[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]
COMPREHENSIVE HEALTH CARE REFORM DISCUSSION DRAFT
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON HEALTH
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED ELEVENTH CONGRESS
FIRST SESSION
----------
JUNE 23, 24, & 25, 2009
----------
Serial No. 111-54
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
COMPREHENSIVE HEALTH CARE REFORM DISCUSSION DRAFT
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON HEALTH
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED ELEVENTH CONGRESS
FIRST SESSION
__________
JUNE 23, 24, & 25, 2009
__________
Serial No. 111-54
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
_____
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COMMITTEE ON ENERGY AND COMMERCE
HENRY A. WAXMAN, California, Chairman
JOHN D. DINGELL, Michigan JOE BARTON, Texas
Chairman Emeritus Ranking Member
EDWARD J. MARKEY, Massachusetts RALPH M. HALL, Texas
RICK BOUCHER, Virginia FRED UPTON, Michigan
FRANK PALLONE, Jr., New Jersey CLIFF STEARNS, Florida
BART GORDON, Tennessee NATHAN DEAL, Georgia
BOBBY L. RUSH, Illinois ED WHITFIELD, Kentucky
ANNA G. ESHOO, California JOHN SHIMKUS, Illinois
BART STUPAK, Michigan JOHN B. SHADEGG, Arizona
ELIOT L. ENGEL, New York ROY BLUNT, Missouri
GENE GREEN, Texas STEVE BUYER, Indiana
DIANA DeGETTE, Colorado GEORGE RADANOVICH, California
Vice Chairman JOSEPH R. PITTS, Pennsylvania
LOIS CAPPS, California MARY BONO MACK, California
MICHAEL F. DOYLE, Pennsylvania GREG WALDEN, Oregon
JANE HARMAN, California LEE TERRY, Nebraska
TOM ALLEN, Maine MIKE ROGERS, Michigan
JANICE D. SCHAKOWSKY, Illinois SUE WILKINS MYRICK, North Carolina
CHARLES A. GONZALEZ, Texas JOHN SULLIVAN, Oklahoma
JAY INSLEE, Washington TIM MURPHY, Pennsylvania
TAMMY BALDWIN, Wisconsin MICHAEL C. BURGESS, Texas
MIKE ROSS, Arkansas MARSHA BLACKBURN, Tennessee
ANTHONY D. WEINER, New York PHIL GINGREY, Georgia
JIM MATHESON, Utah STEVE SCALISE, Louisiana
G.K. BUTTERFIELD, North Carolina
CHARLIE MELANCON, Louisiana
JOHN BARROW, Georgia
BARON P. HILL, Indiana
DORIS O. MATSUI, California
DONNA M. CHRISTENSEN, Virgin
Islands
KATHY CASTOR, Florida
JOHN P. SARBANES, Maryland
CHRISTOPHER S. MURPHY, Connecticut
ZACHARY T. SPACE, Ohio
JERRY McNERNEY, California
BETTY SUTTON, Ohio
BRUCE BRALEY, Iowa
PETER WELCH, Vermont
(ii)
Subcommittee on Health
FRANK PALLONE, Jr., New Jersey, Chairman
JOHN D. DINGELL, Michigan NATHAN DEAL, Georgia,
BART GORDON, Tennessee Ranking Member
ANNA G. ESHOO, California RALPH M. HALL, Texas
ELIOT L. ENGEL, New York BARBARA CUBIN, Wyoming
GENE GREEN, Texas HEATHER WILSON, New Mexico
DIANA DeGETTE, Colorado JOHN B. SHADEGG, Arizona
LOIS CAPPS, California STEVE BUYER, Indiana
JAN SCHAKOWSKY, Illinois JOSEPH R. PITTS, Pennsylvania
TAMMY BALDWIN, Wisconsin MARY BONO MACK, California
MIKE ROSS, Arkansas MIKE FERGUSON, New Jersey
ANTHONY D. WEINER, New York MIKE ROGERS, Michigan
JIM MATHESON, Utah SUE WILKINS MYRICK, North Carolina
JANE HARMAN, California JOHN SULLIVAN, Oklahoma
CHARLES A. GONZALEZ, Texas TIM MURPHY, Pennsylvania
JOHN BARROW, Georgia MICHAEL C. BURGESS, Texas
DONNA M. CHRISTENSEN, Virgin
Islands
KATHY CASTOR, Florida
JOHN P. SARBANES, Maryland
CHRISTOPHER S. MURPHY, Connecticut
ZACHARY T. SPACE, Ohio
BETTY SUTTON, Ohio
BRUCE L. BRALEY, Iowa
C O N T E N T S
----------
June 23, 2009
Page
Hon. Frank Pallone, Jr., a Representative in Congress from the
State of New Jersey, opening statement......................... 1
Hon. Michael C. Burgess, a Representative in Congress from the
State of Texas, opening statement.............................. 3
Hon. Diana DeGette, a Representative in Congress from the State
of Colorado, opening statement................................. 4
Hon. Phil Gingrey, a Representative in Congress from the State of
Georgia, opening statement..................................... 4
Hon. Lois Capps, a Representative in Congress from the State of
California, opening statement.................................. 5
Hon. Marsha Blackburn, a Representative in Congress from the
State of Tennessee, opening statement.......................... 5
Hon. Jim Matheson, a Representative in Congress from the State of
Utah, opening statement........................................ 6
Hon. Tim Murphy, a Representative in Congress from the
Commonwealth of Pennsylvania, opening statement................ 7
Hon. Donna M. Christensen, a Representative in Congress from the
Virgin Islands, opening statement.............................. 7
Hon. Zachary T. Space, a Representative in Congress from the
State of Ohio, opening statement............................... 8
Hon. Janice D. Schakowsky, a Representative in Congress from the
State of Illinois, opening statement........................... 9
Hon. Gene Green, a Representative in Congress from the State of
Texas, opening statement....................................... 9
Hon. Tammy Baldwin, a Representative in Congress from the State
of Wisconsin, opening statement................................ 10
Hon. Doris O. Matsui, a Representative in Congress from the State
of California, opening statement............................... 10
Hon. John D. Dingell, a Representative in Congress from the State
of Michigan, prepared statement................................ 269
Hon. Anna G. Eshoo, a Representative in Congress from the State
of California, prepared statement.............................. 275
Hon. Kathy Castor, a Representative in Congress from the State of
Florida, prepared statement.................................... 276
Hon. Bruce L. Braley, a Representative in Congress from the State
of Iowa, prepared statement.................................... 279
Hon. Joseph R. Pitts, a Representative in Congress from the
Commonwealth of Pennsylvania, prepared statement............... 284
Witnesses
Ralph G. Neas, Chief Executive Officer, National Coalition on
Health Care.................................................... 11
Prepared statement........................................... 14
Richard Kirsch, National Campaign Manager, Health Care for
America Now.................................................... 30
Prepared statement........................................... 33
Stephen T. Parente, Ph.D., Director, Medical Industry Leadership
Institute...................................................... 37
Prepared statement........................................... 40
Marian Wright Edelman, President, Children's Defense Fund........ 98
Prepared statement........................................... 102
Jennie Chin Hansen, President, AARP.............................. 123
Prepared statement........................................... 125
David L. Shern, Ph.D., President and Chief Executive Officer,
Mental Health America.......................................... 136
Prepared statement........................................... 139
Erik Novack, MD., Orthopedic Surgeon, Patients United Now........ 146
Prepared statement........................................... 149
Shona Robertson-Holmes, Patient at Mayo Clinic................... 164
Prepared statement........................................... 166
Jeffrey Levi, Ph.D., Executive Director, Trust for America's
Health......................................................... 197
Prepared statement........................................... 200
Brian D. Smedley, Ph.D., Vice President and Director, Health
Policy Institute, Joint Center for Political and Economic
Studies........................................................ 213
Prepared statement........................................... 215
Mark Kestner, M.D., Chief Medical Officer, Alegent Health........ 240
Prepared statement........................................... 243
June 24, 2009
Hon. Henry A. Waxman, a Representative in Congress from the State
of California, opening statement............................... 287
Prepared statement........................................... 290
Hon. Joe Barton, a Representative in Congress from the State of
Texas, opening statement....................................... 296
Hon. John D. Dingell, a Representative in Congress from the State
of Michigan, opening statement................................. 297
Hon. Nathan Deal, a Representative in Congress from the State of
Georgia, opening statement..................................... 299
Witnesses
Kathleen Sebelius, Secretary, Department of Health and Human
Services....................................................... 300
Prepared statement........................................... 303
Answers to submitted questions............................... 348
Sidney M. Wolfe, M.D., Director, Health Research Group at Public
Citizen........................................................ 360
Prepared statement........................................... 363
Steffie Woolhandler, M.D., Associate Professor of Medicine,
Harvard Medical School, and Co-Founder, Physicians for a
National Health Program........................................ 366
Prepared statement........................................... 368
John C. Goodman, Ph.D., President and CEO, National Center for
Policy Analysis................................................ 370
Prepared statement........................................... 372
Michael O. Leavitt, Former Secretary, U.S. Department of Health
and Human Services............................................. 405
Prepared statement........................................... 407
Joseph Vitale, Chairman, Committee on Health, Human Services, And
Senior Citizens, New Jersey State Senate....................... 410
