[Joint House and Senate Hearing, 108 Congress]
[From the U.S. Government Publishing Office]
S. Hrg. 108-319
RESHAPING THE FUTURE OF AMERICA'S HEALTH
=======================================================================
ROUNDTABLE DISCUSSION
BEFORE THE
JOINT ECONOMIC COMMITTEE
CONGRESS OF THE UNITED STATES
ONE HUNDRED EIGHTH CONGRESS
FIRST SESSION
__________
OCTOBER 1, 2003
__________
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JOINT ECONOMIC COMMITTEE
[Created pursuant to Sec. 5(a) of Public Law 304, 79th Congress]
SENATE HOUSE OF REPRESENTATIVES
Robert F. Bennett, Utah, Chairman Jim Saxton, New Jersey, Vice
Sam Brownback, Kansas Chairman
Jeff Sessions, Alabama Paul Ryan, Wisconsin
John Sununu, New Hampshire Jennifer Dunn, Washington
Lamar Alexander, Tennessee Phil English, Pennsylvania
Susan Collins, Maine Adam H. Putnam, Florida
Jack Reed, Rhode Island Ron Paul, Texas
Edward M. Kennedy, Massachusetts Pete Stark, California
Paul S. Sarbanes, Maryland Carolyn B. Maloney, New York
Jeff Bingaman, New Mexico Melvin L. Watt, North Carolina
Baron P. Hill, Indiana
Donald B. Marron, Executive Director and Chief Economist
Wendell Primus, Minority Staff Director
CONTENTS
----------
Opening Statement of Member
Senator Robert F. Bennett, Chairman.............................. 1
Panelists
Richard H. Carmona, M.D., M.P.H., F.A.C.S., Surgeon General, U.S.
Public Health Service, Dept. of Health and Human Services...... 4
James E. Oatman, Senior Vice President, Fortis Health............ 7
Diane Rowland, Sc.D., Executive Vice President, Kaiser Family
Foundation and Executive Director.............................. 7
Submissions for the Record
Prepared Statement of Senator Robert F. Bennett, Chairman........ 27
Prepared Statement of Representative Pete Stark, Ranking Minority
Member......................................................... 28
Prepared Statement of Richard H. Carmona, M.D., M.P.H., F.A.C.S.,
Surgeon General, U.S. Public Health Service, Department of
Health and Human Services...................................... 29
Prepared Statement of James E. Oatman, Senior Vice President,
Fortis Health.................................................. 31
Prepared Statement of Diane Rowland, Sc.D., Executive Vice
President,
Kaiser Family Foundation and Executive Director................ 32
Center on Budget and Policy Priorities report entitled, ``Number
of Americans Without Health Insurance Rose in 2002,'' submitted
for the record by Representative Pete Stark, Ranking Minority
Member......................................................... 45
Families USA report entitled, ``Census Bureau's Uninsured Number
is
Largest Increase in Past Decade,'' submitted for the record by
Representative Pete Stark, Ranking Minority Member............. 51
RESHAPING THE FUTURE OF
AMERICA'S HEALTH
----------
WEDNESDAY, OCTOBER 1, 2003
Congress of the United States,
Joint Economic Committee,
Washington, DC
The Committee met at 10:45 a.m., in room 216, Hart Senate
Office Building, the Honorable Robert F. Bennett, Chairman of
the Joint Economic Committee, presiding.
Members Present: Senators Bennett, Sessions;
Representatives Maloney, Ryan.
Staff Present: Donald Marron, Leah Uhlmann, Colleen J.
Healy, Melissa Barnson, Lucia Olivera, Rebecca Wilder, Wendell
Primus, John McInerney, Diane Rogers, Rachel Klastorin, Nan
Gibson.
OPENING STATEMENT OF SENATOR ROBERT F. BENNETT,
CHAIRMAN
Senator Bennett. I want to welcome our panelists. I'll have
a little more to say about that in a moment and thank them for
their willingness to come back because this roundtable was
scheduled from a previous time. The Senate is very
inconsiderate of our schedules. They require us to vote at very
odd times, and we had a number of votes that morning that
required the cancellation, rather postponement to this hour of
the roundtable. So I'm grateful to the panelists for
rearranging their schedules and apologize to them for any
inconvenience that we may have caused.
We are going to try something different this morning.
Rather than using the traditional Congressional hearing format,
we are going to be in a roundtable approach. I want to try this
approach because too often the traditional adversarial
atmosphere of a hearing limits the discussion between Members
and panelists.
The current debate on health care is dominated by the
discussion of benefits, deductibles, insurance coverage,
payment levels, and the like. The attention of policymakers has
been drawn away from the most important health care issue--the
actual health of the American people. In the time I've been in
the Senate, we've spent little or no time discussing health.
We've spent all our time discussing these other aspects of the
health care system.
America has the pre-eminent health care system in the
world. It is also the most expensive health care system in the
world. But despite our pre-eminence and our spending, there are
some disturbing trends emerging with serious implications for
the health of the American people in the future.
The numbers are overwhelming. Obesity is epidemic in the
United States. In recent years, diabetes rates among people
ages 30 to 39 rose by 70 percent. We know that this year, more
than 300,000 Americans will die from illnesses related to
overweight and obesity.
We also know that about 46.5 million adults in the United
States smoke cigarettes, even though this single behavior will
result in disability and premature death for half of them.
Compounding the problem, more than 60 percent of American
adults do not get enough physical activity, and more than 25
percent are not active at all.
Some groups of Americans are particularly hard hit by these
disturbing trends, especially the epidemic growth in diabetes.
Native Americans are two to three times more likely to have
diabetes than whites. And NIH reports the diabetes among
African Americans has doubled in just 12 years.
Many of the problems I just mentioned are completely
preventable. Having the pre-eminent health care system is not a
replacement for a healthy lifestyle. Americans need to be
responsible for their own health and prudent consumers of their
own health care.
Much of current medicine is reactive and not proactive. The
more proactive approach that emphasizes targeted screenings,
patient education, and proper follow-up by medical providers
can go a long way to help improve the health and productivity
of the American people, and incidentally, reduce the cost of
providing traditional health care.
However, poor preventive screening, redundant or
inappropriate treatment, simple medical mistakes, and lack of
oversight, do little for the health and do increase the cost of
care.
So this morning, our goal is to focus on health, and not
just health insurance. As we examine the challenges that face
Americans over the next five to ten years, there are at least
two questions that must be asked. First, what are the major
health challenges that face Americans over the next five to ten
years? Second, what are the most innovative tools available to
meet these challenges?
Our roundtable discussion this morning will include the
unique insight of the Surgeon General, Richard Carmona, who is
spearheading President Bush's HealthierUS initiative. The
HealthierUS initiative helps Americans to take action to become
physically active, eat a nutritious diet, get preventive
screenings, and make healthy choices. We are very happy that
the Surgeon General was able to find time to join this
morning's discussion, and we look forward to hearing his
thoughts on these vital issues.
We're also pleased to have Mr. Joe Oatman, who is currently
Senior Vice President of Fortis Health. He is here to elaborate
on the initiatives the insurance industry is taking to promote
healthy lifestyles and keep down costs. Many insurance plans
and employers, including Fortis Health, have taken a ``carrot
and stick'' approach to encouraging beneficiaries to exercise,
quit smoking, or follow doctor's orders while monitoring
chronic illness. Some companies reduce premiums and increase
interest rates on health care saving accounts, or give away gym
equipment as rewards for healthier lifestyles. Health and Human
Services Secretary Tommy Thompson met with Fortis Health and
other insurers in July to persuade them to find ways to reduce
the public cost of treating America's obesity epidemic.
Finally, we are pleased to have Dr. Diane Rowland of the
Kaiser Family Foundation. Dr. Rowland is a nationally
recognized expert on Medicaid and the uninsured. Like physical
inactivity or cigarette smoking, the lack of health care
coverage is a risk factor for long-term health problems. We
look forward to Dr. Rowland's insights on the particular
problems facing lower income Americans and those without access
to health insurance.
The ground rules are that we will hear briefly from each of
our panelists, but we do not want the traditional opening
statement and presentation of policy, we want a statement that
will trigger interaction and conversation, and I will recognize
Members of the Committee for the same kind of statement.
Congressman Stark, who is the Ranking Member, is maybe
coincidentally ill today and therefore not able to be with us.
We will put his statement in the record, and we regret he will
not be here for his traditional brand of questioning and
prodding, which always keeps the Committee on its toes.
Mrs. Maloney, you have the obligation to pick up that
particular lance and carry it forward. So, with that statement
on my part and Congressman Stark's statement as the official
opening statement of the Minority, we will go immediately in
the roundtable kind of conversation and General Carmona, we
will start with you.
[The prepared statement of Senator Robert Bennett appears
in the Submissions for the Record on page 27.]
Representative Maloney. Mr. Chairman, on behalf of Mr.
Stark, I would like to put a statement in the record. He sends
his regrets, he is very ill today. It's good that you're having
this health care hearing today.
Senator Bennett. Yes. His statement is included in the
record.
[The prepared statement of Representative Pete Stark
appears in the Submissions for the Record on page 28.]
Representative Maloney. He wanted very much to have this
report from FamiliesUSA on the census numbers of the uninsured
numbers is the largest increase in the past decade. The total
number of uninsured now exceeds the cumulative population of 24
states and the District of Columbia. I'd like permission to
place this in the record with the accompanying map that shows
the uninsured. Likewise, a report from the Center on Budget and
Policy Priorities, ``Number of Americans Without Health
Insurance Rose in 2002,'' and a report that shows that the
increase would have been much larger if Medicaid and the SCHIP
enrollment gains had not offset the loss of private health
insurance. So I request permission to place both reports, along
with his statement in the record. Thank you.
[Families USA report entitled, ``Census Bureau's Uninsured
Number is Largest Increase in Past Decade,'' submitted by
Representative Stark appears in the Submissions for the Record
on page 51.]
Senator Bennett. Without objection it will appear with his
statement.
General Carmona, let's kick this conversation off and be
prepared to be interrupted and questioned as we go along, in
ways that are probably not traditional in a congressional
hearing, but that I hope will be productive in giving us a
record and understanding of where we are.
Surgeon General Carmona. Thank you Mr. Chairman.
Senator Bennett. Don't worry Members. If you have a
question just ask for recognition and we will do our best to
accommodate you regardless of when you come or whose turn it
is. We want it to be a true roundtable.
Surgeon General Carmona. Thank you, Mr. Chairman. It's a
pleasure to be with you here today and thank you and your
colleagues for your leadership in calling this discussion.
Nearly two out of three of all Americans are overweight or
obese. That's a 50 percent increase from just a decade ago.
More than 300,000 Americans will die this year alone from
heart disease, diabetes, and other illnesses related to
overweight and obesity.
Obesity-related illness is the fastest growing killer of
Americans. The good news is that it's completely preventable
through healthy eating--nutritious foods and appropriate
amounts and physical activity. The bad news is, Americans are
not taking steps to prevent obesity and its co-morbidities.
The same is true for other diseases related to poor
lifestyle choices such as smoking and substance abuse.
Put simply, we need a paradigm shift in American health
care.
There is no greater imperative in American health care than
switching from a treatment-oriented society to a prevention-
oriented society. As American waistlines have expanded, so has
the economic cost of obesity, now totaling about $93 billion in
extra medical expenses a year.
Overweight and obese Americans spend $700 more a year on
medical bills than those who are not overweight. We simply must
invest more in prevention, and the time to start is during
childhood, in fact, even before birth.
Fifteen percent of our children and teenagers are already
overweight. Unless we do something now, they will grow up to be
overweight adults. None of us wants this to happen.
We can't allow our kids to be condemned to a lifetime of
serious, costly, and potentially fatal medical complications
associated with excess weight. The science is clear.
