Good afternoon, and welcome once again to the Frank Batten School of Leadership and Public Policy at the University of Virginia's Garrett Hall. Today we turn our focus to the future of domestic policy challenges here in the United States, beginning appropriately with healthcare. At an animated discussion with faculty colleagues the other day, one professor quipped, in the near future, you will all be health economists. Why? Because the challenge of adopting policies and shaping markets to meet ever-growing health care, costs will be a central issue for policy makers for decades to come. As we think about this challenge, we're fortunate to have with us today, a national thought leader on Health Policy in Congress, Professor Eric Patashnik. It is a particular honor for me to introduce Eric, because no individual has done more to shape the concept and the realization of the Batten School of Leadership on Public Policy than Eric Patashnik. Eric was literally present at the creation. He played an instrumental role in crafting the planning documents and defining the school's mission and curriculum, even before Mr. Batten's founding gift was made. As Associate Dean for Academic Affairs, he's recruited key faculty. As a friend, he's been exceptionally kind to recovering politicians and practitioners like me as he integrated us into the teaching faculty. And as a much in demand lecturer, he has won the Jefferson Scholar's Teaching Award, recognizing his extraordinary talents in the classroom. He's a widely noted national scholar with key studies to his credit, including his works on Congress and healthcare policy and his book on the post-reform politics of policy implementation. Nothing could be more appropriate for our discussion of the Affordable Care Act. As this is the central issue for the Affordable Care Act, Eric's insight is most welcome. Please join me in welcoming to PPOL 3230, Professor Eric Patashnik. [APPLAUSE]. >> Thank you. >> Thank you. >> Thank you, it is a great privilege to be here today to talk to you about, what I think Professor Warburg quite accurately said is the great domestic issue of our time, and that is healthcare. Healthcare is at the center of public policy. It's at the center of social policy and the way in which we deal with income inequality and the hardships that different members of our American community face. It's at the center of fiscal policy. Health care is the largest and most rapidly growing part of the federal budget. And increasingly, health care is at the very center of our political debate, it is the key issue that divides Democrats and Republicans. It was a key issue in the last presidential election. I believe it will be a key issue in the next several presidential elections. So today what I hope to do, is to give you a sense about the substance of healthcare policy, as well as the politics. Why is healthcare such a fraught issue? Where are we today, and where might the United States be going? What I want to talk to you today about, is why healthcare is different, in a key respect? Why is this issue so challenging for policy makers to address? I'll give you a very brief overview of the United States healthcare system, and then we will turn our attention to the politics of Obamacare. This is an issue that I'm sure all of you have been following in the news, but I want to step back from the headlines and put some of today's debates in a broader, historical and economic context. Okay. Well, the place to begin when thinking about healthcare is to recognize that healthcare is a product. It is something that people consume and so in that respect, it is very similar to buying a shirt at the Gap, and yet it differs in key respects for many other market goods. And some of these differences, the ways in which health care is not like other goods and services that you purchase in a market, help explain why dealing with this issue has been so challenging. The great economist Kenneth Arrow once pointed out that healthcare is characterized by what he called imperfect information. When you go to the Gap and you buy a shirt, you can look at the shirt, you can try it on, you can see how it feels, you can see how it fits. Maybe you've had some of your friends have, had a similar shirt. You have a pretty good idea of what you're getting. Whether it's a good value, whether it's a good match for you. But, things are very different, when we turn to the health care arena. In health care, patients don't know exactly what treatments they require. When you go to the doctor, you don't know what is most appropriate for your illness. Insurers that finance the cost of healthcare, don't know in advance exactly what patients will be sick, or what treatments will be appropriate for them. And of course, medical providers themselves don't know with perfect certainty, whether their diagnosis and prescriptions are correct. Doctor's and nurses and hospitals do the very best they can, but there's tremendous uncertainty about the proper course of treatment. I'm just coming back from spending some time in Florida with my 95 year old grandmother. Recently passed away, she lived a long and very fruitful life, it's an important moment for our family, but in the days leading up to her final passing, we must have met with 20 different doctors, who had 20 different opinions they were all well meaning people. And yet, they did not agree on what would be the appropriate course of treatment even though, they basically shared a recognition of what her symptoms were. And this information, this imperfect information, is not only incomplete, but it's asymmetrically distributed. As little as my grandparent, my grandmother's physicians know, certainly I and my parents trying to be the advocate of my grandmother, knew much less. We were in a position of being very uncertain about what the appropriate course of treatment for her was.