Prepared statement........................................... 412
W. Ron Allen, Chairman, Jamestown S'klallam Tribe................ 419
Prepared statement........................................... 421
Jay Webber, State Assembly, State of New Jersey.................. 440
Prepared statement........................................... 442
Raymond C. Scheppach, Ph.D., Executive Director, National
Governors Association.......................................... 446
Prepared statement........................................... 448
Robert S. Freeman, Deputy Executive Director, Cencal Health,
California Association of Health Insuring Organizations........ 453
Prepared statement........................................... 455
Ron Pollack, Executive Director, Families USA.................... 461
Prepared statement........................................... 463
Scott Gottlieb, M.D., Resident Fellow, American Enterprise
Institute...................................................... 493
Prepared statement........................................... 497
Thomas Miller, CEO, Workflow and Solutions Division, Siemens
Medical Solutions, USA......................................... 499
Prepared statement........................................... 501
Kathleen Buto, Vice President for Health Policy, Johnson &
Johnson........................................................ 510
Prepared statement........................................... 513
William Vaughan, Senior Health Policy Analyst, Consumers Union... 520
Prepared statement........................................... 522
Paul Kelly, Senior Vice President, Government Affairs and Public
Policy, National Association of Chain Drug Stores.............. 551
Prepared statement........................................... 553
Answers to submitted questions............................... 575
June 25, 2009
Witnesses
Glenn M. Hackbarth, Chair, Medicare Payment Advisory Commission.. 582
Prepared statement........................................... 584
Daniel R. Levinson, Inspector General, U.S. Department of Health
and Human Services............................................. 605
Prepared statement........................................... 608
Ted D. Epperly, M.D., President, American Academy of Family
Physicians..................................................... 658
Prepared statement........................................... 661
M. Todd Williamson, M.D., President, Medical Association of
Georgia........................................................ 670
Prepared statement........................................... 672
Karl J. Ulrich, M.D., Clinic President and Ceo, Marshfield Clinic 715
Prepared statement........................................... 717
Janet Wright, M.D., Vice President, Science and Quality, American
College of Cardiology.......................................... 725
Prepared statement........................................... 727
Kathleen M. White, Ph.D., Chair, Congress on Nursing Practice and
Economics, American Nurses Association......................... 730
Prepared statement........................................... 732
Answers to submitted questions............................... 1042
Patricia Gabow, M.D., Chief Executive Officer, Denver Health and
Hospital Authority, National Association of Public Hospitals... 739
Prepared statement........................................... 741
Dan Hawkins, Senior Vice President, Public Policy and Research,
National Association of Community Health Centers............... 754
Prepared statement........................................... 756
Bruce T. Roberts, RPH, Executive Vice President and CEO, National
Community Pharmacists Association.............................. 763
Prepared statement........................................... 765
Bruce Yarwood, President and Ceo, American Health Care
Association.................................................... 773
Prepared statement........................................... 775
Alissa Fox, Senior Vice President, Office of Policy and
Representation, Blue Cross Blue Shield Association............. 792
Prepared statement........................................... 794
Kelly Conklin, Owner, Foley-Waite Custom Woodworking, Main Street
Alliance....................................................... 832
Prepared statement........................................... 835
John Arensmeyer, Founder and CEO, Small Business Majority........ 841
Prepared statement........................................... 843
Gerald M. Shea, Assistant to the President, AFL-CIO.............. 849
Prepared statement........................................... 851
Dennis Rivera, Health Care Chair, SEIU........................... 867
Prepared statement........................................... 869
John Castellani, President, Business Roundtable.................. 873
Prepared statement........................................... 875
John Sheils, Senior Vice President, The Lewin Group.............. 884
Prepared statement........................................... 886
Martin Reiser, Manager of Government Policy, Xerox Corporation,
National Coalition on Benefits................................. 912
Prepared statement........................................... 914
Howard A. Kahn, Chief Executive Officer, L.A. Care Health Plan... 936
Prepared statement........................................... 938
Karen L. Pollitz, Project Director, Health Policy Institute,
Georgetown Public Policy Institute............................. 943
Prepared statement........................................... 945
Karen Ignagni, President and CEO, America's Health Insurance
Plans.......................................................... 956
Prepared statement........................................... 958
Janet Trautwein, Executive Vice President and CEO, National
Association of Health Underwriters............................. 978
Prepared statement........................................... 980
Submitted Material
Chart, Blue Cross Blue Shield, submitted by Mr. Burgess.......... 1000
Letter of June 15, 2009, from the County of Los Angeles to Ms.
Harman......................................................... 1004
Report by Health Care for America Now, dated May 2009, submitted
by Mr. Pallone................................................. 1006
Letter of July 2, 2009, from the Health Care for America Now to
the Committee.................................................. 1012
COMPREHENSIVE HEALTH CARE REFORM DISCUSSION DRAFT, DAY 1
----------
TUESDAY, JUNE 23, 2009
House of Representatives,
Subcommittee on Health,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 9:39 a.m., in
Room 2123, Rayburn House Office Building, Hon. Frank Pallone,
Jr., [chairman of the subcommittee] presiding.
Present: Representatives Pallone, Dingell, Green, DeGette,
Capps, Schakowsky, Baldwin, Matheson, Barrow, Matsui,
Christensen, Castor, Sarbanes, Murphy of Connecticut, Space,
Sutton, Deal, Whitfield, Murphy of Pennsylvania, Burgess,
Blackburn, Gingrey, and Barton (ex officio).
Staff Present: Karen Nelson, Deputy Committee Staff
Director for Health; Purvee Kempf, Counsel; Sarah, Despres,
Counsel; Jack Ebeler, Senior Advisor on Health Policy; Robert
Clark, Policy Advisor; Tim Gronniger, Professional Staff
Member; Stephen Cha, Professional Staff Member; Allison Corr,
Special Assistant; Alvin Banks, Special Assistant; Jon
Donenberg, Fellow; Camille Sealy, Fellow; Karen Lightfoot,
Communications Director, Senior Policy Advisor; Caren Auchman,
Communications Associate; Lindsay Vidal, Special Assistant;
Earley Green, Chief Clerk; Jen Berenholz, Deputy Clerk; Miriam
Edelman, Special Assistant; Ryan Long, Minority Chief Health
Counsel; Chad Grant, Minority Health Counsel; Brandon Clark,
Minority Professional Staff; and Aarti Shah, Minority Health
Counsel.
OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF NEW JERSEY
Mr. Pallone. The hearing of the Health Subcommittee is
called to order. And I will start by recognizing myself for an
opening statement.
Today we are meeting to examine a discussion draft on
comprehensive health reform. The subcommittee will also convene
to receive testimony tomorrow and Thursday.
In addition, the full committee will meet tomorrow morning
to hear from the Secretary of Health and Human Services,
Kathleen Sebelius.
Comprehensive health reform is a goal that has alluded
reformers, Democrats and Republican alike, for over a century.
As a result, the problems that plague our healthcare system
have continued to grow worse. The ranks of the uninsured
continue to swell. The cost of insurance and medical care
continues to skyrocket. The quality of care delivered becomes
more and more erratic.
After years of failing to address these problems, we find
ourselves in a situation where our broken health care system is
a clear and present danger, in my opinion, to the economic
health of this nation. Government budgets are being overrun by
the mounting costs of health care, crowding out funding for
other key services. American businesses are disadvantaged as
they try to compete in the global marketplace, and American
families are being driven into bankruptcy by ballooning medical
debt or forgoing critical care altogether.
President Obama understands that these problems require
urgent action, which is why he has called upon Congress to pass
comprehensive health reform legislation this year. And health
reform is an issue that generates great interest and
controversy. That certainly we know. And while we may not all
agree on a common solution, I think we also know that we can't
let this opportunity pass us by.