The fundamental reason that our children are overweight is
this: Too many children are eating too much and moving too
little.
The average American child spends more than four hours
every day watching television, playing video games or surfing
the web.
Instead of playing games on their computers, I want kids to
play games on the playground. As adults, we must lead by
example, by adopting healthy behaviors in our own lives. We've
got to show kids it doesn't matter whether you're picked first
or last, but that they're in the game. Not all kids are going
to be athletes, but they can be physically active.
We've got to show them how to reach for the veggies or
healthy snacks rather than fatty sugary snacks that they've
become accustomed to.
Our commitment to disease prevention through healthy
eating, physical activity and avoiding risk is one that our
entire society must be prepared to make in order for this to be
effective.
As you mentioned, President Bush is leading the way through
the HealthierUS prevention initiative.
HealthierUS simply says, ``Let's teach Americans the
fundamentals of good health; physical activity, healthy eating,
getting checkups and avoiding risky behavior.''
Secretary Thompson is leading the Department of Health and
Human Service's efforts to advance the President's prevention
agenda through Steps to a HealthierUS, which emphasizes health
promotion programs, community initiatives and cooperation among
policymakers, local health agencies, and the public to invest
in disease prevention.
As important as these efforts are, we cannot switch
America's health care paradigm from treatment to prevention
through government action alone. The fight has to be fought one
person at a time, one day at a time. All of us must work
together, in partnership, to make this happen.
Secretary Thompson has asked employers to make health
promotion part of their business strategy. In September, he
released a report, Prevention Makes Common Sense, highlighting
the significant, economic toll of preventable diseases on
business workers and the nation. The key finding of the report,
obesity-related health problems cost U.S. businesses billions
of dollars each year in health insurance, sick leave, and
disability insurance.
The report highlights the need for and cost effectiveness
of employment-based prevention strategies. Recently, I joined
my colleague and former Surgeon General David Satcher and the
National Football League in kicking off their partnership to
promote school-based solutions to the obesity epidemic. I also
joined basketball star, LeBron James in launching Nike's PE2GO
program, which provides equipment and expertise to schools so
they can offer fun physical activity, school-based programs.
As Members of Congress, you can influence the behavior of
your constituents in many ways, obviously first by leading by
example. Secretary Thompson put himself on a diet and
challenged all HHS employees to get in shape by being
physically active for at least 30 minutes a day. You could
issue the same challenge to your staff members and your
constituents. Secretary Thompson has lost 15 pounds and
continues to work out every day and as you know, follow the
example of our President, who has a pretty ambitious routine on
a daily basis of working out and setting that example.
You can also help educate your constituents about the
importance of prevention, through town hall meetings and by
establishing partnerships in your own communities. The total
direct and indirect cost attributed to obesity is about $117
billion per year or $400 for every man, woman, and child in the
country.
I'm a doctor, not an economist, so I've seen the cost in
more than just dollars and cents. It's about a mother who can
no longer provide for her children. It's about a child who can
no longer ask a father for advise. It's about real human cost,
300,000 American lives lost each year. Just a 10 percent weight
loss through healthier eating and moderate physical activity
can reduce an overweight person's lifetime medical cost by up
to $5,000, maybe even save that person's life, not to mention
what it will do for their self esteem and self sense of well-
being and for the well-being of their loved ones. Where else
can you get that type of return on an investment?
Thank you and I look forward to our discussion.
[The prepared statement of Surgeon General Carmona appears
in the Submissions for the Record on page 29.]
Senator Bennett. Thank you very much.
We might as well start the discussion off right at the
beginning. The one thing you can do to absolutely guarantee
your financial future is to write a book about diet.
[Laughter.]
That is the absolute home run, everybody has a diet book.
Dr. Atkins was very famous, Mr. Pritikin became famous, and so
on. And like every household, we have on our shelves a whole
bunch of diet books.
There is a growing theme among these diet books, which I
have raised in my other assignment as Chairman of the
Agriculture Appropriation Subcommittee, that one of the reasons
for obesity is that Americans are eating too many carbohydrates
and that carbohydrates, according to some of these medical
sources, actually produce more fat than fat does. And that by
starving themselves from eating fat and pigging out if you will
on carbohydrates, Americans are getting fatter even while they
are on diets. And according to some of these folks, the villain
is the USDA food pyramid, which is very heavy on carbohydrates.
We have colleagues here in the Senate, Senator Sessions and
I, who have lost 50 pounds and done it entirely by cutting out
the carbohydrates. Not cutting them out, but cutting them down
and saying, we will not eat anything but leafy vegetables as
carbohydrates, but we will cut out the heavy emphasis on grains
that the USDA pyramid calls for. We increased our intake of
protein, and yes, sometimes the fat. And they are walking
examples that they've been able to lose very substantial
poundage.
I've never had a weight problem, I guess because of my
genes, but joining my wife as she struggles with hers, I've
lost 8 to 10 pounds by cutting down on the amount of
carbohydrates that I have consumed and they are supposedly
healthy carbohydrates. Fruit juice, for example. By switching
from fruit juice to water, that alone--well I won't go on and
on about this. Let's not----
[Laughter.]
But the reason I raise it is because you emphasize the
school activity. You emphasized the importance of dealing with
our children. The USDA pyramid is scripture in schools, and our
kids are being told over and over again to eat more
carbohydrates and there is a whole industry that has grown up:
walk down the aisle of the supermarket and it says ``fat free''
and you read the label and they're filled with carbohydrates.
Now there is no fat, and I love them, and I ate them and I
thought ``Boy, I'm doing great, look, I've cut down on all my
fat.'' But, I didn't seem to be able to do anything about my
weight. It seems to me it is the responsibility of the Federal
Government, if they are leading this charge, to do more than
just urge us to eat less and exercise more. If indeed there is
some scientific basis for this, and I recognize this is a major
debate within the scientific community, but if, in fact, there
is some scientific basis for the idea that Americans are not
eating enough protein and eating too much carbohydrate, then it
ought to be the government that does the science and the
government that comes out with the study instead of all of
these independent gurus who keep getting rich selling books.
Now, do you have a reaction to that? Or perhaps Mr. Oatman, you
have experience with that? Let's start the roundtable with a
very simple one, which is, is the USDA food pyramid good or
bad?
Mr. Oatman. I can respond to that. This is not a corporate
position or a company position, but a personal comment. I have
worked with the low carbohydrate diet since April of this year
and lost 40 pounds. My wife has worked with it and lost 50
pounds and----
Senator Bennett. Exhibit B.
Mr. Oatman. I would have to echo your comments considerably
Mr. Chairman that I think we need lots of good scientific
research on this very topic and that by working on helping
people understand the education component, what is the
appropriate diet and having strong scientific evidence behind
that is very critical to making the changes that are needed to
improve this area of obesity, which is an epidemic.
[The prepared statement of James Oatman appears in the
Submissions for the Record on page 31.]
Senator Bennett. Any other comments?
Surgeon General Carmona. Yes, I think you've covered very
broadly the whole issue that's so complex before us. An issue
that often is not discussed as it relates to this is the issue
of health literacy. Because you know, overall we are largely a
health illiterate society. You pointed to that in many of your
statements. People are confused, they read different books,
they watch infomercials in the middle of the night, they don't
know what is science and what is hype. And so, there is a
considerable body of information out there, good scientific
information about physical activity, about the value of a
balanced diet. Clearly, carbohydrates are part of that, as are
proteins, as are fat. Fats are essential in our diet. But it's
the balance, that's what we're talking about, creating energy
balance which really is how much you take in, what your needs
are, which we find are very individualized, depending on how
old your are, how active you are and so on, and how much you
put out every day. Marathon runner versus a sedentary officer
worker.
So there is no simple answer for each person, but one of
the things that we feel is important is that we must build the
health literacy into society so that society has the capacity
to understand these messages and be able to ask the right
questions of their health care providers and purchase the right
foods so that that will constitute a healthy diet.
Dr. Rowland. Mr. Chairman, I also think one has to take
into account affordability. For many of the lowest income
families, the food that's most available at the cheapest price
is often the food that's the worst for them. We need to really
think about ways to make carrots more available than some of
the other kinds of Big Macs that people can get so quickly.
When people are waiting in line at a hospital for their child
to be seen, the place you go is Burger King or McDonald's for
the 99 cent meal. I think that is another part of what we have
to deal with.
[The prepared statement of Diane Rowland appears in the
Submissions for the Record on page 32.]
Senator Bennett. Senator Craig has a diet that forbids him
carrots.
[Laughter.]
Representative Maloney. Mr. Chairman I would like to follow
up on the Chairman's comment on the food pyramid and the
Surgeon General mentioned that the public should be more
informed and better educated, but if the education coming from
the federal FDA or the Surgeon General or the federal
government is faulty, we should be told that. When we go to the
store, they have all these advertisements that say ``fat
free.'' Well, maybe we should require them to say that ``fat
free'' means you may be gaining more weight if you eat it. It's
the exact opposite of what it is and with all of the diets that
are out there, and we have two examples here where they lost 50
pounds--I'm going to go on your diet, I'd like to lose some
weight.
Senator Bennett. I lost five.
Representative Maloney. You lost five. Okay. But in any
event, there are many, many diets out there that say that the
Federal Government's food pyramid is faulty, that it is
incorrect, that it is unhealthy actually. And my question
really follows up on the Chairman's, what are we doing to
review the health pyramid? Is this something we have to pass
legislation on or is this something that is under review right
now? The public should know. You said they should be more
informed, but the government needs to tell them what's healthy
for them and I was taught the food pyramid in school and it's
still being taught. Should that be changed? Is it under review?
The scientific evidence seems to indicate, if these books are
correct, it's a faulty pyramid for health.
Surgeon General Carmona. I'd be happy to comment. It is
under review. Heath and Human Services and the Department of
Agriculture have a group that has been convened for some time
now, reviewing the elements of the food pyramid, the
constituents that make that up. But I'd like to, maybe, just
make a comment about the issue. Is it bad information? You
know, science evolves very, very quickly and at the time when
the food pyramid evolved, and the best science was allied to it
at that time, this was the best that was to offer. But science
evolves so rapidly now--almost on a daily basis--that it's hard
to have something fixed for years and say this is the best way
to do something. Look at the genomic project, for example, and
how quickly that's come before us.
So I think what we have is an evolution. We're learning
much more about the value of different constituents of diet,
how they should be appropriated across the board and I think
what we're seeing is really the new science that's come before
us. And we have to figure out a way that we can keep this as a
dynamic process. It will never be static, in our lifetime or
our children's lifetime, because the science is going to move
too quickly. We always have to be prepared to incorporate that.
Those meetings are taking place now and there is a recognition
within the federal government that that needs to occur because
of the reasons I've mentioned.
Representative Maloney. When will the report be available?
And you mentioned, science changes swiftly, yet the food chart
hasn't changed in my lifetime.
Surgeon General Carmona. You're absolutely right.
Representative Maloney. So if it changing swiftly, it's not
being reflected
Senator Bennett. It has changed, it has changed, but it's
gotten heavier on the carbohydrates.
Representative Maloney. Really? Wow.
Surgeon General Carmona. This is not a trivial issue.
Representative Maloney. When will the report be due? When
was the report due in HHS?
Surgeon General Carmona. I don't have a date for you. I can
get that for you. I'm not personally involved in that, but
there is a group of both USDA and HHS folks that are working on
this now and have been for some time.
Senator Bennett. I raised this issue during the
appropriations hearings with the USDA and put the cat among the
pigeons, as they say. Rather significantly, there was a lot of
reaction among the witnesses. Not to beat this, but Dr.
Rowland, if General Carmona's comment is correct and obesity is
costing us $117 billion a year, half of that would go a long
way towards solving some of the problems you are concerned
about, wouldn't it?
