Rae Woods (00:01):
Hey, it's Rae. This is actually going to be my last episode of Radio Advisory. And before we get into the content, I just want to take a moment to pause and to say thank you, to say thank you to the incredible team at Radio Advisory and Advisory Board who've been on this journey with me for almost seven years. And to thank you, our listeners. You've shown up week after week, clicked on our episodes, downloaded this podcast, listened to the advice that we gave you, and hopefully went back to your home organizations and made a different decision, a decision that would help shape the future direction of this industry and of your business. It's truly been the honor of my life to be part of Radio Advisory. And so, one last time, I'm doing my favorite thing, which is not just to bring an episode of Radio Advisory to you, but to actually get the chance to record it live.

(00:59):
So without further ado, from Advisory Board, we are bringing you a Radio Advisory, your weekly download on how to untangle healthcare's most pressing challenges. My name is Rachel Woods. You can call me Rae. American healthcare leaders are being asked to do something that can feel impossible. You're being asked to make care more affordable while expanding access, while improving outcomes, rebuilding trust, and investing in the next breakthrough. And when faced with such a momentous task, it's natural to look around and frankly to look abroad and ask, "Who else has figured this out?" But here's what frustrates me about that question. It usually sends us into the same tired debate. The United States spends more, but Canada and the UK have long wait times. The United States innovates, other countries cover everyone, and we don't end up with anything all that helpful, maybe a scorecard, maybe a political argument, and the search for a seemingly perfect healthcare system that we can simply copy and paste.

(02:11):
But here's the thing, no country has escaped the basic economic challenge of healthcare, that demand is enormous, clinicians and money are finite, and every system makes trade-offs. They make trade-offs among costs and access and outcomes. The difference is who makes those trade-offs, how visible they are, and frankly, whether or not people believe that they are fair. So today, I don't want to debate which country is best. Instead, I want to use international healthcare systems as mirrors so that we can look beneath the scorecards, understand the choices and the trade-offs that are required, and ask what those trade-offs reveal around the decisions facing you, American healthcare leaders. We recorded this live at Advisory Board's Chicago Summit with one of my healthcare heroes. So without further ado, I'm going to be joined today by Dr. Aaron Carroll. He is the president and CEO of AcademyHealth. He's a pediatrician, a health services researcher, and a long time explainer of what evidence actually says about healthcare. Aaron, welcome back to Radio Advisory.

Dr. Aaron Carroll (03:25):
Thank you for having me again.

Rae Woods (03:26):
All right, let's start with hopefully an easy question.

Dr. Aaron Carroll (03:29):
Okay.

Rae Woods (03:30):
Is there an easy answer that we are missing? If we look around at other countries at who is quote unquote, "Best." Especially as American leaders are often referring to our own system as broken, is there a country that has actually figured all of this out?

Dr. Aaron Carroll (03:46):
No. And in fact, I think it's even more complicated than that because what do you mean by best? And depending upon what metric you pick, that helps you quantify what do you mean by best.

Rae Woods (03:56):
And that's because every nation has set up a system that prioritizes. They either prioritize based on the things that they explicitly value and name or the things that they have implicitly chosen to care about. And so I want to think about cost, I want to think about outcomes, I want to think about access. Is it actually possible to perform well in all three?

Dr. Aaron Carroll (04:21):
No, because everything in healthcare policy is a trade-off. What do you want? What are you willing to give up to get there? I think what separates the United States from so many other countries is that they have an operating philosophy which helps explain exactly what they're doing. You stop anyone in the UK, even physicians, they will say that their total philosophy is that care should be available with no cost barrier at the point of care for everyone and it should be good enough. If you go to Singapore, they will talk much more about personal responsibility, the need for everyone to save for themselves, that government needs to be there for sort of the edges and emergencies, but otherwise people are expected to do things themselves.

(05:06):
And if you go to some countries like Switzerland or Germany, it's much more of a, "Yeah, we'll set up the architecture that will allow the private market to figure out how are we going to cover the financing of this." And basic great services are going to be available for everyone, but if you want more, go pay for it. The problem is in the United States, I can't describe any part of it that simply. We just want it to be the best, we want to save money and we want everyone to get it.

Rae Woods (05:34):
So you don't think that there is something that we prioritize?

Dr. Aaron Carroll (05:37):
No. I would say if we were going to say we prioritize anything, I think we do prioritize choice. I think we do prioritize reasonable access, if not good access for those who are well insured and we prioritize new and fancy and innovation. How that translates and works its way down isn't quite always clear.

Rae Woods (06:00):
I would agree that we prioritize choice, that especially compared to other nations, the United States disproportionately says, "You can get that treatment. You can see that physician. You can have relatively unlimited choice."

Dr. Aaron Carroll (06:14):
I think it goes even further. There is an innate need in the United States to have choice. One of my favorite things is when foreigners come to the United States for the first time, take them to a supermarket, they lose their minds. In fact, they become frozen because they're used to picking from three shampoos and two types of toothpaste and the number of choices available is literally a block for them. They can't figure out what they're supposed to do. I mean, a Costco would blow their minds. It's not how other countries are set up.