Maintaining the status quo and allowing these problems to
continue to fester is no longer an option. Nor can we simply
resign ourselves to making marginal improvements as we have
done in the past. The time has come for comprehensive reform,
and the discussion draft we are reviewing this week is a
starting point for that debate.
The discussion draft envisions a world where every American
family has access to affordable and quality health coverage.
Those who are currently unable to access coverage through our
public programs, employers or the individual market will now be
able to do so through a reformed insurance marketplace that
guarantees access, quality and affordability. People who
already have health coverage will be able to keep their
coverage and their choice of doctors.
But health reform isn't just about improving coverage and
access; it is also about improving the public health. Too many
people are suffering from preventible illnesses and conditions,
such as cardiovascular disease, respiratory diseases, and
obesity-related illnesses. Accordingly, we must change the way
we think about medical treatment by focusing on preventive
care, as well as the quality of care being given. And this
discussion draft aims to do just that.
There are a lot of other important details about the
discussion draft that I am not mentioning, which I hope will be
explored over the course of the next 3 days. I just want to
speak directly to those who will stand in opposition to our
efforts. For those who have legitimate concerns with the draft,
I simply urge you to talk to us about your ideas. We want to
work with those of you who are truly interested in being
constructive participants in enacting health reform this year.
But for those who stand in opposition simply for opposition's
sake, I urge you to rethink your position. After a century of
inaction, the American people want to see change. They want to
see health reform enacted, and we intend to deliver it to them.
Thank you.
And now I will yield to our ranking member for the day, the
gentleman from Texas, Mr. Burgess.
OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF TEXAS
Mr. Burgess. Thank you, Mr. Chairman.
It seems like I have been waiting my entire career for just
this time. I gave up a 25-year medical practice to run for
Congress, and I didn't do so to sit on the sidelines with
really what could be the biggest change in our system since the
enactment of Medicare almost 45 years ago.
And here we are this morning calling up 10 panels to walk
us through a legislative proposal released late last week, and
it is pretty skimpy on some of the details. Now, I recognize
what a draft is, and I understand that a draft means that
everything is not completed, but for a draft that mentions
``fee'' 54 times, ``tax'' 58 times and ``penalty'' 98 times,
isn't it odd that we have nothing as pertains to financing this
legislation?
So, Mr. Chairman, will we have a legislative hearing on the
actual bill that this committee might markup when that bill
becomes available? I feel like we ought to emphasize the care
part of health care, and this debate continues to be defined by
two words, ``cost'' and ``coverage.'' Yet we need to know how
many people are covered under this proposal, or how much it
will cost, or how we are going to pay for it.
Mr. Chairman, will you commit that we will at least have a
CBO score on the bill that we will mark up, since we do not
have one on this bill?
Now, everyone if the CBO were here to testify, which they
are not, will they be able to tell us how much this bill will
cost in the outyears? Every change in the Tax Code, every cut
in spending that achieves savings only gets us out 10 years.
From there on out, it will mean Congress will be having to find
tens of billions of dollars a year to keep whatever program we
enact, to keep that going.
And most importantly, as I said, coverage does not equal
access. What does this bill do for patients? What does this
bill do to ensure that we will have an adequate supply of
physicians?
Now, Mr. Chairman, the President said in his break out--
after one of the break out sessions last March, that he wanted
to find out what works. He said it again at the American
Medical Association last week. I applaud him for having an open
mind. I wish this committee, I wish this committee had the same
type of open mind.
You just said you want to work with people who are willing
to work with you. Why, then, Mr. Chairman, have we been
excluded from the drafting of this bill only to receive it,
again, late last week and in a very incomplete form?
Now, I was hopeful and I am still hopeful that we can write
a bipartisan bill. Since no Republican has been consulted thus
far, the totality of this bill, I think that is a disservices
to our constituents. I think that is a disservice to Americans.
Mr. Chairman, we do stand ready to work with you when it is
possible; and when it is not, we stand ready to try to educate
you where you are wrong. And that is what this process should
be about. But it should be done in the arena in the full light
of day and not behind closed doors in the dark of night. That
is how our constituents are best served. That is how the
American people are best served, and certainly for America's
patients and doctors, we should do no less.
I would yield back the balance of my time.
Mr. Pallone. Thank you.
May I just mention, Dr. Burgess was sitting in as the
ranking member, so I gave him the 3 minutes or close to it. But
because we want to hear from the witnesses today and we have so
many, I am asking members to try to limit their remarks to 1
minute today.
Hopefully you got notification of that, because remember,
not only the Health Subcommittee members are able to
participate today; any member of the Energy and Commerce
Committee is able to give an opening statement or participate.
So that is why we limited it to 1 minute.
Next is the gentlewoman from Colorado, Ms. DeGette.
OPENING STATEMENT OF HON. DIANA DEGETTE, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF COLORADO
Ms. DeGette. Thank you, Mr. Chairman.
I will just point out to my friend from Texas, here we are
in the light of day, and we are going to have 3 days of hearing
on this draft.
And I want to thank you, Mr. Chairman, for doing that.
This is a monumental undertaking, and it is going to take
everybody's wisdom and advice. I want to talk about a couple of
things that we all care about in this bill. I think we are all
going to have to do that today because it is such a
comprehensive bill.
First of all, automatic enrollment of newborns into
Medicaid will ensure that all children have access to necessary
immunizations and well-child visits during the first and most
important year of life.
Secondly, primary care workforce incentives and training
programs, like student loan repayments and higher
reimbursements for primary care, will help with the workforce
we need.
And finally, a strengthened infrastructure for health care
quality will let us pay--let us identify and track key health
indicators.
I want to agree with you for the need for prevention, and I
just want to close by saying, we are either going to pay now or
we are going to pay later, and I suggest we focus on Americans'
health.
Thank you, Mr. Chairman.
Mr. Pallone. Thank you.
The gentleman from Georgia, Mr. Gingrey.
OPENING STATEMENT OF HON. PHIL GINGREY, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF GEORGIA
Mr. Gingrey. Thank you, Mr. Chairman.
Mr. Chairman, I want to ensure that every American has
quality health care.
Unfortunately, this legislation will do nothing but ensure
that millions of Americans lose the coverage they currently
have. By including a government health plan and a mandate that
every American purchase health insurance, this bill guarantees
that the only insurance plans available to Americans and
businesses are those that are designed and sold by government
bureaucrats.
For those that argue that the government plan will merely
compete, studies have shown that such a plan will drive out
competition and indeed become a monopoly.
This, the bill before us argues, is the responsible thing
to do. By way of government-made products, mandates, taxes and
partisan politics, this legislation will take quality market-
driven health insurance away from millions of Americans and
lead inexorably to a single-payer national health care system.
We can do better, Mr. Chairman. The minority party has some
well-studied ideas for improving the affordability, the access
and availability of health care.
So far, the majority party in the House has turned a deaf
ear toward working in a bipartisan manner. For the sake of the
American people and those patients I cared for, for over 30
years, I urge you to listen carefully to all voices, and I
yield back.
Mr. Pallone. Thank you.
Vice Chair of the subcommittee, the gentlewoman from
California, Mrs. Capps.
OPENING STATEMENT OF HON. LOIS CAPPS, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Mrs. Capps. Thank you, Chairman Pallone.
And thank you, Chairman Waxman and Chairman Emeritus
Dingell, for your excellent leadership and the hard work that
you and your staffs have put into this draft legislation.
As a nurse turned Congresswoman, this debate is one I have
waited for, for a very long time. We have had many hearings on
this topic, bipartisan hearings, and I thank you for that
opportunity, that it really, truly is coming from all the
people we represent.
Our Nation's health care system is in shambles, and with
legislation, we will finally take the most important steps we
can to fix it. We will put the emphasis on wellness instead of
just illness. We will give patients greater choice and
protection in the health insurance market. We will make sure
that everyone has access to the care they need and deserve.
It is going to take a long time, some difficult choices,
and perhaps a few pennies to get it underway. But we must act,
and we must act now. The price of inaction is simply too high.
I look forward to this coming week and the discussions we will
have on how to perfect this legislative proposal.
I yield back.
Mr. Pallone. Thank you.
The gentlewoman from Tennessee, Mrs. Blackburn.
OPENING STATEMENT OF HON. MARSHA BLACKBURN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF TENNESSEE
Mrs. Blackburn. Thank you, Mr. Chairman.
As I have said so many times in this committee, what is on
the table for us to consider is in essence the Tennessee
TennCare experience all over again. And for those of you who do
not know, that was Tennessee's attempt at an executive order
program of the Governor's Office. This was their attempt at
Medicaid managed care. The plan, that plan is what our Democrat
Governor in Tennessee recently called, and I am quoting him,
``a disaster.''
