can spend another $500 and basically I’m stuck. So, you know, I,

It can actually be harmful for quite a large share of patients and high deductible health plans if they don’t do the math. What I, you know, one thing that I am looking, looking out for is, well, the ⁓ administration tried to get insurers on board and figure out that problem because I think, you know, there’s a great opportunity with high deductible health plans. It sort of takes us back to the rebate rule where the Trump administration was very concerned about the

savings not being shared with patients at the pharmacy counter. You’re paying the list price even though the health plan was getting a rebate.

while you were actually paying the full price when you were in your deductible phase. And the Trump administration was trying to pass a rule. They actually did finalize the rule, but then Congress used this as a little gimmick to pay for other things and pushed it off for a longer period of time. But basically, this is in a sense trying to address the same problem. How do you help a patient in a high deductible health plan get lower prices?

It is an opportunity, but right now I actually think this potentially does more harm to those patients than good. And I’m just looking to see whether this could be addressed.

Rena M. Conti PhD (22:10)
you

On Background (22:11)
I’ll kind of chime in on that one real quick. I mean, I do think that’s something that should potentially be addressed because the same thing apply for price transparency. If people just pay for stuff out of pocket, outside of their network, then how do they get credit for it? Now, they can submit and some plans will let them submit medical expenses there. And that’s pretty straightforward for medical care. It’s not so straightforward, I think, for pharmacy because the PDMs are typically managing the pharmacy benefit as sort of a bolt on to the insurance contract. So that has to get

Rena M. Conti PhD (22:26)
you

On Background (22:40)
unified or least addressed in some other way, which will be a challenge. I’m going to make sure we can cover maybe quickly three other areas real quick. So we’re going to do a speed round of everyone’s favorite topic, and I mean it’s speedy. AI, know, fact or fiction, myth or whatever.

for healthcare. Do you think it’s useful? Do you think it’s not ready for prime time? It’s a speed round because we want to get to two other things while we still have a chance. We’ll start with, Rina’s nodding, so we’ll start with Rina.

Rena M. Conti PhD (23:04)
Okay.

goodness. I am.

I don’t think we have the tools yet, but I think there is great potential. And the place that I’m most interested in is that AI might finally shake the dominance of the physician-only model as the way in which healthcare gets delivered. We’ve had these fights in the US in the past about nurses.

nurse practitioners, pharmacists, or others trying to substitute for physician services, now we might actually have the tools to unlock that. But I don’t think we’re there yet. But I think it’s possible.

On Background (23:48)
Doug?

Doug Holtz-Eakin (23:49)
So I’m quite hopeful. I think AI will be as helpful as we let it be. And I mean literally that. I think there will be great incentives for physicians who are threatened and others to choke off its progress and its diffusion through the industry. And that would be a shame. But I think that’s a real risk.

Rena M. Conti PhD (24:08)
I agree.

Marta Wosinska (24:08)
Yeah,

I would say it’s, you know, it’s a double-edged sword. the technology, it’s, you know, you know, probably the term garbage in garbage out, right? You train it on the wrong data and you’re going to get very poor outcomes. mean, there’s some really great work that has been done on, you know, diagnostic capabilities of ⁓ AI models. So I think there’s incredible potential, but there are a lot of landmines in the way. And

On Background (24:09)
Martin.

Marta Wosinska (24:35)
So it’s a tricky space to regulate, right? Because again, you don’t necessarily know what it’s doing. And so I think from a regulatory perspective, I think this is going to be an incredible challenge. And from sort of accountability perspective, it will be an incredible challenge.

On Background (24:48)
I’ll put my own comment in because this is a space I play with a little bit too. I’m a little, I think I’m hopeful but I’m also very skeptical because to really do a large data model, not language, but of medical records requires the medical records to flow freely and at bulk and at scale. And the problem is, is our dominant EHR vendor operates like a Bloomberg terminal. So if Judy would like to change her ideas about that, then maybe it has a better shot.

Rena M. Conti PhD (24:51)
Bye.

On Background (25:14)
⁓ a different podcast we know we can bring on everybody back to talk about what china’s doing in this space because ⁓ it’s amazing what a kind of autocracy can do when there’s no privacy restrictions

Rena M. Conti PhD (25:19)
you

On Background (25:24)
And there I said it online. So we’re going to finish with two questions. One that was directed ⁓ toward Doug with your CBO world. There’s another one from Nora about hospital cost efficiency savings and such like that. So the question to Doug is ⁓ could you talk about how the CBO analyzes costs and benefits of different health care legislation and presents funding. guess. And I guess another question I know you and I talk about this personally all the time like what’s hot in the hopper for CBO to be looking at other than just another baseline.