Dr. Rowland. It certainly would.
Senator Bennett. Okay.
Representative Ryan. Do you mind if I go in another
tangent?
Senator Bennett. Absolutely.
Representative Ryan. Mr. Oatman, in your testimony, you
highlight three elements of lower cost via lifestyle changes
and the third one you talk about is incentives and I want to
ask the three of you, to kind of throw it out there.
Senator Bennett. We haven't asked you for your testimony
yet, so I'm glad you read it, go ahead.
Representative Ryan. They are a constituent.
Senator Bennett. Okay.
Representative Ryan. But a good one. Incentive structures.
How do you assemble a good incentive structure to encourage
people to engage in healthy lifestyles? I'm thinking of an
employer in Wisconsin who is really cutting edge on this who
has a program for his employees, has a couple hundred
employees, who gives them a better deal on their health
insurance, on their out-of-pocket costs on co-pays and their
deductibles, if they agree to sign up to this healthier
lifestyle program in the company. Go to the gym, get a free
membership, have a better diet, and if they engage in this,
then they get lower cost out-of-pocket. If they don't, and all
screening and assessment is a part of that, if they chose not
to do that, they're going to have to pay for it. And that is a
real clear incentive structure and the take-up rate for this
program in this company I think is about 92 percent and their
health care cost, where you see most employers are talking
about double digit health care increases in their premiums,
they have been keeping them at single digit increases.
So, there is one example of a company, you know, actually
putting a very solid incentive structure in place. Can you tell
us more about what the market is doing? What you as a market
participant are doing to put good incentive structures out
there so the consumer actually, it pays to have a healthier
lifestyle. And I'm also interested in the rest of the
panelists, what you are seeing. I know Kaiser, I mean you are
the cutting edge: researchers in a lot of these areas, what do
you see that's taking place, the new phenomenon in the
marketplace, are there things that we can do in tax laws or
public policy to improve the availability of these new
incentive structures? Let me just throw it out for the
incentive structure discussion.
Mr. Oatman. Sure. Let me respond to that. I think what that
employer is doing is very remarkable and what more people need
to do. We've tried to accomplish similar things in some of the
products that we sell. There are four basic components to the
kinds of things that we have done that we think have proven to
be very, very successful.
The first is medical saving accounts (MSAs). We are the
largest writer of medical savings accounts and we have seen
that the health care of people that decide to pay a significant
portion of the first dollars of health care spending themselves
and where they have got more responsibility for that is
significantly lower. And it's not only significantly lower at
the time they buy the policy, but it continues for many years
into the future, that they continue to have lower costs because
they're very much engaged in the game.
Senator Bennett. Can I just ask you on that point. Is there
any indication that because they are paying the costs, they
don't seek care that they really need, or is it, in fact, the
change in lifestyle that makes them healthier?
Mr. Oatman. You would think that if they were not getting
the care they needed, then you might see an increased incidence
of the more catastrophic and serious things and we do not see
that. We see a lower incidence of the serious things as well.
Senator Bennett. Thank you.
Mr. Oatman. I think there is evidence that is not
happening.
Dr. Rowland. However, some of what we see with the use of
those accounts is that younger, healthier people who are less
likely to have a lot of health expenses are the ones who opt
for that account. Very few people with serious chronic illness,
which is where most of the cost in our health system occurs, or
with ongoing diabetes, are in these kinds of programs.
Representative Ryan. What adverse selections data is out
there for MSA? I know MSA is going to cap and they're fairly
limited, but could you address that as well since I think
that's where we are headed?
Mr. Oatman. Actually, we were surprised. We thought that
indeed that might happen, that the younger people would buy
this product and healthier people would buy this product. In
fact, we've seen a different pattern. In fact, the average age
of the buyer is older, generally it's a very much a cross
section of customers that buy it, that look very much like the
rest of our business and quite frankly we were surprised by
that. We felt we would see something different.
Representative Ryan. Is it because they'll buy an MSA and
then a catastrophic plan. So it's people who may be less
healthy, who know that they're really going to need
catastrophic coverage at some point and they'd rather manager
their cost and get a better deal in their health insurance. So
is it, in fact, that you are getting some sicker people into
these MSAs, for those reasons? That it's actually the reverse
argument of an adverse selection argument?
Mr. Oatman. I don't think that it's a reverse selection or
a positive selection. It seems to me that it is pretty much
like the same kind of customer. The one interesting thing too
is that for someone who gets sick, a typical family MSA account
with a $3,400 deductible, their costs are capped at that
$3,400. And often, in many other products that are not MSA
products, a very sick person could end up going to a much
higher number of out-of-pocket cost. So actually, for the sick
person, the MSA account tends to work pretty well in limiting
to a fixed dollar amount, their out-of-pocket expenditures. And
we see that as people do get sick, they are very pleased with
their product, and they hang on to it and it serves them very
well.
Senator Bennett. Is it portable from employer to employer?
Mr. Oatman. Currently, the medical savings accounts that
are offered are only offered to the self-employed and to small
employers. And quite frankly, our experience has been limited
to mostly the self-employed. Because of the lack of portability
many small employers are not adopting it as much. They are
tending to go for a health reimbursement account, it's tended
to be the way they have gone. Many of the limitations I think
on medical savings accounts have limited their applicability to
a very small subset of self-employed people and with the
expansion of MSA rules, we think they would have much broader
applicability.
Representative Ryan. Your business--I think because you are
a Wisconsin company I'm familiar with your business--your
business in HRAs really grew drastically after the IRS ruling
on Health Reimbursement Accounts (HRA). Could you explain why
that occurred and what benefits HRAs have over MSAs and why
it's easier to get that product out to the marketplace?
Mr. Oatman. We market HRA exclusively to small employers
and in fact, the average size of employer group that buys our
product is six lives. We introduced a health reimbursement
account product and found that our sales very, very quickly
went to 25 percent of our sales, that employers are hungering
for this kind of solution to health care costs.
Representative Ryan. Just for everybody else who isn't
familiar with the IRS ruling, could you just quickly describe
that? Some people might want to know that.
Mr. Oatman. I'm not sure I'm familiar with all of the
details, but basically, the employer can set up an account for
an employee and the employee can use that account for health
care expenses under the deductible, and unlike medical spending
accounts that many large employers have, this account can be
carried forward year after year. So, it's a very positive thing
for the employee as well.
Representative Ryan. No use-it-or-lose-it rule?
Mr. Oatman. It's no ``use-it-or-lose-it'' rule with that
product and we found that employers are looking for a way to
responsibly partner with their employees in the health care
cost equation and so have been looking for solutions. As a
result of this, it took off well beyond our expectations.
Senator Bennett. Let me ask a question that I think Dr.
Rowland is interested in. Are these employers those that would
otherwise cancel their insurance because of the cost and
therefore increase the number of uninsured? Do you think you
are reducing the number of uninsured with this product?
Mr. Oatman. Yes. The data is very early and we haven't done
all the analytics on health reimbursement accounts. I can give
you the numbers on medical savings accounts. We are finding
that half of the people that are buying that product,
previously had no insurance coverage at all. So it's addressing
a need for people who previously were not in the market and
have decided to get into the segment.
Representative Ryan. Is that just in all MSA, or your pool
of business?
Mr. Oatman. Our pool of business. I'm unfamiliar with the
rest of the business.
Senator Bennett. Is there anybody else offering this same
mix that would expand the amount of data that we can look at
for this phenomenon?
Mr. Oatman. Yes. There are a number of carriers that are
offering these products. I think that you will see an expansion
of health reimbursement accounts, now that the IRS has
favorably ruled on them. Medical savings accounts are offered
by rather more limited number of carriers because they didn't
want to make the investment, given that there was a termination
date associated with the legislation.
Senator Bennett. We fought that fight in the Senate--and
basically we lost it--to try to get more opportunity for
medical savings account experimentation. I don't think the
opportunity to experiment is big enough to give us enough data
to make it complete.
Dr. Rowland. Mr. Chairman, we do an annual survey of
employers of the health benefits that they offer, and in this
year's 2003 survey we saw among some of the jumbo firms, those
over 2,000 employees, the beginning of offering of a broader
mix of services, including some of the medical reimbursement
accounts with the catastrophic plan attached to it. That was
one area in which many of the employers said they were going to
look at instituting in the future. Mostly, however, in our
survey, it was those very, very large firms where they felt
they could have a whole mix of insurance options as opposed to
the firms under 200. So, we're talking about very different
markets here.
Representative Ryan. Dr. Rowland, have you looked at the
connection between incentive structures and these health
reimbursement type of accounts? The question I'm asking is,
because right now we're in the middle of a Medicare conference
report, we're debating health savings accounts. It's another
iteration, but it has all of the benefits basically of all of
these different products kind of wrapped into one product. No
use-it-or-lose-it, it's portable for the employee, the employee
and the employer can put tax deductible dollars into it, you
have to buy catastrophic coverage.
The question I'm trying to get at is, do we have evidence
and data that suggests that you can get the right kind of
incentive structure set up inside these plans where an employee
has his or her own money at stake and the first dollar of
coverage, the employer sets up some kind of incentive system so
they lead a healthier lifestyle. Their own money is at stake
because it's money that has been given to them by their
employer that is part of their property or they put their own
tax deductible into it. Is there evidence that suggest that you
can get these incentives set up and if we fix some of the
strings and the problems that are associated with Medical
Savings Accounts (MSA), Flexible Spending Accounts (FSA),
Health Reimbursement Arrangements (HRA), which is essentially
what Health Savings Accounts (HSA) have attempted to do. I know
I'm throwing a lot of acronyms out.
Senator Bennett. You sound like you work for the Pentagon.
[Laughter.]
Representative Ryan. Can we get a good--can we really push
this incentive issue?
Dr. Rowland. There's really not much data that I'm aware of
on the use of incentives at all. We're just beginning to pick
up some of the employer's strategies to contain cost in our
last survey, but none of them include anything along the lines
of the wellness incentive. We can certainly ask that in this
year's survey which is about to go into the field.
Representative Ryan. It would be interesting to see that.
Dr. Rowland. What we do know however is, in some of the
public opinion work we've done trying to assess health
insurance options that the public views, that many members of
the public are very concerned about ending up with health care
costs they can't afford and so they seem very risk-adverse in
some of our questioning to go into a system with a high
deductible. So I think there is really a pretty limited
understanding of what these plans are or how they operate.
Representative Ryan. Sure. I understand a lot of those
questions don't necessarily say that you'll have the money in
your account to cover the deductible and then when you reach
that level, your insurance kicks in.
Dr. Rowland. Well, and as you pointed out, one of the
problems is that the structure of these plans vary so
tremendously from one to another that you're really comparing
apples to oranges in most of the cases.
Representative Maloney. Dr. Rowland, in your comments
earlier, you mentioned that in some cases, families may not be
making good health choices because they cannot afford more
protein. Have you done any studies on what the impact has been
on granting Medicaid, which has really capped the amount of
money that can go to the poor and the competition with health
care, and have you thought about incentives of maybe more food
stamps would go farther if you bought vegetables as opposed to
potato chips or that type of thing that could encourage
healthier eating patterns?
And the Surgeon General, you mentioned quite a bit about
exercise and the importance of it. I represent the Rusk
Institute, which really was a trailblazer in rehab and
exercises as a tool to heal. And what they do there is
absolutely remarkable. I feel that future research will really
change the way we approach our lives because with exercise, you
can literally heal people that are very, very ill and any
studies that the government may be doing on the impact of
exercise.
Everyone says exercise and build it into your life, but
when we look at our public school system, oftentimes gym
classes, after-school programs, the very programs that begin a
healthy life pattern, where you learn that that has to be part
of your life, regrettably are being cut out of many public
education programs. What are we doing to counter that?