Eventually that program consumed every single penny of new
revenue in our State. I was a State Senator tasked with funding
that program. That program nearly bankrupted the State of
Tennessee. It is not a model for future success. It is a model
for a looming fiscal disaster.
And I have no clue who the majority thinks is going to pay
for this thing. I have no idea where they think they are going
to get the money for this. Let me tell you, go look at the 10
care records. We cannot afford this program. There is no money
to pay for it. You cannot borrow enough money to pay for this
program.
In Tennessee, we know that this public option always costs
more than initial projections. Cost overruns were through the
roof. Patients are always going to choose free rather than out-
of-pocket care. Employers will force their employees onto the
system. That is why you are going to see more than 120 million
Americans moving off of private insurance if this goes through.
Sound the alarm bell. This is not----
Mr. Pallone. The gentlewoman, I just wanted you to know you
are a minute over.
Mrs. Blackburn. Mr. Chairman, I thank you for that, and I
think this is an incredibly serious situation. And I thank you
for your patience.
Mr. Pallone. Thank you.
I am trying to keep people to a minute. I am not going to
stop you if you go a little over.
Mrs. Blackburn. It is fine. I apologize.
Mr. Pallone. All right.
The gentleman from Utah, Mr. Matheson.
OPENING STATEMENT OF HON. JIM MATHESON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF UTAH
Mr. Matheson. Thank you, Mr. Chairman. I will do my best
with a minute.
We use the terms cost, access and quality a lot around
here, but we really do need to focus on all three. That is what
we are trying to do here. I think this is the most complex
piece of legislation we are going to work on in our careers.
And just maintaining the status quo is not an option. Our
health care system is driving up costs in a way, both the
public sector and the private sector. We can't sustain the path
we are on.
I fear this discussion has focused so much on access, we
are not also looking at the unproductive system we have now.
There is so much money in our health care system today that is
spent in irrational ways. There are so many perverse incentives
built into our health care system. And if we want to achieve
what our President has asked us to do, which is to bend the
curve, the cost curve, the plots where costs are going, if we
want to achieve that, that is where we can really accomplish
something as a group.
So I encourage this committee, as we look at this
legislation, to look for ways to make our health care system
more efficient, get rid of perverse incentives. And if we do
that, I think we will secure a better future regardless of how
we structure the plan.
Thanks, Mr. Chairman. I yield back.
Mr. Pallone. Thank you.
The gentleman from Pennsylvania, Mr. Murphy.
OPENING STATEMENT OF HON. TIM MURPHY, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA
Mr. Murphy of Pennsylvania. Thank you, Mr. Chairman.
And I am thankful we are finally moving forward on this.
Certainly there is not a member in this room on either side of
the aisle, no matter what one's political leanings, who is not
totally dedicated to reforming our health care system as many
of our witnesses are, too.
The question is, which direction? From the time I arrived
in Congress in 2003 and through my time before as a State
senator, I focused my energies on trying to reform this system.
Just on the issue of hospital-borne infections alone since I
have been in Congress, 350,000 people have died, hundreds of
thousands more from other errors. And we have spent hundreds of
billions of dollars in wasted health care.
Our current system of $2.4 trillion wastes about $700
billion a year. Our Medicare and Medicaid system are filled
with problems. We need to address those first. But don't take
my word for it. Take Members of Congress's word for it. In the
110th Congress, 452 bills were brought forward by Members of
Congress to reform Medicare and Medicaid. Members of Congress
signed up to cosponsor those 452 bills 13,970 times.
Members of Congress think we have trouble if the Federal
Government is going to run a health care system. We are not
there. A bill that looks at who pays for premiums and co-pays
is not health care reform. A bill that looks for taxes to pay
for these things is not health care reform. A bill that reduces
costs by reducing payments to physicians and hospitals is not
health care reform.
We have to reform that system. We have the talent and the
ability to do that. And I hope that as we progress in the
coming weeks on this health care reform system, we truly can
look at focusing on outcomes and not quantity and really make
health care more affordable and accessible for millions of
Americans who right now can't afford it.
Thank you. And I yield back.
Mr. Pallone. Thank you.
The other gentleman from Georgia, Mr. Barrow.
Mr. Barrow. I will waive an opening.
Mr. Pallone. The gentlewoman from the Virgin Islands, Mrs.
Christensen.
OPENING STATEMENT OF HON. DONNA M. CHRISTENSEN, A
REPRESENTATIVE IN CONGRESS FROM THE VIRGIN ISLANDS
Mrs. Christensen. Thank you, Mr. Chairman.
And I want to begin by using this opportunity to recognize
the fair and open way in which the Chair Emeritus Dingell,
Chairman Waxman and you, Chairman Pallone, have conducted the
process of getting us to this point today and to thank you and
your staff.
The bill acknowledges that insurance is not enough and
takes steps to promote prevention and wellness, to expand
services and to eliminate health disparities. We appreciate and
applaud your efforts.
But if we are to truly transform our system, we will
continue to push the committee to go further. One specific area
where more progress is needed is in the treatment of the
territories. Just as we will willingly and proudly fight and
die in every war and conflict in defense of our Nation, we
believe that we deserve the same access to health care as every
other citizen and legal resident of the United States. We
understand ``universal health care'' to mean universal health
care.
And finally, I believe that the health and well-being of
every person living in this country is important enough and
vital enough to our Nation's productivity, competitiveness,
strength and leadership that passing a meaningful and effective
health care reform bill should not require an immediate offset
for every provision. Prevention saves. It saves lives first of
all, and it saves money as well.
Thank you, and I yield back.
Mr. Pallone. Thank you.
The gentleman from Ohio, Mr. Space.
OPENING STATEMENT OF HON. ZACHARY T. SPACE, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF OHIO
Mr. Space. Thank you, Mr. Chairman, for your time and your
tireless work on behalf of American consumers.
We stand before a debate so historic and significant that
it arises but once every several generations, and that stake is
an issue of no less importance than the health of the American
citizen, along with the health of the American economy. For,
even though we boast of the most sophisticated health care,
technology, and talented health care professionals in the
world, their services are often out of reach of the average
working American.
Today I offer three areas of critical importance where
improvements must be made. First, we must grow and nurture our
rural health care workforce to ensure the same quality of care
is offered to all residents of this country regardless of where
they reside.
Second, we must make quality affordable health care a
reality for every resident of this country by making reforms
that capture the power of the free market, harnessing what is
best about market forces.
And third, we must change how we treat chronic diseases,
taking more steps to encourage prevention and managing care of
those that they afflict. An investment on the front end will
only result in a higher quality of life for those who suffer
from chronic diseases and cost savings of billions of dollars
to our health care system.
Just as history has judged our efforts to battle for
democracy abroad and put men on the moon, we, too, shall be
judged for our response to this critical moment in history. We
truly cannot afford to fail.
I yield back.
Mr. Pallone. Thank you.
The gentlewoman from Illinois, Ms. Schakowsky.
OPENING STATEMENT OF HON. JANICE D. SCHAKOWSKY, A
REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS
Ms. Schakowsky. Thank you, Mr. Chairman, for moving us
closer to getting where we all want to be, and that is the goal
of comprehensive reform of our health care system.
I want to thank Chairman Waxman and Chairman Emeritus
Dingell who have provided wonderful leadership.
This is a historic moment. Americans are counting on us for
guaranteed access to affordable quality health care and we have
to ask now--act now. People are forgoing care, families are
falling into bankruptcy, businesses are struggling to make ends
meet. I want to focus on two provisions.
First and most important, the public health insurance
option. Consumers need a real choice, and the insurance market
needs real competition. A robust public option provides both.
It is essential to meaningful reform.
Second is the inclusion of the nursing home quality and
transparency act no-cost legislation, which as the title says,
will improve quality and transparency, helping nursing home
residents and their families. There are so many important
provisions in this bill and I look forward to moving it and at
long last creating an American health care solution that meets
America's health care needs. I yield back.
Mr. Pallone. Thank you.
The gentleman from Texas, Mr. Green.
OPENING STATEMENT OF HON. GENE GREEN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF TEXAS
Mr. Green. Thank you, Mr. Chairman.
I want to thank you for holding this series of hearings on
the health reform discussion draft. I am pleased we are
starting the process on addressing the issues facing the 47
million uninsured individuals in our country. There is a lot of
good things in the discussion draft that I know we will hear
about and we will talk about over the next few days.