Rae Woods (06:45):
You can get access to someone most of the time, or maybe I should now say something most of the time. And that is something that I think we implicitly care about.

Dr. Aaron Carroll (06:57):
So access is complicated because there are a bunch of domains. There's the ability, "Can I afford it at the point of care?"

Rae Woods (07:02):
That's right.

Dr. Aaron Carroll (07:03):
There's the ability of, "Is it available even if I wanted to get it?" There's innovation again about whether the newest stuff is fully available. "Is it available with or without insurance?"

Rae Woods (07:13):
What are the referral rules?

Dr. Aaron Carroll (07:14):
Or the referrals or whether providers. And so, the United States prioritizes against some of those, but it also falls short on some of those. Too often, I think the only way we define it is, "Are you insured?"

Rae Woods (07:25):
Yes.

Dr. Aaron Carroll (07:26):
And here insurance is necessary but not sufficient and it doesn't get you all the way there. There's still plenty of ways we do not have access in the United States. People in the United States are more likely to avoid care because of cost than any other country in the world, and that includes insured people.

Rae Woods (07:43):
That's exactly right.

Dr. Aaron Carroll (07:44):
People in the United States still have to wait a long time in order to see many specialists because depending upon where you are, there's real shortages of what you might want to see. And of course the quip I hear all the time is, "We have wait times too. It's waiting for the bill."

Rae Woods (07:58):
Yes. Yes. That's actually a really good point. When folks in the US are quick to criticize other countries, they often run to access. They say the wait times are just so long elsewhere. I would describe the differences in the US, we actually have a theoretically pretty unlimited ceiling for what you can get access to, but a very uneven floor. Whereas other countries, they want to have as expansive of a floor as possible, but they limit the ceiling.

Dr. Aaron Carroll (08:24):
I think you're right, but I would go a little bit further. The floor is higher and they are broadening that, but if you want above that, that is on you and they are explicitly willing to tier what people get. In the United States, we believe that no matter what insurance you have, you should still have access to the same hospital, the same physician, the same clinic. It doesn't matter. And we start getting upset when that does not occur. But in every other country, the vast majority of people get hospital care from the public system. And so most people go to a government hospital for care. Almost every other country, there's also a private system you can choose to go to, but depending on the country, it's 10 to 20% of people. And in the United States, we do not have that at all. We can differentiate between nonprofit and for-profit, but our public delivery system is incredibly small. Most people wind up going to a private hospital and most people want the ability to go to any private hospital they want.

Rae Woods (09:30):
Yes, exactly. I want to run to the other big elephant in the room, which is affordability. In the United States, we spend nearly twice as much per person on healthcare compared to other wealthy countries, and we do not have the same outcomes. If I just look at life expectancy, US life expectancy was 79 years in 2024 compared to 83 years across our peer nations, which means we are spending more and we are not necessarily getting comparable outcomes. But what that stat doesn't tell me is why. So if we focus on the spend for a moment, if we focus on the affordability, what do you want American healthcare leaders to understand about how other countries spend less?

Dr. Aaron Carroll (10:14):
It comes from less and everything. The easy way to say it is what has become sort of the go-to is that it's the prices. But the biggest issue is that we spend more on everything without really tying that to any direct benefit. We like to throw around words like innovation or access or fancy new procedures that you might not be able to get in other countries, but it's not equivalent to the extra spending. The difference between our spending and the next highest country is very hard to figure out why. And part of that is because we have to own this system was not built from a general philosophy. It was built because of wage freezes in World War II, followed by IRS policy to make employer given healthcare tax-deductible. And after that, it was a real push for private ownership of hospitals in ways that could happen after World War II that really couldn't happen in most European countries after World War II, as well as Asian countries.

(11:18):
A couple years ago, I was in South Korea learning about their healthcare system. They were just about to have a doctor strike and it was centered around pay and training. But the biggest problem was there were shortages in four specialties, pediatrics, OB-GYN, cardiothoracic surgery, and neurosurgery. I can't figure out what's common amongst those four. Why those four? And they said, "Oh, those are the four least paid specialties."

Rae Woods (11:42):
Wait, wait, wait, wait, wait.

Dr. Aaron Carroll (11:43):
I know.

Rae Woods (11:43):
Cardiothoracic surgery was one of the least paid specialties?

Dr. Aaron Carroll (11:47):
And neurosurgery. How can that be? And they were like, "Well, you just don't need that many neurosurgeons." And you'd... "How many cardiothoracic surgeons do you need?" "A ton of internists and you need a ton of..." So they don't pay them a lot and the world keeps on spinning. We think cardiothoracic surgeons and neurosurgeons should make the most, but they think they should make the least. Why? They could explain to me why those specialties were paid. They were like, "We don't need that many of those, and so we're just sort of going where the need is." We don't really do that. I'm sure people in this room could come up with reasons why neurosurgeons or cardiothoracic surgeons should make more than others.