Obviously, if we raise healthy people, the cost on our medical
system both for individuals, for business, for the government
is far, far less. Also, any comments on screening?
Obviously, if we screen people early and find out what
health ailments they may have, whether it's prostate cancer or
breast cancer, the degree of probability of healing it and
healing it in a cost effective way goes up dramatically. So
those are items if anyone wants to comment from both the panel
and the Chairman and so forth.
Senator Bennett. Feel free to dip into your opening
statement now. This is your opportunity to read those things
that we didn't give you a chance to read.
Dr. Rowland. Well let me just comment from the perspective
from low-income families and their access to affordable foods.
Most of the work that we've looked at involves the Native
American population and some of the real disparities in terms
of the kinds of foods that were made generally available
through some of our assistance programs. I think there has been
a lot of work now to try to remedy that, but historically that
has been an area where we've know that the choice of food has
been particularly poor for the health of that population.
In terms of my own statement, I do recognize that advances
in improving health and combating obesity offer a great promise
in the health care system. But I also am concerned that for
many Americans, those gaps will not be closed by just improving
healthy behavior alone. Health insurance really is a key to the
door for getting people into the health system for both
preventive care as well as for the follow-up medical care that
may be needed. And yesterday's statistics from the Census
Bureau reporting that we had 43.6 million Americans in 2002 who
were uninsured, I think provided a wake up call for all of us
that this is a problem that's growing and not a problem that's
going away.
But what I'd like to put before the Committee's
consideration is that we also have to think about the
consequences of lack of health insurance. And in my longer
statement, I reviewed much of the evidence on the fact that an
uninsured population is also not a healthy population. They
have less access to care, they tend to postpone or forego
needed care, go without needed prescriptions, and receive less
preventive care. I think the Surgeon General would agree, that
this also brings them in later at a point where their diseases
have advanced more so they are less likely to gain some of the
therapeutic advantages that early detection may bring. And as a
result, they have a higher mortality rate.
I think we can't be complacent when the Institute of
Medicine (IOM) is estimating that some 18,000 Americans die
prematurely each year because of their lack of health
insurance. But it also is a substantial burden on our society
as a whole. Lack of coverage in the middle ages means that when
people come on to the Medicare program, they are in poorer
health. We now estimate that about $10 billion a year could be
saved in Medicare alone if we had people engaged in healthier
behaviors as well as in having health insurance coverage to
treat illnesses before they age onto the Medicare program.
I think these statistics compel us to try to provide both a
coverage initiative as well as a healthy behavior initiative to
make our nation a healthier place. And unfortunately, in
today's economy, I think the employer-based coverage we've
enjoyed, as well as the public coverage, are in serious
jeopardy.
Last year, employer premiums rose by 14 percent. We now pay
$9,000 on average a year for a family health insurance policy,
unaffordable for many of the lowest income. The employee's
share for those policies is roughly $2,400 a year, which is a
very big burden on employees and I think we're going to see in
the future, more and more low wage employees not able to even
pick up the health insurance offered by their employer and
we're seeing employers really struggle with how they can limit
their cost and now we can expect some employers to decide not
to offer coverage because of the price tag.
On employer behavior, we've had very promising statistics
in that there has been no drop off in the percent of employers
offering coverage, but there has been a drop off in the
percentage of employees who are able to gain insurance through
the workplace.
On top of that, the good news in this year's Census data
was that while the employer coverage was slipping and creating
more uninsured Americans, Medicaid actually grew and provided
some coverage to pick up at least some of the children who may
have lost coverage when their families were uninsured. But
Medicaid itself is now in dire fiscal straits because of the
revenue depletion at the state level and the fact that states
are making more and more difficult choices about how to
restrict their Medicaid budgets. Virtually every state is
looking at reducing eligibility, reducing benefits, really
unraveling some of the progress that's been made since 1997
when the State Children's Health Initiative was passed to
complement Medicaid and really try to address our uninsured
children.
So I think as a society, one of our pressing problems
remains how do we maintain coverage in the employer-based
sector and in Medicaid and how do we expand coverage so that
everyone is on an equal playing field to get the preventive
care they need and to be able to participate fully in the many
benefits of our health system--whether that is early education,
wellness programs or other things. Lack of health insurance
really is undermining the health of our nation, just as some of
our unhealthy behaviors are.
Senator Bennett. Thank you very much. May I offer a slight
correction? You say the cost is $9,000 a year and $2,400 of
that is paid by the employee?
Dr. Rowland. Right.
Senator Bennett. All of that is paid by the employee?
Dr. Rowland. Right.
Senator Bennett. We have created the fiction in this
country that it's free. But having been an employer, I know
that if the employee does not return enough economic value to
me by his labor to cover the full $9,000, I can't afford him.
And even though it doesn't show up on his W-2, he earned that
entire $9,000. And if we can get that concept firmly rooted in
people's minds, that this isn't free, this is your money, it
might go a long way towards solving the educational problem
that you talk about, because a lot of folks say ``Well, I don't
have to worry about that. That's the employer's money, it's
free to me. So whatever he decides to do, is just so much gravy
to me.''
No, it's your money and you ought to take control of it and
be educated about it and have some degree of say as to how it
is spent. And that gets us back to cafeteria plans and all the
rest of that.
I don't know that you have any numbers on this, I
discovered when I was running a business, and we did set up a
cafeteria plan, where we said you have X number of, we called
them ``flex bucks,'' we will spend--pick a number, it was about
$350 a month--that you, the employee, can dictate how it's
going to be spent. And, you tell us ``here is the cafeteria of
options.'' Well, the first employee comes in and he says, ``Are
you out of your mind? I've got four children, I want every dime
of that $350 to go to health coverage, and of course, I'll have
to add another $150 myself to get the coverage I need for my
family. I have no options. What do you mean cafeteria plan? I
need every bit of it.''
Then the next employee comes in and she says, ``Well you
know, my husband works at Hill Air Force Base and he is covered
under the Federal Employee Health Benefits Program, and I don't
need any health coverage. And I'd like the $350. We've got
little kids; I'd like it to go to daycare. Could you spend it
that way?'' We'd say ``Sure. Give us the name of the daycare,
we'll send the $350 a month check to your daycare.''
The next employee comes in and says, ``Hey, my husband
works for a law firm and he has got all kinds of health care
coverage at his law firm, I don't need health benefits and I
don't have any small children. Can you put that in my 401K?''
And we'd say ``Yeah, we can put it in your 401K,'' etcetera.
Well, it made for a much happier workforce because they
began to get control of these benefit dollars. But the great
thing that hit me, that I would like some statistics on, if
anybody has them, how much double coverage do we have? Where we
have two-income families, are both husband and wife in plans
where the employer is paying for both of them, when in fact,
they would be covered by just one. Is there some duplication
there? We are spending more GDP than any other country in the
world. We're not necessarily healthier than any other country
in the world. Although we do have better health care than
anybody else, except for the people who fall between the
cracks. How much of that is eaten up in duplication and
administration and checking and all other rest of that. Does
anybody have any reaction?
Dr. Rowland. There is some duplicate coverage. Although
what we do find is that one of the major reasons that an
individual cites as not taking up their employer's offer is
that they're getting coverage through their spouse. We see also
one of the new incentives that many employers are starting to
offer is they are giving bonuses to employees who will sign up
for their coverage through a spouse's plan as one of their
strategies for reducing their overall health care costs.
So I know in one situation, one employee of ours said her
spouse was offered $1,000 in additional salary for the year if
he did not elect the health insurance coverage and instead
signed with hers through Kaiser.
Senator Bennett. Yeah, and that $1,000 means that the
employer probably saved $4,000 or $5,000 on it. You are in the
insurance business. Do you have any reaction to this?
Mr. Oatman. We're in, of course, as I mentioned in the
individual and small group segment and quite frankly, we don't
see very much duplicate coverage in that end of the market.
Obviously, if an individual is going to buy coverage, there is
no duplicate coverage there and similarly with small employers,
I think that they know their employees, know the situations,
and often you don't find as much duplicate coverage in our end
of the market. So our experience with it is pretty limited.
Senator Sessions. A couple of things, Mr. Oatman, one
regarding medical savings accounts and those type plans. I have
heard recently that the uninsured who are often poor, not
always, but often, much poorer, when they go to the doctor,
that they pay much more for the same care two, three, four
times, what someone who is insured would. And I wonder if that
impacts adversely medical saving account holders also.
Mr. Oatman. Let me explain.
Senator Sessions. Medical, less physicians, excuse me,
hospital care probably more often.
Mr. Oatman. The medical savings account customer has the
benefits of the negotiated rates that we have with doctors and
hospitals, even on the portion which they fund themselves.
Senator Sessions. Is that true with all the plans that you
know of?
Mr. Oatman. Certainly all of the plans that we offer the
insured has the benefit of those deductions. I do think it's a
tragedy that the uninsured people who can least afford it have
to pay full retail.
Senator Sessions. Unfortunately, that's a serious problem
Mr. Chairman. One more thing. There was this very moving
article in one of the newspapers about a lady who was a nurse
in charge of--I'll ask the Surgeon General and others who want
to comment--in helping people who were diabetic. And she was
highly motivated, visited people in their homes, gave rewards
to people who stayed on their diet and exercised and did the
things that had the ability to improve their health condition.
But the science on even that kind of care was not really
encouraging in the number of people who lost substantial amount
of weights, who stayed consistently on their diet, it still was
rather discouraging actually, the numbers there. So I guess my
question is, I'm not sure we used to have this many people in
this condition, is this a lifestyle thing that really does need
to be addressed early, that once you have a lifetime of poor
eating habits, it's much less like to be able to change than
otherwise?
Surgeon General Carmona. Senator, I think you've hit the
nail on the head. It is a lifestyle issue and I agree with my
colleague, Dr. Rowland, about the impact of health insurance
and the need for it. But many of the things that we can do as a
society really involve lifestyle and really very little cost.
Getting some physical activity every day, the issue of
exercise, the word exercise turns off some people. ``I don't
want to exercise.'' Well, take a walk. Go play with your kids,
you know, park in the back of the parking lot in the mall and
walk through the mall rather than looking for the closest spot
to the door. Take the stairs when you have a few flights,
rather than the elevator, and put some groupings of physical
activity together throughout the day. Eating a healthy diet,
which we've heard some of the barriers to, is hard. Some of the
barriers that have not been mentioned are also cultural.
Because even when we have the funds and even when the
populations who are those that we classify as underserved,
often people of color--Black, Hispanic, Native Americans--the
cultural barriers, even with the money, prevent them from
readily changing their diet. Because the----
Senator Sessions. Well, frankly, it's cheaper, sometimes a
good diet is often cheaper.
Surgeon General Carmona. Yes sir. But you know, when, on
the Native American reservation--I'll use my own example in my
family. My grandmother was an immigrant here, spoke no English
and she made some good food for the family, very poor Latino
family. But if you evaluated your cooking, based on healthy
standards, it was filled with grease and lard and tasted
awfully good. But that's part of the culture and breaking those
cultural norms, on the Native American reservation, where I
visit frequently--I was just in Montana on the Crow
reservation--and as Dr. Rowland pointed out, the diets leave
something to be desired.
But, when you look at their cultural norms, how they
prepare their food, how they buy, even if they have the money,
it's still an issue or, I termed it literacy earlier, building
capacity, education into society to make those changes. We have
the science. The problem is we have this wonderful diversity
that makes us the best nation in the world, but that diversity
also makes it very difficult to deliver culturally competent
messages that would result in transformational behavior. That
is, eating more healthy, cooking your food the right way and
such.
Senator Sessions. I guess--let me be explicit on it. Isn't
it one of these things where if it's not done early, it's much
harder to change later? And is there a plan out there to deal--
I know there has been a lot of talk about helping young people
who are overweight how to confront that and deal with it. Do we
have any plans that might be effective at this point, you think
on how to deal with that?