One of the issues that I would like to point out is
something I have been working on with a number of members on
our committee that the discussion draft doesn't include, the
elimination or the--over a period of years, the 24-month
disability waiting period for disabled individuals under 65 for
Medicare. Unfortunately, once again, we leave these individuals
out in the cold. Currently 1.8 million individuals are stuck in
a 24-month waiting period. Of those individuals, 39 percent are
uninsured, and 13 percent will die before they endure that 2-
year wait.
Congress deliberately created the waiting period in 1972 to
keep Medicare costs down. And I believe the 24-month waiting
period is a shameful example of how we refuse to cover disabled
individuals whose medical treatment is deemed too costly. I
sponsored ending the Medicare disability waiting period for 5
years, and each year, we were unable to move the bill because
it is too expensive. And again in this draft, we refuse to
address the issue. So the reform drafts would allow some of the
individuals to obtain a government subsidy to purchase
insurance through the exchange. And if they live through the
24-month waiting period, once they receive their disability
determination, they can then switch to Medicare.
Why would we want disabled and chronically ill switching
insurance coverage and possibly switching physicians? And I am
not sure the exchange will provide these disabled individuals
of the complex medical treatment and coverage for equipment
that they need. And I strongly urge the committee not to push
aside those who endure that 24-month waiting period, even after
you wait to get a disability determination from Social Security
just for monetary concerns. We can eliminate that waiting
period over a period of years and show that we do recognize the
problems the disabled have.
And I yield back my time.
Mr. Pallone. Thank you.
The gentlewoman from Wisconsin, Ms. Baldwin.
OPENING STATEMENT OF HON. TAMMY BALDWIN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF WISCONSIN
Ms. Baldwin. Thank you, Mr. Chairman.
And thank you to our witnesses for being here today. We
have before us what is an amazing accomplishment, the work of
many years of research and analysis and a collaborative effort
of this diverse committee. It is difficult to overstate the
importance of our task. We have been in this position before,
but this time we simply must succeed.
As President Obama said earlier this year at our Joint
Session, health care reform must not wait; it cannot wait, and
it will not wait another year. As we debate the details and the
intricacies of this draft, I want to be sure that we remember
the people, the children and the families that are waiting with
great hopefulness for us to act. Our country is suffering under
this growing burden, and it is our responsibility to answer
their call.
I am very pleased to see that this draft includes a public
health insurance option. I have been unwavering in my support
for this aspect of reform, and I believe that this plan will
lead the way for reforming our delivery system, emphasizing
prevention and paying for quality.
I have a few suggestions for improvement to the bill, but I
look forward to working with my colleagues on moving this
forward.
Thank you again, Mr. Chairman. I yield back the remainder
of my time.
Mr. Pallone. Thank you.
The gentlewoman from California, Ms. Matsui.
OPENING STATEMENT OF HON. DORIS O. MATSUI, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Ms. Matsui. Thank you, Mr. Chairman. I want to thank you,
Chairman Waxman, Chairman Emeritus Dingell, on the excellent
work to get this crucial legislation to where it is today.
I am particularly pleased with Section 2231 and Section
2301 of the draft bill. These sections build off legislation I
wrote to create a public health workforce corps and to
centralize prevention spending in a wellness trust fund. Public
health and prevention are critical aspects of a strong health
care system. They must be part of our national strategy to
control health care costs, create better health outcomes for
people, and ensure that the health care system works for all
Americans.
Without public health and prevention, we will never drive
down health costs, nor will we move our society from one
focused on treating sickness to one that promotes wellness and
healthy living. I urge my colleagues to support these critical
components of the draft bill before us today, and I yield back
the balance of my time.
Mr. Pallone. Thank you.
STATEMENTS OF RALPH G. NEAS, CHIEF EXECUTIVE OFFICER, NATIONAL
COALITION ON HEALTH CARE; RICHARD KIRSCH, NATIONAL CAMPAIGN
MANAGER, HEALTH CARE FOR AMERICA NOW; AND STEPHEN T. PARENTE,
PH.D., DIRECTOR, MEDICAL INDUSTRY LEADERSHIP INSTITUTE
Mr. Pallone. The committee will now receive testimony from
the witnesses. And I will call up our first panel. Let me
introduce each of them at this time if I could. Starting on my
left is Ralph G. Neas, who is chief executive officer of the
National Coalition on Health Care. Next to him is Richard
Kirsch, who is national campaign manager for Health Care For
America Now.
Good to see you.
And then we have Dr. Stephen T. Parente, who is director of
the Medical Industry Leadership Institute.
And this panel is on health reform coalition views. I am
going to ask each of you to give a 5-minute statement. Of
course, your full statement becomes a part of the record. And
then when you are done, we will start having questions for the
panel.
And we will start with Mr. Neas. Thank you for being here.
STATEMENT OF RALPH G. NEAS
Mr. Neas. Chairman Pallone and Ranking Member Burgess and
members of the full committee and subcommittee, thank you so
much for the opportunity to appear before you on this momentous
occasion, day one of hearings to discuss the House Tri-
Committee Health Care Reform Discussion Draft.
I am pleased and proud to be joined by the founder, the
visionary founder, and president of the National Coalition on
Health Care, Dr. Henry Simmons, who is sitting right behind me.
Among many other things, Dr. Simmons was the deputy assistant
secretary to President Richard Nixon for health in the early
1970s.
The National Coalition on Health Care is honored to be here
and heartened by the progress made by the three committees. We
hope that this draft bill can serve as the springboard for
comprehensive and sustainable health care reform. Like you, we
believe that the time for action is now, this year.
Reform of our health care system is a vital condition
precedent for fixing the nation's faltering economy. The fiscal
crisis facing us cannot be addressed successfully without the
simultaneous overhaul of our health care system. America is on
a dangerous path to sharp increases in the cost of health care
and the numbers of uninsured and underinsured Americans to
unsustainable burdens on our economy and on Federal and State
budgets, and to indefensible, avoidable harm to millions of
patients and massive waste from substandard and uncoordinated
health care.
The rigorously nonpartisan National Coalition on Health
Care is the Nation's oldest, broadest and most diverse alliance
of organizations working for comprehensive health care reform.
The coalition's 78-member organization stands for more than 150
million Americans.
The Coalition's five basic principles for health care
reform, coverage for all; cost containment; improved quality
and safety; simplified administration; and equitable financing,
are interdependent. We believe reform, to be effective, must
address all of these issues in a systemic way that recognizes
their interconnectedness.
After more than 18 months of deliberations, the Coalition
developed a set of principles and specific recommendations. I
would ask that they be included for the record, along with my
written statement. As the Coalition operates on the basis of
consensus, we have begun an expedited process of discussing the
provisions of the draft bill with our members. Only as these
internal consultations progress will we be able to provide more
detailed views and consensus recommendations regarding optimal
formulation of the final bill.
However, let there be no doubt that the Coalition strongly
commends the cross-jurisdictional collaborative tri-committee
effort to address the central challenges facing our Nation in
health care, specifically how to slow the growth of health care
costs; how to extend coverage to Americans without health
insurance; and how to improve the quality of care and the
efficiency with which it is delivered.
The draft is appropriately ambitious in its scope and its
recommendations. We believe that reducing costs while expanding
coverage not only can be done but must be done. Now is the time
to be pragmatic and bold, to keep what is good and to fix what
is broken in our Nation's health care system. We must come
together to pass systematic reform that sets our Nation on a
better path toward affordable, high quality care for all
Americans and solid fiscal responsibility.
The Coalition members have long believed that securing
coverage for all Americans should incorporate a range of
mechanisms, including responsibilities for individuals and
employers; the expansion of existing public programs, such as
Medicare and Medicaid; information and framework to improve
competition among private insurance plans; and the creation of
an additional and carefully designed public option.
The Coalition would encourage consideration be given to
adding detail to the definition of the service to be covered in
an essential benefits package. Many of our members would want
us to emphasize the importance of calibrating the revisions
regarding the public option to make sure that it would function
as the drafters clearly intend on a level playing field with
other plans.
We applaud the inclusion of a wide range of measures to
improve the efficiency of health care liberally while enhancing
the quality and safety of care and also providing support for
evidence-based prevention. Escalating health care costs puts
health care coverage out of the financial reach of tens of
millions of Americans and their employers. Thus we suggest
consideration of the use of short-term regulatory constraints
to slow the pace of increase in the cost of essential coverage.