Doug Holtz-Eakin (25:37)
you

On Background (25:51)
model that they put out every year.

Doug Holtz-Eakin (25:53)
So first on CBO’s role, it’s important to recognize that CBO does not, in fact, analyze the costs and benefits of health care. What CBO has is a very narrow task, which is to calculate the federal budget cost of legislation. How much does the legislation change? Cash flows into the federal treasury and out of the federal treasury. That’s it. And do it for year by year for 10 years at the moment and add them up.

And that’s the job. then, so in that way, it’s a very narrow measure of cost. It’s federal budget costs. It’s not even a total cost to society. It’s not the economic cost. It’s not anything like a genuine comprehensive cost measure. It’s a pretty short time period for a healthcare area. 10 years is nothing. You get the innovation and diffusion and you never really see any of the good things.

And they’re not looking for the good things. There’s no benefits in this calculation anywhere. When I ran the CBO, this frustrated people, and I would say, look, here’s the division of labor. We calculate the costs, you the sponsor of the legislation have to convince people the benefits go. And so you don’t want to make the mistake of thinking somehow they’re going to do a benefit analysis, they’re not. A lot of people want…

Rena M. Conti PhD (26:49)
you

Doug Holtz-Eakin (27:05)
a new drug, new device, something to quote save money, do so much good upfront that over time there’s fewer costs from other therapies. But that usually runs into the problem that we only look at the first 10 years and the benefits all happen after that. And so you get a really, really misleading picture of the impact of any innovation from a CBO score because it wasn’t designed to reveal that.

On Background (27:30)
Let me ask a follow up one on that, particularly one, because I mean, as you remember, it might have been for the Trump stuff, but I mean, for under Biden with HR3, the whole idea of essentially having, you know, price controls and other thoughts. Well, actually, take that back, was in Trump’s HR3, Trump one. The whole thought of there would, CBO did produce a number that sort of said, like, if you implement this, you’re going to see this level of innovation.

be squashed or something or turned down. I mean that struck me as that wasn’t just a budget model. They kind of went a little off the rails. Not rails, they, a little out of scope. Just comment on that if you wouldn’t mind.

Rena M. Conti PhD (28:04)
Sure.

Doug Holtz-Eakin (28:08)
Sure. First of all, you often have to calculate other things of interest to get the federal budget costs. So if it’s an insurance subsidy, you have to calculate take up and see how many people will be insured and uninsured and all that. so as sort of inputs to the actual budget score, you have other things people care about and Congress is, know, the CDO works for Congress and if Congress asks for that, they will produce supplemental information about a score. And

Rena M. Conti PhD (28:31)
you ⁓

Doug Holtz-Eakin (28:34)
If they were asked a very pointed question, like how much will this affect drug innovation, they will answer that question. And they did, but that wasn’t part of the formal score. That was Congress asking for more information. know, CBO doesn’t always, is it an imperfect place like everyone else? And often they misjudge providing equal information to all sides in the debate. And that’s a mistake. You got to serve all sides of the debate comfortably.

And often people just disagree with the analysis. And that happens. The goal is to put it at the, essentially the median of the research findings, but in areas where there aren’t much research findings, it’s hard to do. Excuse me. Yeah.

Rena M. Conti PhD (29:11)
So may I follow up on that? So I

On Background (29:12)
you

Rena M. Conti PhD (29:15)
think that this was precedent, that analysis was precedent setting for good and for bad. And I agree with you Doug, that the key challenge with that analysis is that we don’t really have good baseline estimates of how revenue generated.

nine or 13 years after launch has any impact at all on either the direction, quality, or quantity of innovation. And so, you the CBO economists, I think I have a world of respect for them. They are the best and they did the best they possibly could with the request of Congress. But now they have this model

and they have this precedent. So anything that touches revenue coming out of this industry could potentially be amenable to this same type of analysis. And yet we’re not seeing that quite being done uniformly yet. So it’s going to be very interesting to see how that shakes out.

Doug Holtz-Eakin (30:18)
I agree. I was quite uncomfortable with them doing that. In part because I think they asked the wrong question and answered the wrong question. Doesn’t matter how many drugs, what matters is how many indications and how many populations get treated. That’s what you care about. so they didn’t shed light on what I thought was the question of interest. And now we have the president of asking this question. it’s not their finest moment, in my view.