Rae Woods (12:26):
They would talk about the time to train, the time in school.

Dr. Aaron Carroll (12:29):
But I could throw back as well that there are plenty of other specialties that have that same amount of time in training or that same amount of schooling. It's not a good answer. There are always answers. They're just not the answers we tell ourselves.

Rae Woods (12:42):
One thing that's revealed to me already in this conversation is that in the United States, we are not exempt from trade-offs. We are not exempt from choices, but I'm not sure that we are as open and honest about them as other countries. And you've already named two things that we explicitly or implicitly value, access, seemingly unlimited choice, high salaries for specialty physicians, all of those things, if that is our priority, by the nature of prioritization means something else then has to come to the bottom, which takes me back to affordability.

Dr. Aaron Carroll (13:19):
Yeah. Well, this is where I'm comfortable with the thing that we're going to suck at is cost. We are willing to pay an exorbitant amount of money. We are. Why don't we own that and instead say, "Well, if we're going to spend this much money, why don't we have great access and amazing outcomes?" The problem with the way that it works in the United States is that we don't really have a priority and we're not doing great on any of them, and that's what doesn't make sense.

Rae Woods (13:48):
It strikes me as interesting that you're saying it is okay if we are struggling with healthcare affordability. I'm betting you would follow that up quickly with not affordability on behalf of the patient.

Dr. Aaron Carroll (13:59):
Sure, absolutely.

Rae Woods (14:00):
But as a nation, 18% of GDP, you're saying, "Make it 20. Make it 22."

Dr. Aaron Carroll (14:06):
And this is the other thing. No one loves their healthcare system. You go to any country and, "It takes too long and it costs too much." And this and that, and everybody complains. What's different is that their understanding is when you talk to them and you're like, "Well, what prevents you from solving this problem?" They're like, "We'd have to spend more money." Singapore, if you go there right now, they're very concerned about the fact that they have an aging population, they're seeing increased rates of obesity, the same kind of factors that affect every other country, chronic diseases on the rise. And you say to them, "Okay, well, what are you really concerned about?" They're like, "Well, we'd have to go from 8% of GDP to 9% of GDP or 10% of GDP." And they're very nervous about... We're already spending 18%. We've already made the very hard choice that every other country doesn't want to make.

(14:51):
So why aren't we getting everything that they lack for all of that extra spending? The answer is that again, we spend more on everything. Our physicians make more. Our nurses make more. We pay more for drugs. Our hospitals cost more. We're willing to spend more per visit. We're willing to spend more per stay. Every single driver all the way through, we are willing to spend more money, partially because it is the way it is and we can. And again, in a rational capitalist society, people try to maximize their revenue and maximize their income.

Rae Woods (15:31):
That's right.

Dr. Aaron Carroll (15:31):
That is what is going to happen. That's not a moral judgment, but in usual markets, there are levers that the public will react to and that others can react to. And just in the way we've built the United States system, those levers don't work as well.

Rae Woods (15:46):
Yep. And this is where a lot of the leaders that I speak to, their natural response is to say, "Washington needs to figure this out." They say, "I need to wait for Washington to figure this out." I'll say especially that conversation happens around election cycles, which is where we are now, but we cannot wait for that. So my question for you is, what do health system leaders, what do health plan leaders, what do life sciences leaders have agency over when it comes to either changing affordability or making sure that we're actually getting the outcomes and the access that we want for the prices that we maybe need to accept, we should be willing to pay?

Dr. Aaron Carroll (16:24):
Well, the first thing is that you got to stop wanting everything at once. Every time I see any new whatever it is come down the line, AI being the newest, it is promised that it's going to satisfy the triple aim. It's going to increase access, it's going to increase quality, and it's going to bring down costs at the same time. Almost nothing in the world will ever do that. Nothing. Everything is a trade-off. Everything. Affordable Care Act was an honest trade-off, you can like it or not, that we are going to increase access by spending a ton of money. That's what it was. Other times we've decided we want to increase quality.

(16:59):
You probably either have to spend money for that or you got to limit access in some way, but you can't do all three. And every time I see an amazing new development, it inevitably comes, "Well, we're only going to do that if it also saves money." No, that is just not how it works. When GLP-1s show up, we're all amazed. They're modern miracles. They're going to cost a lot of money and we're going to have to figure that out. And if you want to come up with new drugs and new therapy, it's going to cost a lot of money. So what does a healthcare system need to do? Be rational about it. What is your goal and what are you willing to give up to get there?

Rae Woods (17:31):
Is it possible to do that at the organizational level or do we have to look beyond that? Does it have to be the stakeholder level? Does it have to be a regional level?

Dr. Aaron Carroll (17:38):
But I think even at a stakeholder level, you could figure out what is the number one thing you're trying to accomplish or what is the number one need that our consumer base wants and what can we do to grant them that? And at the same time, be honest about, "That's likely going to mean some give somewhere else." The problem is that it's very hard, especially when we're always over here trying to save money, save money, save money, save money, to find ways that you can improve access or improve quality. And the only way you're going to do that as a whole is by basically asking almost everyone to take a bath, which is probably why we keep looking to Washington.