The Coalition applauds the chairman for the leadership. The
enormous added momentum your joint efforts have given to the
reform process cannot be overstated. Indeed, this is truly an
extraordinary moment in history. Too much is at stake for us to
risk failure due to partisanship. It is only through a
commitment to shared responsibility and shared sacrifice that
we can rise to meet this once-in-a-generation opportunity to
develop an achievable and uniquely American solution. To
protect the generations to come, let us work together to enact
health care reform that is at once moral and fiscally sound.
Thank you, Mr. Chairman.
[The prepared statement of Mr. Neas follows:]
Mr. Pallone. Thank you, Mr. Neas.
And as I mentioned, all of your written testimony, your
documents that you gave me, will be included in the record. So
you don't have to make a special request for that.
Mr. Kirsch.
STATEMENT OF RICHARD KIRSCH
Mr. Kirsch. Good morning, Chairman Pallone, members of the
committee. My name is Richard Kirsch. I am the national
campaign manager of Health Care For America Now, a coalition of
more than 1,000 organizations in 46 States that are committed
to a guarantee of quality, affordable health care for all
according to specific principles.
Those principles have been endorsed in writing by the
President of the United States and 196 Members of Congress,
including 176 Members of this House from both parties.
And I am so glad to be with you this morning because the
legislation you have drafted meets those principles. It would
deliver on the promise of quality, affordable health care for
all in a system that is retooled to deliver better quality at
lower costs. You have done so in this unique tri-committee
process that recognizes the urgency and historic imperative of
this issue.
Our current health care system is a huge stumbling block to
the American dream. No matter how hard we work or make
responsible choices for ourselves and our families, our health
care system too often gets in the way. For too many families,
one serious illness can mean financial disaster. As medical
costs contributed to more than three out of five personal
bankruptcies and the great majority of those were people with
insurance.
And even if you have good insurance, you find your choices
limited and your dreams deferred. You want to look for a new
job, start that new business, retire at age 59; trapped because
you won't be able to get affordable coverage if you can get
coverage at all. And, of course, there are too many families
that can't get coverage at all.
Neither can many small businesses, that other great engine
of the American dream, who want to do the right thing for their
employees but can't as health care premiums skyrocket every
year.
The good news is we can fix what is wrong with the system
with a uniquely American solution. For those who say we can't
do this, it is too complicated, it is too much to take on, it
is too much at once, your legislation is proof positive that,
yes, we can.
As Americans begin to pay attention to the health care
debate, they will increasingly ask, what does this mean to me?
Here is how I would explain how this works to the average
American and why it will make their lives better. If you have
good health coverage at work, you can keep it. But there will
be two important changes. Under your legislation, you no longer
have to worry about your coverage at work getting skimpier
every year or your employer taking a bigger chunk each year out
of your paycheck. Your employer coverage will not be barebones.
It will cover most of your health care. It won't stop paying if
you get seriously ill. Your job will pay a good share of
coverage for you and your family.
One more thing. Whatever job you take, you will have good
health care. That is because all employers will either provide
coverage or help pay for it.
If you don't get health coverage at work or you work
several part-time jobs, you are self-employed, retire early or
simply out of work, you will now be able to get good affordable
coverage. You won't be turned down because of a pre-existing
condition or charged more because you have been sick or you are
a woman of childbearing age. You can still be charged more if
you are older but only so much.
And how much will it cost you? The amount you pay will be
based on your earnings and the size of your family, with
assistance for low-, moderate-, and middle-income families. To
get insurance, you go to a new marketplace called an exchange,
one-stop shopping for health coverage. All plans will have a
decent level of benefits and play by the same rules. No matter
which plan you choose, your out-of-pocket costs will be
limited, no more catastrophic medical bills.
You will have a choice of the new public health insurance
plan, too. So you won't be limited to the same private
insurance companies that have a record of denying or delaying
care while they raise premiums three or four or five times more
than wages.
As the President says, there are two reasons for offering
the choice of a public health insurance plan. The first is to
lower costs, a plan that doesn't pay the average CEO $12
million a year or sky-high administrative costs. The mission of
the public health insurance plan will be to drive the kind of
delivery systems changes we need to innovate, provide better
value, and invest in our community's health. A plan that will
inject competition into 94 percent of markets that--or into
competitive under DOJ standards.
The second reason the President says we need a public
option is to keep insurance companies honest. The 93 percent of
Americans who don't trust private insurance companies know that
no matter how much we regulate them, their first order of
business, actually their legal fiduciary responsibility to the
shareholders, is to make a buck. And when they pay for
someone's costly care, their profits go down.
An additional reason for the public health insurance plan
is to ensure they make real progress at eliminating the
barriers and disparities in access to needed services that are
too often experienced today.
Poll after poll shows strong support for the choice of a
public health insurance plan with strong support on bipartisan
lines.
This legislation also answers the crying need for small
business for affordable coverage by offering tax credits, and
allowing small businesses to enter the exchange, and gives them
the advantage of large pools and lower costs.
The legislation does a great deal more for the poor through
Medicaid, for seniors on Medicare, to address the lack of
primary care providers and the disparities and access to health
care.
I am almost done.
Are there ways of improving this draft? Although there are,
there are not a great number. And I will detail that in my
written testimony. Let me conclude by asking you to keep one
question in mind over the coming weeks: As you hear from a
myriad of interest groups complaining about this and that, it
is the question that your constituents will ask at the end of
the day, will I have a guarantee of good coverage that I can
afford? The draft legislation you presented answers with a
resounding yes. And if the answer remains yes next fall when
you send the bill to the President for his signature, you will
have done your jobs and in doing so made history.
Thank you.
[The prepared statement of Mr. Kirsch follows:]
Mr. Pallone. Thank you.
Dr. Parente.
STATEMENT OF STEPHEN T. PARENTE, PH.D.
Mr. Parente. Thank you, Chairman Pallone and members of
this committee, for this opportunity.
We are in the midst of the seventh major attempt of
national health reform, beginning with the Wilson
administration. Since that first attempt, there has been
President Roosevelt's second attempt in 1936; President
Truman's third attempt in 1948; President Johnson's fourth
attempt leading to a compromise that created Medicare and
Medicaid; President Nixon's limited fifth attempt; President
Clinton's sixth attempt.
With President Obama's call for reform, will seven be the
lucky number?
My name is Steve Parente. I am a health economist from the
University of Minnesota and a principal of a health care
consultancy, HSI Network. My areas of expertise are health
insurance, health information technology, and medical
technology evaluation.
At the university, I am a director of an MBA specialization
in the medical industry and a professor in the Finance
Department with an adjunct appointment at Johns Hopkins School
of Public Health.
Most recently, I and my colleague, Lisa Tomai from HSI,
have scored health reform proposals as they have emerged in the
last 4 weeks. We are using ARCOLA, a microsimulation
methodology initially funded by the Department of Health and
Human Services and published in the journal, Health Affairs.
There are two things people most want to know about these
proposals. One, how many of the uninsured will be covered? Two,
what will it cost the Nation in 1 year and in 10 years? HSI
estimates, like CBO's recent results, find there is no free
lunch to expand health insurance coverage.
Our early assessment of the Senate Finance Committee
proposal shows a 74 percent reduction in the uninsured with a
10-year cost of $2.7 trillion using a public option plan
modeled after the Massachusetts Connector.
We also modeled an FEHBP version of that plan and got a
cost of over $1.3 trillion, but with a 30--only a 30 percent
reduction in the uninsured because the plan is generally more
expensive and not enough incentives are given.
CBO scored the Kennedy bill last week at approximately a 30
percent reduction for $1 trillion over 10 years. Using the
ARCOLA model, we found nearly everyone will be covered if all
elements of the Kennedy bill were enacted at a 10-year cost of
$4 trillion. That $4 trillion estimate over 10 years assumes a
public option plan with bronze, silver and gold levels and the
proposed insurance exchange with a subsidy for premium support
that is income-adjusted and calibrated at the silver level.
The silver level is what most Americans would like in
health insurance today. It is the equivalent to a PPO plan with
medium levels of generosity, something with a 15 percent co-
insurance, manageable co-pays and good access to physicians and
hospitals.
We accounted for the public plan being reimbursed at 10
percent above Medicare reimbursement, which is also 10 percent
below commercial insurance plans.
In the individual market, we assume the public option plans
would be community rated and the rest of the individual market
would be as it is today. For those offered insurance, we assume
the public plan would be--my teleprompter broke. Because the
public plan can compete with the individual and group market
offerings, we saw a crowd-out in the public plan of 79 million
covered lives with the majority of people leaving employer-
sponsored medium-sized PPOs and HMOs.