Surgeon General Carmona. Well, yes sir. Your point again is
well taken. The earlier we start, the better it is. When you
move through life it's much more difficult to break those bad
habits. You know, James Baldwin I think said it best, if I
quote him correctly, that, ``We spend a lifetime telling our
kids what to do, but they never fail to imitate us.'' And so,
our children often end up looking like we do. And if we are
couch potatoes and not physically active, and eating the wrong
foods, then our children probably are going to head in that
direction.
We have programs within HHS now, and I know of many
community programs that start in the schools very early in
getting the kids engaged in physical activity. That's where it
has to start. Also we must engage the parents and the school
systems and the administrators for the understanding of what
constitutes a balanced diet while those children are in school,
and the physical education part.
It really does take a whole community to change this. The
capacity has to be built in throughout society and as early as
possible. We have the Healthier Steps Program within HHS that
President Bush and Secretary Thompson have been pushing very
successfully. I've been out as a Surgeon General throughout the
United States speaking to school administrators and school
districts about the value of these very simple measures of
reducing risks, exercising, or some physical activity and a
balanced diet. We have spoken out strongly to the National
Groups of School Administrators and Teachers to not remove
physical activity from the curriculum as we see being done in
many school districts because they can't afford the teacher or
they don't have the time. There are lots of reasons. But the
bottom line is, there is a huge impact to those children when
they are not physically active and they are spending four hours
in front of the TV.
So, to answer your question, we are starting to target
these audiences earlier. We're spending a lot of time with
children. One program I'm specifically involved in, the 50/50,
50 states, 50 schools, where I have targeted a school in every
state, working with the leadership in the state to bring a
symbolic message, if you will, to grammar schools and encourage
children to stay active. But I'm not just speaking to the
children, I'm speaking to their parents, speaking to the
community leaders and hopefully spread that word through the
country, that this is very important. And it's not just about
insurance or money, it's about taking some personal
responsibility, understanding the issues, staying active,
eating healthy, reducing risk in your life.
Dr. Rowland. Senator, while much of the work I do with the
foundation focuses on health insurance coverage, another aspect
of the work we undertake is to look at the use of the Internet
and TVs and their availability in the homes and their
utilization in homes, especially among children. And I know
that many of our studies are very alarming in terms of the
number of hours and the increasing number of hours that
children spend either watching TV or in front of the computer,
neither of which have a lot of activity to them. We are
beginning to look more at the messages they get from watching
TV shows, from watching bad behavior on TV shows and we've
engaged in trying to do a number of public education and health
education activities by getting some of the Hollywood writers
to cover things a little more effectively. I think we need to
try to change the way entertainment media portrays a child's
afternoon to one in which they're outside doing physical
activity instead of inside at the computer and eating
carbohydrates while they are sitting at the computer. This is
an area where we could really try to change the way the public
views this issue with more than just discussion--with actually
observing how the entertainment media covers this situation.
Senator Sessions. I believe I saw in The Wall Street
Journal, something about that and it indicated that one soft
drink a day was 50,000 calories a year, and I forgot how many
pounds that translated in and all things else being equal. What
about PSA? Public Service Ads (PSA) that give some concrete
suggestions if you'd like to reduce your weight, even for kids
aimed even at kids, you know, make this change and have some
kid say that you know, I lost this by doing such and such. Do
we have any PSAs that might be helpful?
Surgeon General Carmona. Senator, we've done some PSAs in
partnering with private organizations who are stakeholders in
this, but we also are trying to do this much smarter. Some of
our staff, some of whom are sitting behind me are looking at
better ways to understand the marketplace just like the private
sector does to sell products. And we have to do a better job of
delivering those messages in a culturally competent way. I
often joke with my staff that the last thing the kids watching
MTV want to see is some middle aged guy in a white uniform
telling them to be healthy. But you know, if Carson Daily and
the latest pop icon says it, you know, with maybe the Surgeon
General or somebody with a position of authority, it's probably
going to go over.
Senator Sessions. That could describe how they keep their
weight under control. What they do every day.
Surgeon General Carmona. We're trying to get those best
practices from the market and looking at--because really what
we're looking at across society is multiple markets that we
have to motivate to change their behavior and one size doesn't
fit all.
Dr. Rowland. Dr. David Satcher has just joined the Kaiser
Foundation Board of Trustees and I know that he will be pushing
us in the work we do with BET and with MTV to try and develop
more programming and more ads that actually will give some
better messages about this issue as well. We have found that
PSA placements are very difficult to get at a good time, but
have entered in a number of partnership with groups like MTV so
that we do these ads as part of their programming and we
develop the ads and they actually give the programming time to
us to try to further public health education messages. I think
we should broaden our messaging and work with the Surgeon
General on that.
Senator Bennett. I don't want to disparage the ad effort
because I think it's essential and I'm in favor of everything
you're talking about, and we do have the example with
cigarettes. We have seen a cultural change in smoking in this
country so that now people don't assume it's the norm and you
really discover that when you go outside the United States. I
used to own a business in Japan, and over there everybody
smokes, and that's the norm. And you come to America and it's
no smoking in this building, no smoking, etcetera, etcetera,
and we've seen the number of smokers come down particularly
among young people fairly significantly.
However, an economic incentive I think has to be linked to
it. I remember, and Mrs. Maloney has left, but at the height of
the energy crisis in California, when the demand for energy was
causing enormous spikes--and ultimately it looks like Gray
Davis might pay the price for that next week--there were all
kinds of PSAs saying ``turn off your washing machine in the
afternoons, only use your appliances at night, help us, help
us, help us.'' And the behavior did not change appreciably
until the increased cost of electricity hit the average
household in California and the crisis almost disappeared
overnight. ``Oh, it's going to cost me X amount more if I don't
do what the ad is saying.'' So we've got to link some economic
incentives here. I'm not quite sure how we can do it.
Mr. Oatman. Mr. Chairman could I speak momentarily to that
issue?
Senator Bennett. Sure.
Mr. Oatman. We do, in our individual products charge people
more if they are tobacco users, and we find that gets a strong
message across to people when they can see tangibly what is the
economic cost in terms of their health coverage for this. We
often have people come back and say, ``I'd like to now reapply,
I've stopped smoking for a year, can I get a lower rate?'' And
so that is a very effective way not only to communicating the
message, but getting the behavior change you're looking for.
Senator Bennett. So that leads to the theoretical question,
can you say X dollars per pound for a certain level if we have
indeed an epidemic of obesity?
Mr. Oatman. Yes, we do, in fact, do that as well. We charge
extra for people that are BMIs that are overweight and BMIs
that are obese and we have different levels and we track the
statistics and know the cost of that and put that into the cost
of our products so at the end we'll send a message.
Senator Bennett. Has it produced significant behavior
change?
Mr. Oatman. I can't honestly say whether that one has
produced behavior change. I know the smoking one has, but the
weight one I don't have any particular data on it to suggest
that it resulted in changes.
Senator Bennett. The hour is going and you have been very
patient. Let me raise one more issue and get your reaction to
it. Health care is really nothing more than data management.
``Where does it hurt?'' You are a doctor, you can't cure me
until you get a body of data about me. ``Where does it hurt?
How long? When did it start? What happened?'' Okay, you get
above that level to, ``Let's do an MRI, let's do some other
kinds of tests.'' All right, now, with this amount of data in
front of me, I can now make a diagnosis and a decision and
recommend a course of treatment.
We do not have anything approaching a significant database
about our nation's health. There are tiny individual bits of
data scattered around, but we do not have what our current
technological capacity could give us. So let me get Buck Rogers
here for just a minute--and of course; the 21st Century is now
here, so Buck Rogers is obsolete. Let's say 22nd Century but,
maybe 21st. We have the capacity for an individual to carry his
entire medical record around with him on a credit card, in his
wallet. And we have the capacity to update that continually. So
you talk about screening and there is evidence from some of the
other panelists who were scheduled to be with us at the
previous roundtable and couldn't come back on this occasion,
that they've been able to increase the health and reduce the
price in their risk pool quite significantly through screening.
Now your average HMO is going to say to you, ``We're not
going to cover the cost of screening every single person, we'll
wait until somebody shows some symptoms and then we'll cover
the cost of treating those symptoms, but it's too expensive.''
Well, the evidence of this particular group is, it saves money.
And they screened every single employee of the company with
whom they were working, for a variety of congenital conditions,
and discovered, while the percentages were small, those people
that didn't know they had (fill in the blank), were enormously
expensive claims on the system walking around with the claims
to come three to five years down the road. And by screening and
discovering what they were and then monitoring their activity,
whether it was exercise or diet or medication, they prevented
heart attacks, they prevented hospitalizations, they staved
off, in some cases, diabetes and so on, and saved huge amounts
of money, even though the initial screening seems to cost
something now.
The key to this working is the willingness on the part of
the employee in this situation, the individual, if we do it on
a national basis, to have his data in a central databank where
it can be accessed, and they can be nudged. Where you can say
to the--you sit down at the console of the giant register as it
were, and you say, ``Okay, give me the names of everybody here
who had this kind of result a year ago and let me go out and
find out what they're doing.''
The privacy advocates will come at us and say this is an
enormous violation of privacy. But from a health care
standpoint, this is the tool that could vastly increase the
health of Americans and ultimately reduce costs, because as I
say, the groups that have done this have found that their
population gets healthier and the cost of providing health care
goes down.
Let's take a look at that and get your reactions to it. If
there was to be some kind of an attempt at creating a truly
significant large database and Dr. Rowland, maybe some kind of
public money available to screen every child regardless of
whether they have coverage or not in public schools, to begin
to produce that database so that public providers of health
care would have that tool available for them for people who are
on Medicaid or Medicare and some way to have portability--I
mean, the portability is there once the data is there--and so
the individual says ``Okay, I'm now covered.'' Well, whoever is
providing their health care coverage now has access to the
database.
Mr. Oatman you are in an interesting niche market. How
would you access the database? Let's just put aside our biases
about Big Brother and the implications of somebody being able
to have access to that database for some evil purpose and
stipulate for the sake of this conversation that the access
will always be benign. How helpful would it be to producing a
healthier population and helping do something about this
skyrocketing cost?
Dr. Rowland. Well obviously, what you've talked about is
the ideal of what a Health Maintenance Organization was
supposed to be all about. It was supposed to be about
enrolling, having screening and then being followed up. What's
happened in our current fragmented health care system is that
nobody really wants to take on the responsibility for screening
because it's an up-front cost and the long run savings may
accrue to someone else because health care coverage switches
back and forth. So, having the screening in our fragmented
system financed separately is probably an important concept.
The only program that has a built-in requirement for screening
is the Medicaid program for children, called the Early Periodic
Screening Diagnosis and Treatment Program. However, the
governors have been complaining for many years about that
particular program because it requires full treatment for
anything screened in the children. So that's the one example we
currently have of national screening, and in that program
screening picks up a lot of disability early among children and
if they are treated for it, they go to school, they learn
better and do better.
So I think that clearly, screening is important if it's
followed up with treatment, but our current fragmented system
doesn't provide much of a mechanism for giving insurers an
incentive to do that.
Mr. Oatman. Let me speak to that because--I'm a great
believer of screening and assessment. I think to the extent
that we could do annual screening on things like weight,
cholesterol levels, blood pressure, many things which are
reasonably controllable by the individual, it could have a
payback for us, if we could then tie that with the incentive.
But right now, we can not tie it to an incentive. The state
laws basically wouldn't allow me to adjust my premium every
year based on that regular assessment to get the message to
people to get the behavioral change. And if we had the freedom
with state premium laws to make adjustments, based upon regular
assessment of health cost, it would have an economic advantage
and we would be spending the money on it. But right now, we
don't have the ability to leverage it into incentives for an
existing customer.