(18:13):
The problem is Washington is not willing to make those kinds of honest trade-offs either. Even when passing the Affordable Care Act, you'd find very few supporters who would openly acknowledge, "We're improving access by spending an enormous amount of money." They would constantly focus on deficit reduction, how we're going to do this and the pay-for's and everything else. And it's like, "No, we've still increased healthcare spending by a fairly large amount of money and it's going to keep increasing until we make incredibly hard decisions."

Rae Woods (19:38):
I appreciate that you're saying sort of accept the decision that we have implicitly made.

Dr. Aaron Carroll (19:44):
Yeah.

Rae Woods (19:45):
Now that's easy when we think about the federal government spending. It's much more complicated when the affordability challenge does come to the organizational level. Is it possible for individual organizations, a health system with a 1% margin, a health plan with a 0.7% margin to meaningfully make that trade off and say, "I am going to lose at affordability in order to gain on access or outcomes?"

Dr. Aaron Carroll (20:12):
It's very, very hard. I mean, I do not envy the choices that are there. The way that you could possibly give the same away or give away more while paying less means paying all of your people less money, all sharing in the pain, everyone takes a cut. That is almost one of the very few ways I think they can. And that's honestly what other countries are doing. They're just squeezing the whole thing. Our problem is that we try to squeeze industry-by-industry. We try to identify a bad actor and say it's their fault, and then we reduce prices one bit-by-bit. The government goes, "Oh, it's pharmaceutical spending. We're going to concentrate on pharmaceutical spending." You could eliminate all pharmaceutical spending. We'd still have by far the most expensive healthcare system in the world. It would be almost impossible at an individual systems level to solve the affordability problem. And don't be confused. I'm not trying to say that Washington can either because Washington's favorite thing is just to push it onto states.

Rae Woods (21:06):
Yes.

Dr. Aaron Carroll (21:06):
They will make decisions where they're not actually reducing the cost of care of healthcare spending, they're just reducing the federal component of it, which has to be picked up either by states or by individuals, both of whom can't run deficit financing like the federal government. The Affordable Care Act was a decision. OBBBA was a decision. What did it decide to do? Cut Medicaid spending by a significant amount. Now states are going to have to figure that out. There's no magic solution. Medicaid is already running incredibly lean.

Rae Woods (21:36):
Yes.

Dr. Aaron Carroll (21:37):
They can either decide to cover fewer people, they can cover each individual less, or they can reimburse less for the care. Those are really the three options available. There's no magic solution waiting in the corner. And anyone that thinks you can innovate out of that, it's just pushing paper around. And so probably we're going to see them cover fewer people. And it may be intentional or unintentional, but a lot of it'll be because as we've seen in the states that have already tried this, that's what really happens because people can't keep up with the paperwork. But the vast majority of people who are on Medicaid are elderly, pregnant moms, young children, or disabled people.

Rae Woods (22:17):
Yes.

Dr. Aaron Carroll (22:18):
Which of those groups should be working more?

Rae Woods (22:20):
Yes.

Dr. Aaron Carroll (22:21):
Which of those groups needs to go get another job? There is no magic solution. Something has to get squeezed.

Rae Woods (22:27):
And you talked about Washington pushing costs around, right? It's not cost of the federal government. We're going to pass it down to the states. The exact same thing happens at health system organizations, at health plan organizations, at life sciences organizations. We're not actually lowering costs. We're just moving the bill or the risk or the work to someone else. So if we stick with affordability for a moment, what would it take for a healthcare leader to know and see that they're actually taking costs out of the system as opposed to just shifting the paperwork around?

Dr. Aaron Carroll (23:05):
You wanted my... Aaron Carroll's answer of what would be the best way for us to reduce healthcare spending while not limiting quality as much, stop paying for stuff that doesn't work as well or agree to pay for the stuff that is basic and good enough. And then if people want to pay for anything above that, that's fine.

Rae Woods (23:24):
Give me an example of that.

Dr. Aaron Carroll (23:25):
My favorite go-to example of this is osteoarthritis of the knee. For a long time when people had osteoarthritis in the knee, arthroscopic surgery was an enormous thing. Everyone was getting arthroscopic surgery for osteoarthritis of the knee. It was a huge expense in the United States. Medicare was spending billions and billions and billions on this, as was private insurance. And then someday, somehow, somebody did a randomized controlled trial where they randomized people to one of three groups. One of them got an incision and got arthroscopic surgery. One of them got an incision and got lavage. And the third group, I kid you not, got an incision, they twiddled their thumbs, they sewed them up and lied to those patients and told them they got arthroscopic surgery.

Rae Woods (24:07):
Wow.