Rena M. Conti PhD (30:39)
you

On Background (30:40)
So I want to turn back to Nora’s question here. think all of you can weigh in on this one. So she notes that she appreciates Rena’s comment about hospitals bearing the cost of the uninsured. We’ve talked about this class a lot. ⁓ But the obvious solution is national health care. Are there other solutions other than that to be implemented to protect hospitals from these sorts of costs?

to anyone. ⁓

Rena M. Conti PhD (31:05)
My

answer is sigh. Just really huge resounding sigh.

On Background (31:07)
Hahaha

Rena M. Conti PhD (31:12)
I mean, think the best answer was for better or for worse, ACA. And the next best answer is not full, fully loaded health plans, but some skinny down version of health protection in catastrophic plans or something else.

But the consequences of uninsurance for families and for kids is real. And it’s bad. And it’s not great for our health care system either. So we gotta do something.

Doug Holtz-Eakin (31:32)
you

So I’ll just point out that this is why I said insurance was the bad part at the outset. I we really have a whole list of things that I worry about. For the hospitals, note for the record that this is an unanticipated financial flow that puts them at risk. And that’s what insurance is for. So buy insurance policy against those unexpected, unreimbursed costs. Their reinsurance market’s all over the place. This is doable. They just don’t.

On Background (32:08)
Marty, you wanna weigh in? Or is it another big sigh?

Marta Wosinska (32:10)
Pass.

Rena M. Conti PhD (32:12)
Yes.

Marta Wosinska (32:12)
Another big sigh.

On Background (32:15)
The happy hour portion is coming shortly, so I mean it’s… Yeah.

Rena M. Conti PhD (32:18)
Excellent. Well,

exactly. As soon as you start talking about hospitals, you need to ring the bell and everyone starts to need to start drinking. No matter what. So, I mean, you know, the other issue here is that we solve the short-term problem of propping up hospitals in a variety of ways through ACA and insurance expansions.

On Background (32:25)
That’s true.

Rena M. Conti PhD (32:44)
And yet now we have these institutions that are enormous. They have significant market power. And they enjoy tax charity status and many other things that probably are a little perverse at this point in time. And so…

While I worry about the emergency rooms staying open for kids and young people, I’m also hopeful that this will bring a reckoning on how we’re actually spending our dollars, which are largely into the hospital sector.

On Background (33:21)
I mean it.

One of my biggest concerns is we’ve most of the system that’s been built largely through insurance design. We’ve talked about this in the class too, but is really to treat people if they have major medical conditions. And there’s all the other CODA part of this is like the Medicare system, which was built for the elderly is not designed for the elderly as they wind down. It’s designed to heal them, but there is no treatment for an aging population basically with all that comes with it, which is

Rena M. Conti PhD (33:23)
you

On Background (33:49)
you know, all of us if we’ve experienced issues of our own parents or in our declines or you know, even friends, it’s a challenge to watch it all happen. And it’s also probably one of the harder things about being an economist in this because you know there are efficiencies that can happen, but you don’t want to, you know, make the dismal science even more dismal than it already is. So, I guess any, I wanted to end on more of hopeful note than that, ⁓ but

The one thing that’s sort of that’s cool about this is that I think a common theme of all of us here is innovation seems to be the pathway out for some things and maybe AI will be that activity. Maybe it’ll be drug innovation and all the things that are in the pipeline. The other thing I’ll just leave it with is that’s why I kind of wanted to dovetail this enough a healthcare marketplace of future healthcare leaders because if nothing else you’re hearing us say there’s no easy fixes. But if you really want to stay determined and be leaders in this market.

Rena M. Conti PhD (34:27)
Bye.

On Background (34:39)
it’s your turn, you know, and it may not happen automatically. think just so you all know, I invited virtually into the class Wilbur Cohen, who was the architect of Medicare, after really being a New Deal, you know, bureaucrat, essentially kind of waiting 30 years to get his moment.

Rena M. Conti PhD (34:54)
you

On Background (34:56)
and you know we could argue marty and i know him fairly well that when the previous is the latter day version of of of a will burkow and waiting his moment you know for finding ⁓ you know i read a rather pricing components of what’s there you know who knows of this class who wants to do the due diligence ⁓ to get there in washington is only a two-hour flight away this one delta flies in most days but

Rena M. Conti PhD (35:01)
you

On Background (35:20)
So I will take this opportunity then to thank you all for joining us on this ⁓ really novel experiment of a podcast. And we kept our sanity down, which is good. I mean, there’s always the editing out process, but we’re really thrilled that we were able to make this happen and maybe we’ll try it again sometime. Take care all.

Rena M. Conti PhD (35:31)
you

Doug Holtz-Eakin (35:39)
Thank you.

Rena M. Conti PhD (35:40)
Thank you.