Senator Bennett. In other words, there is no payback to
you.
Mr. Oatman. Right, because I can't----
Senator Bennett. If you do the screening, it's just a cost
with no particular benefit.
Mr. Oatman. Yes. Take for instance someone that has been a
customer for a few years and perhaps has gained weight, isn't
managing their health. If I could do a regular assessment of
that and charge them more for that behavior, I think I can
impact their behavior and I think that would have a payback in
doing that. But I don't have the freedom under current state
laws to make those adjustments to premiums after I've sold the
policy to the individual. So I do think if we got creative
about this and thought about it, we could find some ways to
make it economically feasible to do assessment on an ongoing
basis, and it would prove valuable.
Surgeon General Carmona. I think Senator, that's a key,
what Mr. Oatman said, making it economically feasible. Because
in fact, as Dr. Rowland pointed out also with the screening,
not only from a public health standpoint, it's obviously the
way to go. We're talking about the cost, but when an insurer
deals with it and takes on that responsibility, often they are
saddled with more cost after they've made the diagnosis, and
they are committed then to have to care for that person. So
from the public health standpoint, I think there is no
disagreement that screening as the way to go is one of the best
methods of prevention. We do it now. We've gone through it with
kids with PKU, with thyroid testing, diabetes, hypertension,
cholesterol, and it's proven. In fact, within HHS, we have the
Guide to Clinical Preventive Services put out by ARC, and it's
one of the best books around that talks about the evidence base
for screening and the cost benefit analysis for all types of
screening. More screenings than most people have ever heard of
that are out there and have been studied. But really, it comes
down to that cost benefit ratio and who pays for that
screening.
Let me make another point on the database though. I think
one of the things, and I think Dr. Rowland might mention it
because I always mention it as it relates to Kaiser. We have
some wonderful national databases in Kaiser. As you know, one
of those--we don't have a national database, but we do have
large groups, Fortis for one, Kaiser and many others that we
have through our statistical centers at HHS, where we study
large populations for just that reason--to see trends that are
emerging, to look at epidemiological trends, to try to make
predictions as to where we are going. We're doing it now
knowing that we have 9 million children that are overweight and
obese and we're looking 20 years forward when they become
middle aged. What will our population look like then? How much
will it cost? How much diabetes will be in society? How much
accelerated cardiovascular disease?
How much cancer as a result of that obesity epidemic? So we
are doing that. But I agree with you that we probably could do
it better with larger databases, especially one that relates to
underserved populations who often don't get picked up in some
of these databases because they may be the uninsured and are
not captured. So there are some inequities in the system, but I
think it has it has improved a great deal.
Senator Bennett. Well, that's really the reason for these
hearings, or this discussion and I'm very grateful to you for
your willingness to participate in it, and I'll just close it
off with this summary of where we are.
This is the Joint Economic Committee and we exist to look
at the economy as a whole, both Houses, that's why it's joint,
House and Senate. The American economy is really the wonder of
the world. Our economy is enormously resilient. We've taken
hits that in past history would have thrown an economy into
terrible tailspin. One after the other, the bursting of the
bubble of the late 1990s, which was inevitable, dropped the
stock market, we lost $7 trillion worth of wealth, numerous
jobs, particularly in the high tech industry wiped out as some
of the illusions of that industry were exposed. Followed by the
shaking of confidence in the governance of American industry.
People wanted to flee investment in American because of Enron
and WorldCom and the other shocks, 9/11, the terrorist attack,
the enormous difficulties that followed that, the geo-political
uncertainties, the decision to respond to 9/11 militarily,
which I happen to agree with and support, I think it was the
right thing to do, but that puts another tremendous strain on
the economy.
One after the other and in historic terms, compared to past
recessions and past problems, the economy weathered that series
of shocks with enormous resilience and is the envy of every
other economy in the world. Every other industrialized country,
even with our unemployment rates where they are, even with our
GDP growth, as anemic as it has been, every other
industrialized country in the world would kill to have our
numbers.
So, the Joint Economic Committee, we look out into the
future and say, the future really looks pretty good, and it
does, until we start looking at health care and the numbers.
You were talking about it, General Carmona, the numbers in the
next 50 years become truly frightening. We are living longer,
which is a good thing. Our population is growing, which is a
good thing. But the cost, if we do not do something about
medical cost, the cost that will hit us in the Medicare out
years as this population starts--the baby boomers start to
retire in the next decade or less--and they are going to stay
in that position longer and their demands on Medicare are going
to be higher. It's happening in the rest of the population,
ironically we discussed this at a previous hearing. The more
technology we apply to the health care challenge, the more we
bring down the cost per procedure and the more procedures we
stimulate, so the cheaper the procedure becomes, the greater
the cost to society overall.
If all we were interested in was money, we'd say, let them
die and save the money. But we do a tremendous job in keeping
people living longer and then we have this enormous challenge.
So, as I say, as we look out over the economy, the one
thing that truly is frightening, if we cannot get it under
control, is the health care costs that are waiting for us
several decades down the road. And we've got to think
creatively, we've got to start experimenting, Mr. Oatman, with
the kind of thing that you are doing. We've got to open up the
question of the database. We've got to face what could happen
to us if we did more screening and paid for it and say to the
states, ``Okay, whatever it takes.'' We've got to keep this
going, because the individual employer may not see the long-
term benefit or the individual insurer may not see the long-
term benefit, America as a whole, 50 years from now, has got to
see the long-term benefit in healthier people and thereby
ultimately lower health care cost, or the whole economy will be
over. So that's a little bit too apocalyptic, but the whole
economy will be in trouble, would be a better way of saying it.
So, that's why we have focused on these kinds of discussions
rather than the traditional political shouting matches over
current situations in health care and why your observations
here this morning have been so particularly helpful to us.
We're building a record, which we hope the appropriate
legislative committees can take advantage of as they look at
these challenges that we face. Thank you very much again for
your willingness to come.
The hearing is adjourned.
[Whereupon, at 12:15 p.m. on Wednesday, October 1, 2003,
the roundtable discussion was adjourned.]
Submissions for the Record
=======================================================================
Prepared Statement of Senator Robert F. Bennett, Chairman
Good morning and welcome to today's roundtable discussion:
``Reshaping The Future Of America's Health.''
We would like to try something a little different this morning.
Rather than using the traditional congressional hearing format, we will
be using a roundtable approach. I want to try this approach because too
often the traditional approach limits the discussion between the
Members and the witnesses.
The current debate on health care is dominated by a discussion of
benefits, deductibles, insurance coverage, and payment levels. The
attention of policymakers has been drawn away from the most important
health care issue--the actual health of the American people.
America has the pre-eminent health care system in the world.
America also has the most expensive health care system in the world.
Despite our pre-eminence and our spending, there are some disturbing
trends emerging with serious implications for the health of the
American people in the future.
The numbers are overwhelming. Obesity is epidemic in the United
States. In recent years, diabetes rates among people ages 30 to 39 rose
by 70 percent. We know that this year, more than 300,000 Americans will
die from illnesses related to overweight and obesity.
We also know that about 46.5 million adults in the United States
smoke cigarettes, even though this single behavior will result in
disability and premature death for half of them.
Compounding the problem, more than 60 percent of American adults do
not get enough physical activity, and more than 25 percent are not
active at all.
Some groups of Americans are particularly hard hit by these
disturbing trends, especially the epidemic growth in diabetes. Native
Americans are two to three times more likely to have diabetes than
whites. And, NIH reports that diabetes among African Americans has
doubled in just 12 years.
Many of the problems I just mentioned are completely preventable.
Having the pre-eminent health care system is not a replacement for a
healthy lifestyle. Americans need to be responsible for their own
health and prudent consumers of their own health care.
Much of current medicine is reactive, not proactive. A more
proactive approach that emphasizes targeted screenings, patient
education and proper follow up by medical providers can go a long way
to help improve the health and productivity of the American people.
However, poor preventive screening, redundant or inappropriate
treatment, simple medical mistakes and lack of oversight do little but
increase the cost of care.
This morning our goal is to focus on health, not just health
insurance. As we examine the challenges that face Americans over the
next five or ten years, there are at least two questions that must be
asked: What are the major health challenges that face Americans over
the next five to ten years? What are the most innovative tools
available to meet these challenges?
Our roundtable discussion this morning will include the unique
insight of Surgeon General Richard Carmona, who is spearheading
President Bush's HealthierUS initiative. The HealthierUS initiative
helps Americans to take action to become physically active, eat a
nutritious diet, get preventive screenings, and make healthy choices.
We are very happy the Surgeon General was able to find time to join
this morning's discussion and look forward to hearing his thoughts on
these vital issues.
We are also pleased to have Mr. Jim Oatman, currently Senior Vice
President of Fortis Health. He is here to elaborate on initiatives the
insurance industry is taking to promote healthy lifestyles and keep
down costs. Many insurance plans and employers, including Fortis
Health, have taken a ``carrot and stick'' approach to encouraging
beneficiaries to exercise, quit smoking or follow doctor's orders while
monitoring chronic illness. Some companies reduce premiums, increase
interest rates on health care savings accounts, or give away free gym
equipment as rewards for healthier lifestyles. Health and Human
Services (HHS) Secretary Tommy Thompson met with Fortis Health and
other insurers in July to persuade them to find ways to reduce the
public cost of treating America's obesity epidemic.
We are also very pleased to have Dr. Diane Rowland of the Kaiser
Family Foundation. Dr. Rowland is a nationally recognized expert on
Medicaid and the uninsured. Like physical inactivity or cigarette
smoking, the lack of health care coverage is also a risk factor for
long-term health problems. We look forward to Dr. Rowland's insights on
the particular problems facing lower income Americans and those without
access to health insurance.
We welcome each witness's thoughts on the challenges facing health
care today. I want to thank Ranking Member Stark for his interest and
help in organizing this hearing and in bringing these distinguished
experts before the Committee. I ask all of you to join me in a
bipartisan spirit as we engage in this important task.
__________
Prepared Statement of Representative Pete Stark,
Ranking Minority Member
Thank you Chairman Bennett for holding this roundtable discussion
on ``Reshaping the Future of America's Health.'' I expect this will be
a far-reaching discussion about ways of improving care and responding
to the health care challenges facing the nation. Certainly, there are
public health issues, such as diabetes and heart disease, which are
going to require new innovations and research. But the most crucial
issue we face is increasing access to care and improving public health
insurance programs.
Our nation--wealthy as it is--continues to leave more than 41
million people without health insurance. The downturn in our economy
will only make these numbers grow. Every American should have
affordable, quality health care coverage and expanding health care
coverage to the uninsured, especially children, must be a top priority.
In July, the President unveiled his HealthierUS Initiative, which
encourages Americans to be physically active, eat a nutritious diet,
get preventative screenings, and make healthy choices. But the
President's ``eat your broccoli'' health initiative won't help millions
of Americans get important preventative screenings, such as mammograms,
cholesterol tests, or prostate exams. Such potentially life-saving
preventative tests are skipped by millions of the uninsured and even
millions more of insured Americans who simply can't afford high out-of-
pocket costs needed to pay for them.
Medical experts, doctors, hospital executives, and academic leaders
have increasingly concluded it is time for some form of universal
health coverage to be considered. Just last month over 7,700 doctors
nationwide, including the former Surgeon General Dr. David Satcher,
endorsed a ``Medicare for all'' national health insurance plan.
The Institute of Medicine of the National Academies recently found
that the benefits of insuring uninsured Americans would be
substantially greater than the cost of the increased utilization of
health services. Specifically, the report found that since uninsured
Americans have shorter life spans, poorer health, and higher morbidity
rates than Americans with health insurance, they cumulatively forego
$65 to $130 billion a year in economic value that could be realized if
they had health insurance. In contrast, the cost of the additional
health care the uninsured do not currently access because they are
uninsured totals $35 to $70 billion a year.