Dr. Aaron Carroll (24:08):
No difference in any of the groups. All three had exactly the same outcomes. You can imagine people lost their minds. They said this was unethical as well. I don't know what the IRB said, but regardless, they have redone the trial over and over again since comparing in a variety of ways arthroscopic surgery to just PT, it turns out it absolutely is not better. Medicare still spends a couple billion dollars a year on osteoarthritis and arthroscopic surgery. Why?

Rae Woods (24:33):
Yeah.

Dr. Aaron Carroll (24:34):
I don't want to pay for that. Why should-

Rae Woods (24:36):
Because we have chosen choice.

Dr. Aaron Carroll (24:37):
So that should be on people. Once I think there's data and evidence to say, "This is just equivalent to that and this costs way more." We should agree to pay for that. Anything over there, that's on you. You want it? You get it. That's what every other country in the world does. Now it sounds heartless, but again, that's what every other country in the world does. They say, "The basics? Yes. You want more, you got to pay for that." And you will have individuals that will probably... There are 10 to 20% of people as in every other country that will still demand that arthroscopic surgery, but that should be 100% on them or they should have to buy another product that the rest of us don't have to contribute to. We should be able to differentiate with teeth between care that actually is evidence-based or at least this is as good as we know before we go up to the next level. But we don't make those kinds of decisions. We refuse to.

Rae Woods (25:30):
Well, and the alternative is also to accept the outcomes of that choice, which is if we want people to be able to have arthroscopic surgery, we are going to continue to spend more. We are going to continue to have this affordability challenge.

Dr. Aaron Carroll (25:44):
Yes. But because it has become so expensive, we also wind up not achieving the quality that we want or the access that we want. So if you were to say to me, "How could we spend the same amount of money?" That would improve quality. It would also improve access in some ways while hurting access in other ways. So let's be honest, I am reducing your access to arthroscopic surgery, but I am opening the doors to where now there's a savings in the healthcare system that we could choose to improve other access, how quickly you get in. The other thing is, of course, there are other drivers for this as well. Why does it take so long to see a physician? Because there aren't enough physicians.

Rae Woods (26:22):
Yes.

Dr. Aaron Carroll (26:22):
We know how to fix that. We refuse. Why do we have so few primary care doctors? Because we don't pay them as much. And our immigrant population is actually who does the vast majority of low reimbursement primary care.

Rae Woods (26:38):
That's correct.

Dr. Aaron Carroll (26:38):
But now we're actually talking about reducing-

Rae Woods (26:40):
And nursing care as well.

Dr. Aaron Carroll (26:40):
Yeah, nursing care. Absolutely. But we make choices which run diametrically opposite to what might solve the problem at a large scale.

Rae Woods (26:51):
So what choice would you suggest we make as an American healthcare system? And I ask you this because you, the human being, have a really unique purview. You are a physician.

Dr. Aaron Carroll (27:00):
Yes.

Rae Woods (27:01):
You are presumably a patient.

Dr. Aaron Carroll (27:03):
Yes.

Rae Woods (27:03):
And you are one of the smartest thinkers on healthcare economics that I have ever met.

Dr. Aaron Carroll (27:07):
You're very kind, but I don't know about that.

Rae Woods (27:09):
So what choice do you think we should be making?

Dr. Aaron Carroll (27:14):
All of those. All of those.

Rae Woods (27:14):
But you said we couldn't prioritize all of them.

Dr. Aaron Carroll (27:16):
No, no, no, no, no, no. I think you could pick and choose. If you look at a hospital care system, they're like, "How can I possibly spend less? I have to pay doctors this." Why do you have to pay doctors that amount? Because there aren't enough doctors. You could increase the number of doctors, you wouldn't have to pay them as much. We could do the same with nurses. You could say, "Why do you need everyone in their own individual room with a curated menu?" They don't. You don't need to do that. We could say most people would settle for far less if they were paying less money. This goes all the way up to administrative costs.

(27:45):
Our administrative costs are through the roofs compared to... We could solve that and fix that too. It would probably require us to simplify how insurance companies work and how reimbursement works, but we could choose to do that as well. We could choose to pay more for primary care. We could reduce what we pay for specialty care, which would drive more people into primary care, which would satisfy that need, probably reduce chronic disease maybe in the long run, which these are individually choices and things we could do.

Rae Woods (28:14):
Who is we?

Dr. Aaron Carroll (28:15):
We choose to do almost all of them.

Rae Woods (28:16):
You kept saying "We." And I'm sitting here curious, who is the we that we talk about?

Dr. Aaron Carroll (28:20):
America. Part of this is it has to be, I think at the end of the day, the other way we differ from the rest of the world is regulation.

Rae Woods (28:26):
Yes.

Dr. Aaron Carroll (28:27):
It's not that we have a different insurance scheme. Part of it is, yes, we don't have a public delivery system, but part of it is regulation. Why does private insurance systems in countries that go that route, your Switzerland's, your Germany's, your other countries that have no public insurance... I mean, Switzerland is 100% private insurance birth to death. There is no such thing as Medicaid or Medicare or the VA, 100% private insurance, birth to death, uncoupled from jobs. You could have the same insurance plan your whole life. It's tightly regulated.