At this time, we are the only group yet to score the full
Kennedy proposal. We released it last Sunday, June 14th, on our
HSI network.com home page, 2 days before CBO's preliminary
estimate. This work was completed as a public service without a
funder from industry or a political sponsor.
Some proposals we have examined have specific pay-fors
already scored by CBO that can substantially reduce their cost,
such as the Coburn-Ryan bill, with a 72 percent reduction and a
10-year cost of $200 billion with the pay-fors accounted for or
$1.7 trillion without.
One conclusion emerges every time we score a plan: None are
revenue-neutral. Even with Medicare and Medicaid pay-fors, the
savings in those programs need to deal with the cost pressures
of those programs. In all likelihood, these proposals, if
enacted, would escalate the rate of growth of our national
debt, particularly the Kennedy plan.
As a Nation, we are on the verge of making a multimillion
dollar gamble that more per-capita health care deficit spending
will make us better off as a society. We are wagering with
starting bids in trillions that have excessive spending in the
health care system. Hoping that these billions and trillions
will lead to a breakthrough medical technology that can
eliminate whole diseases, such as diabetes and Alzheimer's.
This is actually not a bad path. It happened before with
tuberculosis, but not quite at this level.
It is not an unreasonable wager since Federal funding for
heart disease and cancer either directly through research or
indirectly through Medicare has yielded state-of-the-art
medical care, but it is a wager nonetheless. And we find our
reckoning is not only with the future debt of our children, but
their security when the economic crisis has brought
international scrutiny upon the U.S. from the principal
purchasers of our treasuries.
Furthermore, saving businesses from paying health care
costs or a State government with Federal intervention is simply
an accounting cost shift that only saps our long-term economic
growth.
President Obama spoke recently in Wisconsin of the need to
expand health coverage to bend the cost curve down. I watched
him say it 3 times in 5 minutes.
May I respectfully suggest that bending the cost curve down
starts with active management of Medicare. For 5 months, we
have been without a CMS administrator while there have been
over 400 billion in----
Mr. Pallone. Dr. Parente, I don't mean to interrupt, but
you are a minute over, so If you could kind of wrap it up.
Mr. Parente. I will wrap up. Pardon me.
In summary, there is greater consensus today that health
care reform must be undertaken. It will not be free. It will,
as it always was, be a political decision that was more so
political than economic. So much can be done now with great
expansion, but it will come at great cost.
Thank you.
[The prepared statement of Mr. Parente follows:]
Mr. Pallone. Thank you.
We will now have questions from the members of the
subcommittee.
I should mention that everyone, again, that members of the
full committee are going to participate in the same way and
have 5 minutes each. And if you were here and passed on the
opening, you will get an extra minute. But if you weren't here,
then you don't get an extra minute. Just to make the rules
clear.
And I am going to start with myself. I am trying to get two
questions in here, one about the need for comprehensive reform
and one about the public option. So I will start with the
comprehensive reform. But if we go too long, I may stop because
I want to get to the public option, too.
Mr. Neas, the National Coalition on Health Care has always
envisioned the need to address health reform in a comprehensive
manner, as your testimony sets out this morning. And in our
discussion draft, we address issues ranging from the workforce
and prevention and wellness to coverage costs and quality
improvement. Is it possible to address this in a piecemeal
fashion, or do we need the comprehensive approach to tackle
this issue?
Mr. Neas. Mr. Chairman, it is absolutely essential that
this be done in a comprehensive way, as we point out in our
testimony and all of our published materials. It is essential
that we have systemic, systemwide change in this country in our
health care system. To do it piecemeal, we could end up with a
system much worse. You could cover everybody, but you don't
have cost containment or you don't have it paid for in the
right way or you don't have quality. All of these principles
are interdependent. They rely on one another. You have to do it
all at once. You can't do it incrementally, and you can't do it
piece by piece.
Mr. Pallone. OK.
Let me go to Mr. Kirsch, then, about the public option. We
have a public option in the discussion draft in a manner that
assures, in my opinion, the levelest possible playing field
with the multiple private insurers who will also be competing
with the public option. So I have four questions, and I am just
going to read them and ask you to try to get through them in
the next few minutes here.
First, why do we need a public health insurance option?
Won't the exchange function better with just the competing
private insurers?
Second, what do you think of the alternatives to the public
option set out in or draft? People have mentioned co-ops or
State By State options or a public option triggered only if
certain criteria are met.
And then, third, you know, outside the Beltway, as I guess
we don't really care much about the Beltway anymore, is the
public option a partisan issue?
And fourth, would a public option help or hurt small
businesses?
If you could try to address those in 3 minutes or less.
Mr. Kirsch. And try to talk not too fast. OK.
Why a public option? If we don't, we are just rearranging
the deck chairs on the Titanic, and I guess the regulation is
maybe giving those chairs a shiny coat of paint.
The fact is we have had a private insurance industry that
has been running our health care system for quite a while now.
We have had premiums go up several times as much wages--in some
states, multiple, multiple times as much as wages. At the same
time people have poor quality care, and they are used to denial
and delays all the time from health insurance companies.
We need a public option to do the two things the President
says, to lower costs, to have an actor in the system that is
mandated to have a kind of lower cost operations it can have,
and also to keep insurance companies honest because their
bottom line will always be hurt every time they pay for a
significant claim.
Mr. Pallone. What about the alternatives, the co-ops that
trigger----
Mr. Kirsch. The alternatives are basically ways to kill the
public insurance option. The trigger is basically saying, we
are not going to have it unless things get worse. There is an
old expression: Fool me once, shame on you; fool me twice,
shame on me. The insurance industry basically said in 1993,
1994, leave it to us to fix the system. We have seen what we
have gotten. We can't wait any longer. We have waited a long
time for the insurance system to fix this system, and they have
failed.
The co-op, an interesting comment from an Oppenheimer &
Company analyst says, the co-op proposal is a great gift to
publicly-traded insurance companies. It is doomed to fail. It
was basically a political invention to try to placate
Republicans who didn't want a government role in providing an
option, and it has no policy benefits. We have lots of
nonprofit insurers in this country that haven't done the
market-changing factors we need to provide the kind of care.
Mr. Pallone. Third, would be outside the Beltway, is the
public option a partisan issue?
Mr. Kirsch. No. It is extraordinarily popular. The first
polling question we asked was, public, would you prefer a
public plan, just a choice of just public insurance, private
insurance, or public and private insurance? Not only did 73
percent of Americans say they wanted a choice; that included 63
percent of Republicans.
In the case of the New York Times poll just released over
the weekend, 72 percent of Americans say they wanted a choice
of the language of a government-administered plan like Medicare
to compete with private insurance. So using the government
word, and still 73 percent of Americans wanted it, including 49
percent of Republicans, which means more than--and many fewer
than that opposed it.
Mr. Pallone. What about the impact on small businesses?
Mr. Kirsch. And small businesses? Small businesses like
everyone else need lower-priced coverage. And again, there are
a lot of things in your legislation that make huge advantage of
small business. We should talk about it. One of those is the
public option because to the extent the public option is
offering good quality at a lower cost, small businesses will
benefit.
Mr. Pallone. Thank you.
Mr. Burgess.
Mr. Burgess. Thank you, Mr. Chairman.
Dr. Parente, first off, you were--the buzzer or someone
interrupted you where you were about to make a point about not
having a CMS director. Would you care to finish that point?
Mr. Parente. Simply to say that there should be a CMS
administrator given that there is $400 billion that has already
been spent by that program. If you want to bend the cost curve
down, one of the places where the costs are going out the door
right now is Medicare and Medicaid. That needs active
management.
If even people were to put in modernization for some of the
fraud, things that have been put on the table, some of it
actually in the bill, that would be useful. But right now,
because it is essentially a caretaker administration over at
CMS, none of that can occur.
Mr. Burgess. Let me ask you a question, and certainly, you
know, hats off to your group for doing that exhaustive work on
the Kennedy bill under such a short period of time. Are you
going to do a similar scoring for the draft discussion that we
have in front of us this morning?
Mr. Parente. Yes.
Mr. Burgess. And when might we expect for that information
to be publicly available?
Mr. Parente. I am hoping that it would be on the HSI Web
site by tomorrow morning at 8:00 a.m.
Mr. Burgess. Tremendous. Thank you for doing that as well.
Now, when you were here last fall, I think it was the day
after Lehman Brothers failed, if I recall correctly, and the
whole world changed. This $4 trillion figure that you talked
about for the three tiers of the public option under an FEHBP-
type structure, you also referenced a low end that would be
essentially Medicaid for all that would be much less expensive.