In short, it's costing us more to leave Americans uninsured than to
insure them. For what the President wants to spend in Iraq in 2003 and
2004, we could provide health coverage for the uninsured for a year.
My favored approach to universal health care is to build on the
success of the Medicare program, which provides universal coverage for
our nation's seniors and people with disabilities. Unfortunately,
Republicans in Congress would like to privatize Medicare. Rather than
dismantle Medicare as we know it, we should expand and improve the
program, including broadening preventative benefits and adding a
prescription drug benefit.
Protecting Medicaid for low-income Americans is also a vital issue
in improving the health of the U.S. population and preventing further
increases in the number of uninsured. However, the program has come
under increasing economic pressures in both the short- and long-term.
During the Bush recession and current economic slump states are
being forced to make tough choices between Medicaid and educational
programs. Paltry federal relief did not come soon enough this year to
prevent 44 states from having Medicaid cost overruns, thus forcing many
states to trim the Medicaid roles and cut back on optional health
services.
Millions of low-income Americans would be placed at risk by a Bush
Administration plan to cap federal government spending by block
granting the program. But this would only exacerbate the long-term
structural funding problems of Medicaid as states face mounting costs
of long-term care for an aging society.
As we look to the future of health care, the federal government
needs to assume more responsibility for insuring that all Americans
receive quality care, not less.
Thank you Mr. Chairman and I look forward to the discussion with
our panelists.
__________
Prepared Statement of Richard H. Carmona, M.D., M.P.H., F.A.C.S.,
Surgeon General, U.S. Public Health Service, Department of Health and
Human Services
Thank you, Mr. Chairman. It is a pleasure to be here with all of
you. And I commend you for your leadership in calling for this
discussion.
What if I told you 2 in 3 Americans already had symptoms of a
condition that could kill them, and that the disease rate was growing
every year?
You would say, ``You're the Surgeon General. Do something! Now!''
In fact, it's true.
Nearly 2 out of 3 of all Americans are overweight and obese; that's
a 50 percent increase from just a decade ago.
More than 300,000 Americans will die this year alone from heart
disease, diabetes, and other illnesses related to overweight and
obesity.
Obesity-related illness is the fastest-growing killer of Americans.
The good news is that it's completely preventable through healthy
eating--nutritious foods in appropriate amounts--and physical activity.
The bad news is, Americans are not taking the steps they need to in
order to prevent obesity and its co-morbidities.
The same is true for other diseases related to poor lifestyle
choices, such as smoking and substance abuse.
Put simply, we need a paradigm shift in American health care.
There is no greater imperative in American health care than
switching from a treatment-oriented society, to a prevention-oriented
society. Right now we've got it backwards. We wait years and years,
doing nothing about unhealthy eating habits and lack of physical
activity until people get sick. Then we spend billions of dollars on
costly treatments, often when it is already too late to make meaningful
improvements to their quality of life or lifespan.
Overweight and obese Americans spend $700 more a year on medical
bills than those who are not overweight. That comes to a total of about
$93 billion in extra medical expenses a year.
We simply must invest more in prevention, and the time to start is
childhood--even before birth.
Fifteen percent of our children and teenagers are already
overweight. Unless we do something now, they will grow up to be
overweight adults.
None of us want to see that happen.
We can't allow our kids to be condemned to a lifetime of serious,
costly, and potentially fatal medical complications associated with
excess weight. Being overweight or obese increases the risk and
severity of illnesses such as diabetes, heart disease, and cancer.
Those are the physical costs. There are also social and emotional
costs of being overweight.
We first see this emotional pain on the school playground, when
children's self-esteem drops because they are teased, or on the dance
floor, because they are never asked to dance.
None of us want to see our kids go through that.
The science is clear. The reason that our children are overweight
is very simple: Children are eating too much and moving too little.
The average American child spends more than four hours every day
watching television, playing video games, or surfing the web. They know
more about the running style of ``Sponge Bob Square Pants'' than Gail
Devers or Maurice Green.
Instead of playing games on their computers, I want kids to play
games on their playgrounds.
As adults, we must lead by example by being responsible, and
adopting healthy behaviors in our own lives.
We've got to show them it doesn't matter whether you're picked
first or last, only that you're in the game. Not all kids are going to
be athletes, but they can all get some exercise.
We've got to show them how to reach for the veggie tray rather than
the unhealthy snack.
We've got to show them how to encourage their peers to adopt
healthy behaviors rather than ridiculing them.
As James Baldwin put it, ``Children have never been very good at
listening to their elders, but they have never failed to imitate
them.''
Our commitment to disease prevention through healthy eating,
physical activity, and avoiding risk--is one our entire society must be
prepared to make in order for it to be effective.
President Bush is leading the way through the HealthierUS
prevention initiative.
HealthierUS says, ``Let's teach Americans the fundamentals of good
health: exercise, healthy eating, getting check-ups, and avoiding risky
behavior.''
Secretary Thompson and the Department of Health and Human Services
are advancing the President's prevention agenda through Steps to a
HealthierUS, which emphasizes health promotion programs, community
initiatives, and cooperation among policy makers, local health
agencies, and the public to invest in disease prevention.
Steps also encourages Americans to make lifestyle choices that will
prevent disease and promote good health, from youth, such as avoiding
tobacco use, which is still the leading preventable cause of death and
disease in America, and avoiding alcohol, drug use and other behaviors
that result in violence and unintentional injuries.
Congress has approved funds for Steps in FY 2004 for community
initiatives to reduce diabetes, obesity, and asthma-related
hospitalizations.
We cannot switch America's health care paradigm from treatment to
prevention through government action alone. This fight has to be fought
one person at a time, a day at a time.
All of us must work together, in partnership, to make this happen.
Last week, I joined former Surgeon General David Satcher and the
National Football League in kicking off their partnership in promoting
school-based solutions to the obesity epidemic.
This week I joined NBA player LeBron James to launch Nike's PE2GO
program, which provides equipment and expertise to schools so that they
can offer fun physical activity. School-based programs that focus on
physical activity offer one of our best opportunities to improve
children's health--today and in the future. We welcome partnerships
like these to improve the health of children from the earliest ages.
As Members of Congress, you can influence the behavior of your
constituents in many ways, starting through your own example. Secretary
Thompson put himself and the entire Department of HHS on a diet, and
lost 15 pounds. I challenge you to do the same with your staff members.
You can also help educate your constituents about the importance of
prevention through Town Hall Meetings and by establishing partnerships
in your own communities.
As I said, it will take all of us to switch from a treatment-
oriented society to a prevention-oriented society, but the effort will
be worth it, both to individuals and to the larger community.
I'm a doctor, not an economist, but I know we can save both the
human costs in pain and suffering, and economic costs in dollars and
cents by investing in prevention.
Think about it: the total direct and indirect costs attributed to
overweight and obesity is about $117 billion per year, or $400 for
every man, woman and child in this country.
Just a 10 percent weight loss--through healthier eating and
moderate physical activity--can reduce an overweight person's lifetime
medical cost by up to $5,000. Not to mention what it will do for their
self-esteem and sense of well-being.
Where else can you get that type of return on investment?
Thank you and I look forward to our discussion.
Prepared Statement of James E. Oatman, Senior Vice President,
Fortis Health
I. INTRODUCTION
As 75 million baby-boomers reach the prime years of their lives
they are facing an epidemic of chronic disease. In spite of the fact
that medical advances of the 20th century improved life expectancy from
47 years at the beginning of the century to 77 years at the end of the
century, some very troubling trends developed in the last quarter of
the 20th century.
The incidence of cancer is up over 25 percent.
The incidence of heart disease is up over 50 percent.
The incidence of diabetes has doubled.
The prevalence of obesity has more than doubled.
The data is in and we now know that lifestyle changes can make
significant reductions in all these disease categories. We individually
need to take personal responsibility for significant lifestyle changes
to improve our health. When looking at the cause of health care cost
increases perhaps it is time to stop pointing fingers and literally
look in the mirror.
II. KEY ELEMENTS OF LOWER COSTS VIA LIFESTYLE CHANGES
Three key elements will be required if we are to witness
significant improvements are:
A. Education
People need a consistent, reliable source of information on the
efficacy of health improving behaviors. Health and Human Services has
done an excellent job of collecting and distributing information on
health improvements. Our health care providers should be encouraged to
deliver the message to their patients. Employers can play an active
role in educating in the workplace.
B. Screening & Assessment
People need a method to measure their current health status in
order to calibrate their current health status against a reliable
standard. Benchmarking key indicators such as diet, exercise, weight,
cholesterol levels, blood pressure levels, alcohol consumption, and
driving habits against acceptable standards is the second step towards
making changes. This is a personal responsibility, we each have to
maintain our health and well-being.
C. Incentives
Incentives are the final and essential component to motivate people
to make behavioral changes. Proper rewards and incentives applied by
health care payors serve as an important impetus to reinforce the
message and secure important lifestyle changes.
III. HEALTH INSURANCE PRODUCTS THAT ENCOURAGE HEALTHY LIFESTYLES
D. Medical Savings Accounts
At Fortis we have observed that the cost of health care is lower
and annual increases in costs are also lower for individuals who chose
to self-fund a significant portion of the first dollars spent on health
care. Direct personal responsibility for health care costs has an
impact on controlling costs.
E. Health Reimbursement Accounts
In increasing numbers employers are embracing health reimbursement
accounts as a method to engage employees in a partnership to control
health care spending. Health Reimbursement Accounts are relatively new,
but reports on early data is encouraging.
F. Lifestyle Discounts at Point of Sale
For many years Fortis has offered discounts for improved
lifestyles. We reward people who control their weight, cholesterol and
blood pressure. We also include smoking habits and driving habits in
our assessment. We have found people with better lifestyles consume
less health care and continue to spend at lower levels for long periods
of time.
G. Renewal Incentives to Encourage Healthy People to Continue to Fund
the Pool
Unfortunately, most state laws significantly restrict the ability
of an insurance carrier to introduce incentives at renewal. Fortis
believes that if insurers were granted more latitude in providing
incentives at renewal to reward healthy lifestyles this would have
positive outcomes. With appropriate incentives more healthy people
would retain their coverage at renewal. They would then stay in the
insured pool helping to finance the less healthy and not enter the
ranks of the uninsured.
__________
Prepared Statement of Diane Rowland, Sc.D., Executive Vice President,
Kaiser Family Foundation and Executive Director
HEALTH CHALLENGES FACING THE NATION
Health insurance coverage remains one of the nation's most pressing
and persistent health care challenges. When asked to identify the top
health care priorities for the nation, the public consistently ranks
lack of health insurance coverage as a top priority. Nearly 1 in 3
Americans (31 percent) rated increasing the number of Americans covered
by health insurance as the ``most important'' health issue for Congress
and the President to deal with, in a public opinion survey this summer.
The most recent data--released this week from the Census Bureau--
show that 43.6 million adults and children were without health
insurance in 2002--more than one in every seven Americans. The new
statistics reveal that this is not only a large problem, but a growing
problem for millions of Americans. From 2001 to 2002, the number of
Americans lacking health insurance increased by 2.4 million due to the
decline in employer-sponsored coverage (Figure 1). Public coverage
expansions through Medicaid helped to moderate the growth in the
uninsured, most notably by providing coverage to children in low-income
families, but were not enough to offset the decline in private
coverage.
The uninsured come predominantly from working families with low and
moderate incomes--families for whom coverage is either not available or
not affordable in the workplace (Figure 2). Public program expansions
through Medicaid and the State Children's Health Insurance Program
(SCHIP) help to fill some gaps, especially for low-income children, but
the fiscal crisis in the states is now putting public coverage at risk.