Rae Woods (29:02):
Yes.

Dr. Aaron Carroll (29:02):
Prices are negotiated, reimbursement is negotiated, the benefit package is negotiated. It's all everyone at the table. So you don't have every individual employer negotiating their package with a different insurance company and having to do that every single year. It's not every hospital having to negotiate with every other insurance company to figure out the networks. It's just easier because it's just, "We got to get together and solve this." And everyone takes a bit of a bath because of that. No one is winning overall. It's everyone has agreed that this is sort of a public good that you can make money on, but we have to sort of figure out how do we provide this very necessary public good to basically everyone at a price that is reasonable, but also providing not everything, but what is reasonable. And with the exception of Canada and a few others, also allowing for people who want to pay more to absolutely do so, to have bells and whistles and have it all, but we don't have that lower cost option available in the United States that probably most people would choose.

(30:14):
Now, it'll be very hard to get there. You can already hear the ads of, "You're going to accept this substandard care." But again, go to Switzerland, the vast majority of people choose the nonprofit, very basic insurance, most often with the HMO and gatekeeping because they really want to keep their costs down and they're fine. But that's because those are the options. We have defaulted to everyone needs the most gold-plated, every bell and whistle attached. And I sympathize, there is no good way to stop doing that and make big changes.

Rae Woods (30:48):
Now, the reason why I pushed you on who the we is here is while every system, every nation limits something, the system is not an individual actor.

Dr. Aaron Carroll (30:59):
Nope.

Rae Woods (31:00):
So I want to talk about who is responsible for delivering the no. Who's responsible for delivering the no in the US for imposing any limits that we might have?

Dr. Aaron Carroll (31:12):
At times that has shifted. I would say today the no is most often delivered by payers.

Rae Woods (31:20):
Which is why-

Dr. Aaron Carroll (31:21):
Which is why they're unpopular.

Rae Woods (31:22):
Exactly.

Dr. Aaron Carroll (31:23):
And I have nothing but sympathy, but no one wants to be the deliverer of, "No." Including our government, which again, as I said, really just pushes it to the states or to people. They try to hide that, but no one wants to say no. Now, when you sort of had a lot of managed care organizations and hospitals trying to be in the '80s and '90s, then you also saw a lot of hospitals and HMOs trying to say no, and they became very unpopular very quickly, which is why getting out of the no business is good because nobody wants to be there. But one of the reasons Americans are so frustrated with healthcare every year is that there is no way to answer the no.

(32:09):
With a system that makes sense where you can see the levers, if a no is brought about that is very unpopular, an election will occur or something will change and that will be fixed in some way. And that happens even in Singapore. They will decide to increase this, then it'll be unpopular, they will decide to decrease that. And they have massive private spending on healthcare. But when you're like, "I can't get in to see the doctor I want."

Rae Woods (32:37):
Yeah. The no feels personal.

Dr. Aaron Carroll (32:39):
We keep coming up with ways to gatekeep stuff because that's our way of trying to bring spending down. It just doesn't work.

Rae Woods (32:48):
Correct. And if we gatekeep and if we delegate the no to individual actors, that shapes the friction that we feel and frankly the trust that we have. It is not to say that the no doesn't exist. It's that in the United States we've chosen to delegate the no, and it feels more personal to end users because there isn't this national conversation to fall back on.

Dr. Aaron Carroll (33:14):
And I mean, look, if you have a private insurance company, they're reimbursing better. Hospitals and doctors like them more. Patients often like it more, but they will charge more. And so at the end of the year, if they're just being permissive and letting the patients get whatever they want and the hospitals to deliver it whatever they want at whatever price they want, they'll have spent way more money than they thought, which means the next year they have to raise their rates, then people get upset. So then it's like, "Well, if we can't raise our rates, we have to start either reimbursing less or again, we have to decide not to pay for certain stuff." Which is how you get prior authorization. But then people get upset because there's prior authorization and then doctors argue about the prior authorization. Or another group will say, "Oh, but it's because their executives make so much money."

(34:00):
Okay. Well, I mean that is some administrative costs that we could probably shrink, which is how you get either to a nonprofit insurance system or you get to a government insurance system. But the same problems are still there once you've squeezed out all the executive pay. It's still, "If I give you everything you want and reimburse at a maximum rate, it will cost so much and healthcare costs will go up next year." Eventually something has to give and say no. We can demonize any individual part of the system, but it's all expensive and it's all because we won't sort of bring it all together in a way that utterly just makes sense and where there are levers that we can push that we could then start to talk about overall, what do we want and what are we willing to give up to get there?

Rae Woods (34:45):
Yes. We've talked about access and we've talked about affordability. I want to turn the conversation to an area where I actually think the United States excels, which is innovation. We rapidly adopt new therapies, new treatments. That is something that I think we want to preserve or we have preserved to date. Let me tell you the pushback that I then get from other health leaders where a leader will say, "Yeah, Rae, America just subsidizes healthcare innovation for the rest of the world." What do you say to that comment?

