Incubating Innovation in U.S. Health Care Policy

Lynn Etheredge's Ideas Facilitate Policy to Improve Quality and Reduce Costs

    • January 11, 2012

The problem. Innovative ideas with the potential to improve health care quality and reduce costs often fall prey to partisan politics focused on short-term political objectives. Effective health care policy is greatly facilitated by neutral long-range thinking that works ahead of the political process to stimulate, educate, and help build consensus around innovative ideas.

Lynn Etheredge has spent much of his career working behind the scenes to build widespread support for new paradigms in health care delivery and financing. "I find orphan ideas and give them a good start in life," says Etheredge, a health policy analyst and former chief of the health branch at the federal Office of Management and Budget.

Health care policy work. Etheredge's career in health care policy followed an undergraduate degree in economics from Swarthmore College. "I had been a high school debating state champion and I was drawn to public affairs. I thought economics was better training and more substantive than other options, such as law or political science," Etheredge recalls.

He also attended graduate school, studying economics at the University of Wisconsin. But instead of completing the degree, he took a job at the Office of Management and Budget in 1969, following a summer internship at the agency. "They really wanted me to stay on, and I thought it was more interesting than finishing my dissertation," Etheredge says.

The job was the start of a long stint on the professional staffs of both the Office of Management and Budget and the Department of Energy and in the federal government's Senior Executive Service. This included serving as the chief of the Office of Management and Budget's health branch from 1978 to 1982.

Since then, Etheredge has worked on numerous health care projects, primarily as an independent consultant and policy analyst. In the late 1980s and early 1990s, Etheredge was a member of the Jackson Hole Group—an assembly of policy experts, business leaders, and public officials that developed the concept of managed competition, an approach to health insurance the Clinton administration embraced in its health reform proposal of the early 1990s.

"Managed competition is a proposal in which the government structures the health care market around competition among health plans on the basis of costs and quality. We see it now: It is essentially the insurance exchanges," says Etheredge, referring to a central provision in health reform—the 2010 Affordable Care Act (ACA).

The exchanges will give millions of individuals, families, and small businesses access to affordable health insurance choices through the purchase of private health insurance. Insurance companies will compete for this business. (The Jackson Hole plan is discussed in a 1993 Medical Economics article, which is available online for a fee.)

The Health Insurance Reform Project. After the Clinton health reform plan failed, Etheredge and Stanley B. Jones, also a Washington-based independent consultant (now retired), launched the Health Insurance Reform Project at George Washington University in 1995. "Our idea was to look at issues that had the potential to emerge as major national policy, but that weren't yet on the political radar. You could call it an incubator role," Etheredge said.

The Robert Wood Johnson Foundation (RWJF) has been funding this work since the beginning. "Etheredge is a big picture thinker. He takes big concepts and plays with them and sees where they go in terms of helping to address issues in health and health care, primarily how to improve quality and control costs," says Nancy Barrand, MPA, senior advisor for program development in RWJF's Health Care Group, who has been Etheredge’s program officer for most of this funding.

Incubating health care policy involves working with the staff of government agencies such as the Centers for Medicare & Medicaid Services (CMS) and the National Institutes of Health, and ongoing information dissemination, discussion, and networking. "In Washington, the professional government staff working in health care has a large role in shaping agendas and moving legislation," says Etheredge, "I am able to talk with these people and engage them on these issues."

Etheredge taps into his network, which also includes members of academia, and representatives of health systems, medical societies, and trade groups—every time he introduces a new health care policy concept. "He operates a very effective network and gets a lot of traction about his ideas," says Robert Crane, retired senior vice president of research and policy development at Kaiser Permanente, Oakland, Calif., who has known Etheredge for decades.

To build support for new ideas, Etheredge also organizes meetings and workshops, delivers the lead talk at conferences, writes journal articles, white papers, reports, and blog entries, and disseminates ideas through a number of list serves.

Better care for chronic illness. In one of the first projects of the Health Insurance Reform Project, Etheredge and colleagues promoted the idea of using disease management to improve the quality of life for chronically ill Medicare beneficiaries and reduce the cost of caring for them.

This work and that of other policy analysts eventually led Congress to authorize a pilot program, Medicare Health Support, in the 2003 Medicare Modernization Act. Etheredge and his colleague, Sandy Foote, helped staff from CMS design Medicare Health Support, which tested a range of programs to better manage and coordinate care for Medicare beneficiaries with chronic diseases. Providers proactively monitored their patients’ chronic illnesses and taught them self-management techniques.

Covering the uninsured. Etheredge and the Health Insurance Reform Project also worked to expand health insurance coverage and to strengthen Medicaid and Medicare. One example is the compromise idea to provide health insurance coverage to millions of uninsured people by expanding Medicaid and at the same time implement a system of federal needs-based tax credits to help uninsured people who do not qualify for Medicaid buy health insurance.

Aptly called "Medicaid Plus Tax Credits," the proposal "was designed to create the ultimate compromise for health reform. The Republicans wanted tax credits. The Democrats wanted to expand Medicaid," Etheredge explains. He described the proposal in a 2003 article in Health Affairs (available online.)

Both parts of his idea came to fruition in the 2010 ACA. The federal needs-based tax credits became part of the Affordable Insurance Exchanges. These premium tax credits will dramatically reduce the cost of coverage for people who buy health insurance through the exchanges. ACA also expanded the number of people who will qualify for Medicaid.

Etheredge's work also informed the administrative structure for the exchanges, which use the same eligibility rules for premium tax credits, Medicaid, and the Children's Health Insurance Program (CHIP) and make it easy for people to access coverage. "The key idea was to have one-stop shopping for public and private insurance. You log on and put in your one page of financial information, and the computer coordinates whether you get Medicaid or tax credits or both—because your eligibility could change during the year," Etheredge says.

This idea was promoted in a 2007 white paper published by the Health Insurance Reform Project and the National Academy for State Health Policy, a nonprofit organization comprised of state policy-makers. (The white paper is available online.)

For more information on the early work of the Health Insurance Reform Project, see the Program Results Report on ID# 35292, the Program Results Report on ID# 48827, and the Program Results Report on ID# 48295.

Rapid learning in health care. Etheredge's most recent RWJF-funded project, which began in 2005, is the development of a rapid-learning health system in which electronic health records are used to create large, searchable national databases in which personal health information has been removed.

By tapping into and analyzing these data, researchers and practitioners can figure out how to improve the quality, safety, and cost effectiveness of medical technologies, medications, and procedures. Rapid learning allows them to fill gaps in knowledge about what medical interventions work best for patients that physicians typically treat—those with multiple illnesses or disabilities.

By 2011, rapid learning ideas and initiatives were starting to become part of mainstream health care. Etheredge has worked with health care executives and researchers to show federal health policy staff how to apply rapid learning to federal programs such as Medicare and Medicaid. For example, the $10-billion Center for Medicare & Medicaid Innovation, part of ACA, is charged with rapidly researching, testing, and disseminating information on new models of health care delivery and financing.

Read more about the rapid learning grants in the Program Results Report on ID# 60413 and the Progress Report on ID# 67397.

RWJF perspective. Ensuring that everyone in America has affordable and stable health care coverage has long been a goal of RWJF. Work in this area includes developing policies and programs to expand health coverage and maximize enrollment in existing coverage programs.

RWJF also supports innovators such as Etheredge whose bold ideas push beyond conventional thinking to explore solutions to tough health and health care problems. "Etheredge is pioneering the pathway to the future," RWJF's Barrand says. "He frames the future and then backtracks to how we can get there by innovating in different areas. Much of what he does becomes the new normal."