Unfortunately, the economic downturn, coupled with rising health care
costs and fiscal constraints on public coverage, all point to continued
growth in our uninsured population.
THE CONSEQUENCES OF LACK OF INSURANCE
The growing number of uninsured Americans should be of concern to
all of us because health insurance makes a difference in how people
access the health care system and, ultimately, their health. Leaving a
substantial share of our population without health insurance affects
not only those who are uninsured, but also the health and economic
well-being of our nation.
There is now a substantial body of research documenting disparities
in access to care between those with and without insurance. Survey
after survey finds the uninsured are more likely than those with
insurance to postpone seeking care; forego needed care; and not get
needed prescription medications. Many fear that obtaining care will be
too costly. Over a third of the uninsured report needing care and not
getting it, and nearly half (47 percent) say they have postponed
seeking care due to cost (Figure 3). Over a third (36 percent) of the
uninsured compared to 16 percent of the insured report having problems
paying medical bills, and nearly a quarter (23 percent) report being
contacted by a collection agency about medical bills compared to 8
percent of the insured. The uninsured are also less likely to have a
regular source of care than the insured--and when they seek care, are
more likely to use a health clinic or emergency room (Figure 4). Lack
of insurance thus takes a toll on both access to care and the financial
well-being of the uninsured.
There are often serious consequences for those who forgo care.
Among the uninsured, half report a significant loss of time at
important life activities, and over half (57 percent) report a painful
temporary disability, while 19 percent report long-term disability as a
result (Figure 5). Moreover, there is a growing body of evidence
showing that access and financial well-being are not all that is at
stake for the uninsured (Figure 6). Lack of insurance compromises the
health of the uninsured because they receive less preventive care, are
diagnosed at more advanced disease stages, and once diagnosed, tend to
receive less therapeutic care and have higher mortality rates than the
insured. Uninsured adults are less likely to receive preventive health
services such as regular mammograms, clinical breast exams, pap tests,
and colorectal screening. They have higher cancer mortality rates, in
part, because when cancer is diagnosed late in its progression, the
survival chances are greatly reduced. Similarly, uninsured persons with
heart disease are less likely to undergo diagnostic and
revascularization procedures, less likely to be admitted to hospitals
with cardiac services, more likely to delay care for chest pain, and
have a 25 percent higher in-hospital mortality.
Urban Institute researchers Jack Hadley and John Holahan, drawing
from a wide range of studies, conservatively estimate that a reduction
in mortality of 5 to 15 percent could be achieved if the uninsured were
to gain continuous health coverage. The Institute of Medicine (IOM) in
its analysis of the consequences of lack of insurance estimates that
18,000 Americans die prematurely each year due to the effects of lack
of health insurance coverage.
Beyond the direct effects on health, lack of insurance also can
compromise earnings of workers and educational attainment of their
children. Poor health among adults leads to lower labor force
participation, lower work effort in the labor force, and lower
earnings. For children, poor health leads to poorer school attendance
with both lower school achievement and cognitive development.
These insurance gaps do not solely affect the uninsured themselves,
but also affect our communities and society. In 2001, it is estimated
that $35 billion in uncompensated care was provided in the health
system with government funding accounting for 75-80 percent of all
uncompensated care funding (Figure 7). The poorer health of the
uninsured adds to the health burden of communities because those
without insurance often forego preventive services, putting them at
greater risk of communicable diseases. Communities with high rates of
the uninsured face increased pressure on their public health and
medical resources.
A recent IOM report estimates that in the aggregate the diminished
health and shorter life spans of Americans who lack insurance is worth
between $65 and $130 billion for each year spent without health
insurance: (Figure 8). Although they could not quantify the dollar
impact, the IOM committee concluded that public programs such as Social
Security Disability Insurance and the criminal justice system are
likely to have higher budgetary costs than they would if the U.S.
population under age 65 were fully insured. Research currently underway
at the Urban Institute by Hadley and Holahan suggests that lack of
insurance during late middle age leads to significantly poorer health
at age 65 and that continuous coverage in middle age could lead to a
$10 billion per year savings to Medicare and Medicaid.
THE CURRENT ENVIRONMENT
Given the growing consensus that lack of insurance is negatively
affecting not only the health of the uninsured, but also the health of
the nation, one would expect extending coverage to the uninsured to be
a national priority. However, all indicators point to this year as one
in which we can expect little action on coverage, despite the
significant growth in our uninsured population.
With the poor economy and rising health care costs, employer-based
coverage--the mainstay of our health insurance system--is under
increased strain. Health insurance premiums rose nearly 14 percent this
year--the third consecutive year of double-digit increases--and a
marked contrast to only marginal increases in workers' wages (Figure
9). As a result, workers can expect to pay more for their share of
premiums and more out-of-pocket when they obtain care, putting
additional stress on limited family budgets. With average family
premiums now exceeding $9,000 per year and the workers' contribution to
premiums averaging $2,400, the cost of coverage is likely to be
increasingly unaffordable for many families (Figure 10). For many low-
wage workers, the employee share of premiums may now equal 10 to 20
percent of total income, causing those who are offered coverage to be
unable to take it up. However, for most low wage workers, especially
those in small firms, it is not a question of affordability--because
the firms they work in do not offer coverage.
From 2000 to 2001, employer-based health insurance coverage
declined for low-income adults and children. However, Medicaid and
SCHIP enrollment increased in response to the sharp decline in
employer-based coverage for children, offsetting a sharper increase in
the number of uninsured (Figure 11). The latest Census Bureau
statistics on the uninsured for 2002 underscore the important
relationship between public coverage and loss of employer-sponsored
coverage. Between 2001 and 2002, health insurance provided by the
government increased, but not enough to offset the decline in private
coverage. Most notably, while the number of uninsured adults increased,
the number of uninsured children remained stable because public
coverage helped fill in the gaps resulting from loss of employer
coverage.
For many low-income families, Medicaid is the safety net that
provides health insurance coverage for most low-income children and
some of their parents. However, Medicaid coverage provides neither
comprehensive nor stable coverage of the low-income population. In
2001, Medicaid provided health insurance coverage to over half of all
poor children, and a third of their parents, but only 22 percent of
poor childless adults (Figure 12). Most low-income children are
eligible for assistance through Medicaid or SCHIP, but in most states
parents' eligibility lags far behind that of their children. While
eligibility levels for children are at 200 percent of the federal
poverty level ($28,256 for a family of 3 in 2001) in 39 states,
parents' eligibility levels are much lower. A parent working full-time
at minimum wage earns too much to be eligible for Medicaid in 22 states
(Figure 13). For childless adults, Medicaid funds are not available
unless the individual is disabled or lives in one of the few states
with a waiver to permit coverage of childless adults. As a result, over
40 percent of poor adults and a third of near-poor adults are
uninsured.
In recent years, with SCHIP enactment and Medicaid expansions,
states have made notable progress in broadening outreach, simplifying
enrollment processes, and extending coverage to more low-income
families. Participation in public programs has helped to reduce the
number of uninsured children and demonstrated that outreach and
streamlined enrollment can improve the reach of public programs.
However, the combination of the current fiscal situation of states and
the downward turn in our economy are beginning to undo the progress we
have seen.
States are now experiencing the worst fiscal situation they have
faced since the end of World War II. Over the last two years, state
revenues have fallen faster and further than anyone predicted, creating
substantial shortfalls in state budgets. In 2002, state revenue
collections declined for the first time in at least a decade, falling
5.6 percent from the previous year (Figure 14). These worsening fiscal
pressures mean that state budget shortfalls will reach at least $70
billion in FY2004. At the same time, Medicaid spending has been
increasing as health care costs for both the public and private markets
have grown and states face growing enrollment in the program, largely
as a result of the weak economy. However, even as Medicaid spending
grows, it is not the primary cause of state budget shortfalls. While
state Medicaid spending rose in FY2002 by $7 billion more than
projected based on recent trends, this contribution to state budget
deficits is modest compared to the $62 billion gap in state revenue
collections relative to projections.
The state revenue falloff is placing enormous pressure on state
budgets and endangering states' ability to provide the funds necessary
to sustain Medicaid coverage. Turning first to ``rainy day'' and
tobacco settlement funds, states have tried to preserve Medicaid and
keep the associated federal dollars in their programs and state
economies. But, as the sources of state funds become depleted, states
face a daunting challenge in trying to forestall new or deeper cuts in
Medicaid spending growth. Earlier this year in the Jobs and Growth Tax
Relief Reconciliation Act, Congress provided $20 billion in state
fiscal relief, including an estimated $10 billion through a temporary
increase in the federal Medicaid matching rate. This has helped states
avoid making deeper reductions in their Medicaid spending growth.
However, this fiscal relief will expire next year, and it seems
unlikely that states' fiscal conditions will improve by then.
Because Medicaid is the second largest item in most state budgets
after education, cuts in the program appear inevitable--in the absence
of new revenue sources--as states seek to balance their budgets.
Indeed, survey data the Kaiser Commission on Medicaid and the Uninsured
released at the end of September indicates that every state and the
District of Columbia put new Medicaid cost containment strategies in
place in fiscal year 2003, and all of these states planned to take
additional cost containment action in fiscal year 2004 (Figure 15).
States have continued to aggressively pursue a variety of cost
containment strategies, including reducing provider payments, placing
new limits on prescription drug use and payments, and adopting disease
management strategies and trying to better manage high-cost cases.
However, the pressure to reduce Medicaid spending growth further has
led many states to turn to eligibility and benefit reductions as well
as increased cost-sharing for beneficiaries. Although in many cases
these reductions have been targeted fairly narrowly, some states have
found it necessary to make deeper reductions, affecting tens of
thousands of people.
The fiscal situation in the states jeopardizes not only Medicaid's
role as the health insurer of low-income families, but also its broader
role as the health and long-term assistance program for the elderly and
people with disabilities. Although children account for half of
Medicaid's 51 million enrollees, they account for only 18 percent of
Medicaid spending (Figure 16). It is the low-income elderly and
disabled population that account for most of Medicaid spending--they
represent a quarter of the beneficiaries, but account for 70 percent of
all spending because of their greater health needs and dependence on
Medicaid for assistance with long-term care (Figure 17).
It is these broader roles for the elderly and disabled population
that drive Medicaid's costs. Most notably, for 7 million low-income
elderly and disabled Medicare beneficiaries, Medicaid provides
prescription drug coverage, long-term care assistance, vision care,
dental care, and other services excluded from Medicare. While these
dual eligibles represent 10 percent of the Medicaid population, they
account for over 40 percent of Medicaid spending. Most of the growth
(77 percent) in Medicaid spending last year was attributable to elderly
and disabled beneficiaries, reflecting their high use of prescription
drugs--the fastest growing component of Medicaid spending--and long-
term care, where the bulk of spending on these groups goes. These are
all areas in which states will find it difficult to achieve painless
reductions and understandably areas where states are seeking more
direct federal assistance, especially with the costs associated with
dual eligibles.
CONCLUSION
Looking ahead, it is hard to see how we will be able to continue to
make progress in expanding coverage to the uninsured or even
maintaining the coverage Medicaid now provides. This week's latest
statistics on the uninsured from the Census Bureau show that lack of
health coverage is a growing problem for millions of American families.
The poor economy combined with rising health care costs make further
declines in employer-sponsored coverage likely. The state fiscal
situation combined with rising federal deficits complicate any efforts
at reform. In the absence of additional federal assistance, the fiscal
crisis at the state level is likely to compromise even the ability to
maintain coverage through public programs. Although Medicaid has
demonstrated success as a source of health coverage for low-income
Americans and a critical resource for those with serious health and
long-term care needs, that role is now in jeopardy. Assuring the
stability and adequacy of financing to meet the needs of America's most
vulnerable and addressing our growing uninsured population ought to be
among the nation's highest priorities.
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