Dr. Aaron Carroll (35:15):
I don't think it's 100% wrong. Obviously there's going to be more innovation where there is more money to be made and that is here. If you bring a new drug to market, your goal is to get it to the United States market. I think our biggest issue though is not that we're paying more for innovation, it's that we don't judge how much we pay for innovation by the improvement in quality we get from the innovation. We pay for new. In very rare cases are we also paying for miracles. I would argue GLPs seem to be miracles.

Rae Woods (35:51):
Yes.

Dr. Aaron Carroll (35:51):
COVID vaccines, we needed them that quickly. We paid for miracles. We were willing to do it. The problem is that there's a lot of stuff that comes to market.

Rae Woods (35:59):
What happens if there's 200 miracles?

Dr. Aaron Carroll (36:01):
Well, that's when we should... How much do we really need to pay for the second miracle?

Rae Woods (36:05):
No, 200 miracles for 200 different conditions.

Dr. Aaron Carroll (36:08):
Oh, that's fine. But still, as compared to the vast majority of drugs that come to market, they're not all miracles. A lot of them will provide incremental benefit. We do not have any kind of rational system which says, "We should pay for miracles through the nose."

Rae Woods (36:24):
Yes. And the trade-off of paying for miracles might be doing the good enough just fine for the non-miracles.

Dr. Aaron Carroll (36:32):
Yeah. As long as we say, "If this drug gives you massive quality adjusted life years and this drug gives you a very tiny amount, then we should think differently." And I'm not saying we shouldn't pay for this, but we should think differently about it.

Rae Woods (36:45):
Yes.

Dr. Aaron Carroll (36:45):
And maybe the United States is willing to say, "Yeah, we're willing to pay for innovation." But should that be on the back of sick people? Because the way innovation is paid for right now is who pays for care? Sick people. I mean, we can talk about it's also insurance and everything else, but basically the way that insurance works is we take all the money from healthy and sick people and then we give it to the sick people who need it for healthcare. Now granted that's getting wider and wider, but maybe instead of saying it should be every time I take a GLP, I have to pay a lot of money. It should be like, "We need a bigger, broader public thoughtful system about how we redistribute money to pay for miracles." Like we did with COVID vaccines than to just say, "We'll throw it into the market and it'll be one more thing that American people where they meet healthcare have to pay for."

Rae Woods (37:34):
The thing that's revealing itself to me in this conversation is that trade-offs, first of all, are unavoidable. Every system makes trade-offs. I'm not sure that it is actually obvious always how the United States is prioritizing our own trade-offs. And if I look out at the people in this room and the people who are listening to this podcast at home, they're often the ones that are faced with the burden of translating those trade-offs as coverage decisions, as operating strategies, as patient experiences. So my question is, how should health leaders engage maybe more honestly in the choices that they're making and explain those to their staff, to the public, and maybe to their board?

Dr. Aaron Carroll (38:17):
I think we don't give other people often the benefit of the doubt that they can understand what you and I are talking about right now.

Rae Woods (38:24):
Correct.

Dr. Aaron Carroll (38:24):
They think that, "Oh, people won't pay attention, they won't get it and therefore we have to come up with a pat solution where they don't hear any negatives at all and we can appear to find a magic solution." This again is not political. I see this both sides of the aisle, whether you're a die hard, "Let's do away with insurance and make everything individual." To, "Let's socialize and have full on single payer or nationalized healthcare." They both have massive trade-offs.

Rae Woods (38:51):
They do.

Dr. Aaron Carroll (38:52):
And I can talk about why this will solve some things for you and not others and the same thing over there, but everyone wants to believe that their preferred solution is a magic way of fixing the whole thing that's not going to hurt them or anyone important. The hard thing to grasp is that the $5.8 trillion we spend on healthcare is not sitting in a pile over there that we just burn.

Rae Woods (39:14):
Correct.

Dr. Aaron Carroll (39:15):
18% of the economy, it affects everyone in some way, and there's no way to make any kind of decision that's not going to have a winner and not going to have a loser. Our goal should be to try to spread the pain around and make it so that no group is hurt massively or individually while also trying to maximize the good that we're trying to get. Even when I hear leaders in healthcare speak, I hear them talk about AI, when I hear them talk about value-based care, when I hear them talk about other initiatives they're engaged in, it's almost always that it's going to get the triple aim and it never does. It never, ever, ever, ever does. Why do we keep letting people believe there is a triple aim solution? Because I swear to you, if there was a magic solution that would increase quality and increase access and save money, we would all do it tomorrow.

(40:05):
It would've been done yesterday and last year, there's zero reason not to do that. It dominates in language of medical decision making. It doesn't exist. We don't spend enough time in the language of trade-offs, in the language of, "What do you want and what are you willing to give up to get there?" Because you can't have everything. If your really overall goal is like, "This just costs too much, period." We can find ways even in the healthcare system to spend less money. It will tick some people off, but we could do it. If your goal is like, "I can't get in enough." We could fix that. It might cost us more money. It might result in some changes, what we could consider quality or what some stakeholders will consider quality, but we could do that. We want it all and we keep talking as if we can give it all and it's never ever going to happen.

Rae Woods (40:58):
I actually think what you're saying is very empowering because if everything is a trade-off, then that means that individual organizations, individual C-suites, boards, executives, they can own the trade-off and say, "This is what my system prioritizes. This is what my patients, my region, my community needs. I have to own then what I have to deprioritize so that I can be successful in this area." And maybe don't hide the ball about that. Be honest about the thing that you are prioritizing and maybe I'll use the word protecting and that what you then need to deprioritize in response. There's no silver bullet. There's no magic way to get out of this. What questions do you want the people in this room to ask before deciding if an international lesson can be applied not just to US healthcare, but maybe within their own institution?

Dr. Aaron Carroll (41:49):
They are dealing with the same problems that we do. They are often much more transparent about the trade-offs and how they're making the choices. They will be much more transparent of like, "We're going to be cheap, but you're going to need to wait." They can be transparent of, "We might be cheaper, but you won't get access to everything." Or, "You want more? You are going to pay more, but that's on you. The system isn't going to pay more. That's on you as an individual. If you want the private room, you might pay more. If you want certain class of drugs, you might pay more." And that is a choice, but we can't give everything to everybody, and that's how it is. I don't mean to minimize how difficult that would be. I have said at least a hundred things right now that make me unelectable from now until the end of time. The pain is massive, which is why probably it will require huge collective action in order to get there. We can get there because eventually the system breaks because we just reach a point when we can't afford this anymore.

(42:51):
I've become more and more sure that's not going to happen, which is crazy, but I've been hearing people say, "Oh, it's going to break once it gets to 16% of GDP or once it gets to two trillion or four trillion or six trillion." We're going to be at 10 trillion before we know it. It can break that way, but that's going to be catastrophic. The other way it breaks is by patients and individuals losing their minds and just revolting because too many Americans feel like they're paying through the nose and not getting what they need. And you're seeing it jump up in different groups and different sectors, and eventually they're going to revolt in different ways. They're going to vote strangely or they're going to just start attacking the people who have not been attacked yet. Insurance companies have been attacked a lot, but physicians haven't felt that kind of pain. Lots of other groups have not yet felt that pain. And so we can collectively try to come together and come up with sort of rational solutions where everyone takes a hit or we can wait for it to break.

Rae Woods (43:52):
I want to end this conversation with two prompts. What is an assumption about American healthcare that you want leaders to revisit and what is a strength of American healthcare that you want leaders to protect?

Dr. Aaron Carroll (44:07):
The things we spend money on and spend a lot of money on are the things we must spend a lot of money on going forward needs to be questioned. So many groups think they're owed for what they're providing has not been tested in a real market. That I think is something we could truly revisit. What do we need to protect? I don't dismiss the innovation. I don't dismiss the fact that we value choice, and that's why I'm willing to own, we're always going to have the most expensive healthcare system in the world. We will always spend more, and I think that's appropriate. We're rich. We should spend more. We should try to continually get more for our money because we can. And that has trickled down effects for other countries as well, which I also think is great. I just hedge that with, I think we could be getting a lot more access and quality for what we are spending right now.

Rae Woods (45:05):
Yeah. Well, Aaron, thanks so much for coming on Radio Advisory.

Dr. Aaron Carroll (45:09):
Thank you for having me.

Rae Woods (45:10):
Thank you, everyone. The truth is I could not have asked for a better final episode of Radio Advisory. To get to sit down with one of my healthcare heroes, to get to sit down with so many of you in person is really the perfect bookend to my time here. But this is the part of the episode where I've earned the right to offer you a final conclusion, to summarize the key takeaway and to give you an action step. So here it is. There is practical value to looking at healthcare through a global lens, but other countries are not blueprints. They're mirrors. They can help us understand which priorities other nations are optimizing for, who then carries the ripple effect, the cost, the risk, the trade-off, and frankly, whether or not that trade-off is built directly into our strategy in intentional, evidence-based and ultimately explainable ways.

(46:20):
So here's what I want you to do. The next time someone points to another country and says, "Well, why can't we just do that?" Don't stop there. Ask the follow-up question. Ask what problem it solves, what it gives up, who makes the decision, and who ultimately bears the consequence. Then turn the same scrutiny inward because the choices inside your own organization deserve the same clarity. I have said this more than 300 times, and I'll say it again. Remember, as always, I'll be here to help.

(47:02):
If you like Radio Advisory, please share it with your networks. Subscribe wherever you get your podcasts and leave a rating and a review. Radio Advisory is a production of Advisory Board. This episode was produced by me, Rae Woods, as well as Abby Burns and Chloe Bakst. The episode was edited by Katy Anderson with technical support provided by Dan Tayag, Chris Phelps, and Joe Shrum. Additional support was provided by Dominique Del Gaudio. Thanks so much for listening.