And if I recall correctly, that was about $60 billion a year or
$600 billion over 10 years. Do I recall that correctly?
Mr. Parente. That is correct.
Mr. Burgess. Now, assuming that the reality lies somewhere
in between those two-- well, let me just ask you this. Have you
looked at--under the proposal before us today, Medicaid is
offered--a full Federal component of Medicaid is offered for
everyone at 133 percent of poverty and below, not just the
existing populations, but for all populations. Do you have an
idea what the cost for that is?
Mr. Parente. Not as specifically. Actually, the public
option plans, with the subsidies that are proposed, at least in
the Kennedy bill, addresses a fair bit of the population. A
round guess on that cost would be probably somewhere in the
vicinity of about--no more than about $30 billion or $40
billion per year.
Mr. Burgess. Very well.
Let me ask you a question. And we hear the President all
the time, in fact he said at the White House last March, that
the only thing that was not acceptable was the status quo and,
if you like what you have, you can keep it. Well, it is kind of
tough to reconcile those two positions.
Do you think, under the bill that is under consideration
today, the draft bill, the tri-caucus bill that is out there,
do you think it is reasonable to assume that, if you like what
you have, you can keep it, under the parameters of the bill
that are before us today?
Mr. Parente. I think it is really determined by how the
public plan is ultimately deployed. I mean, as you all know, it
is a very long road from whatever this legislation is to
enactment, which could be 3 to 4 years from now.
The concern, really, is crowd-out. It is hard to say what
the public plan model would look like, in terms of logistical,
operational terms. It if it operates like TRICARE, that could
be a crowd-out potential. If it operates like FEHBP, that would
definitely be a crowd-out potential because it is more generous
than the standard market today.
Mr. Burgess. Mr. Kirsch, let me ask you a question. In
yesterday's Politico you have an opinion piece, and you talk
about the three things that are likely to make this legislation
happen. And the third thing, the organization where it counts
most outside the Beltway--now, I don't know how far outside the
Beltway you have gotten. In north Texas, I will tell you that
65, 68 percent of the people in my district--and it is not a
wealthy district, it is a working district, a rural district,
an inner-city district, as well as a suburban district--but 65
to 68 percent of the people in my district are satisfied or
very satisfied with the insurance coverage that they have
today.
In spite of the fact that so many people are demanding
change, that seems like a pretty high number that is accepting
of where they are right now.
Mr. Kirsch. Well, it always depends, on all these things,
on how the questions are asked. Basically, if we look at the
views nationally, according to the New York Times, 85 percent
of people believe that the health insurance system needs
fundamental change or it needs to be completely rebuilt; 86
percent believes it is a somewhat--61 percent believe it is a
serious threat to the economy.
What people are dealing with is they may be happy with
their insurance at the moment, but what they are totally
terrified of is what happens if they lose their job. And so
they want a system----
Mr. Burgess. Correct. And let me just interrupt you there,
because I think we can address those problems and correct those
problems without turning the entire system on its head.
Now, the last New York Times-CBS poll that I guess is the
one you are referring to, just a curious figure down toward the
end of it: Of the people polled, 48 percent voted for President
Obama, 25 percent voted for Senator McCain, and 19 percent
didn't vote.
That is a curious sampling, and I wonder if that may not
have skewed the results that were reported so widely on the
Sunday shows yesterday.
Thank you, Mr. Chairman. You have been generous. I will
yield back my time.
Mr. Pallone. Thank you.
The gentlewoman from Colorado, Ms. DeGette.
Ms. DeGette. Thank you very much, Mr. Chairman.
Dr. Parente, I read your testimony, and I wanted to talk
with you a little bit about some of your analysis around the
public plan and cost savings and so on.
I certainly agree with you that we need to try to get cost
savings in Medicare and in other programs. But what we have
seen, for example, in Massachusetts, since they have put
together their connector system without a public plan, the good
news is they got almost everybody enrolled in health care. The
bad news is they got absolutely no cost savings, and their
costs are going up as much as everybody's.
So I am just wondering if you can tell me--and I apologize,
I didn't read your piece in Politico. But I wonder if you can
tell me, do you think all potential public plans are a poor
idea or just ones that would cause this crowd-out?
Mr. Parente. I don't think all public plans are a bad idea.
I think, as I understand as an economist what you are trying to
do----
Ms. DeGette. Or, at least, what you have done is you have
analyzed the Senate bill.
Mr. Parente. Right.
Ms. DeGette. And I understand that was the bill that was
out there. But we, as you know, are a little sensitive over
here about having our own bill and having it be a work in
progress. So you can give your opinion on the Senate bill,
recognizing that is not our bill.
Mr. Parente. I understand. And there are similarities, so--
--
Ms. DeGette. Yes.
Mr. Parente. --a lot of the structure is very similar. Like
I said, I applaud some of the things that are put in for
Medicare that are related to cost savings and such.
A public plan is designed to inject competition into the
system. What concerns me is that there already is quite a lot
of competition in the private insurance market space. A few
things----
Ms. DeGette. Well----
Mr. Parente. A few issues--just one clarifying comment. If
you look at what Massachusetts did very well, it simplified the
benefits so that most people can get a sense of what was
available.
Ms. DeGette. Right.
Mr. Parente. But if you look at what actually did the deed
to get everybody covered, it was mostly through high-deductible
health insurance plans.
Ms. DeGette. Well, you know, I am sorry, I have a limited
amount of time and we have two other witnesses. But there was a
study that was just released by Health Care for America that
found that 94 percent of the communities in the country do not
have a competitive health insurance market. For example, in
Pueblo, Colorado, they have one provider, WellPoint, that has
76 percent of the market share. And so, in fact, we don't have
robust competition in 94 percent of the country.
So I am wondering, don't you think that a public plan might
be able to help with competition in communities like that?
Mr. Parente. Not if it doesn't have active price
competition. So my concern is what if the----
Ms. DeGette. Right. Well, let's say it does have active
price competition, then your objection is that everybody leaves
the private plans because it is cheaper. But isn't that a noble
goal?
Mr. Parente. To have everybody leave the private plans?
Ms. DeGette. No, that people be able to buy cheaper health
insurance.
Mr. Parente. Yes, that is a noble goal. But if you are
going to regulate the public plan to basically go into price
competition with the private insurance industry, you have to
ask with your question, how are you going to be able to price-
fix those public plans to be able to do that?
Ms. DeGette. Oh, you know, just so you know, at least from
the view of--at least from my view, I don't think that we
should price-fix the public plan and give them an artificially
low price. I think most of us on this committee would think, if
we have a public plan, they should be able to compete with the
private insurance companies.
Mr. Kirsch, I am wondering if you can comment on that study
by Health Care for America and why that necessitates the need
for a public plan.
Mr. Kirsch. Right, yes, Congresswoman, as you said, 94
percent of the market--this is actually AMA data that we use in
our study--are highly concentrated by Department of Justice
standards, which means people don't really have choices in
State after State, like in Pueblo, Colorado, and municipalities
or areas around the country.
It is also the question of the right kind of competition.
It is having competition; it is also having competition for an
insurance company that cares about people's health care more
than a healthy bottom line. So it is both factors we are
looking at.
Ms. DeGette. Yes. And it would seem to me, for all the
panelists, Mr. Neas and everybody, that one way that we could
improve our health care system is to get the competition, but
also to try to get cost savings through Medicare. And I don't
think those things are mutually exclusive, do you, Mr. Neas?
Mr. Neas. Absolutely not. And I think we can applaud the
work of some of the States, like Massachusetts or Tennessee.
However, they were not systemic, systemwide reform that
addressed cost containment, that addressed simplified
administration and other issues. You have to do it as a
comprehensive package.
This could be done. And I think the committee has done a
good job, a good start, on the public plan, trying to make sure
that it would be on an equal playing field, not giving an
advantage, be fair and competitive.
Ms. DeGette. And I won't vote for a public plan that has an
unfair advantage over the private plans. But I do think we need
to find some place for competition, to keep everybody trying to
find their best price points.
Thank you very much, Mr. Chairman.
Mr. Pallone. Thank you.
The gentleman from Georgia, Mr. Gingrey.
Mr. Gingrey. Mr. Chairman, thank you.
I want to address my first question to you, Mr. Kirsch. You
made a statement in response to one of my colleagues, I think
the question of why the public option plan. And you said, well,
the insurance company--the health insurance companies are so
egregious in what they have failed to do. I think you said,
fool me once, shame on me; fool me twice--or just the
opposite--fool me once, shame on you; fool me twice, shame on
me.
Why do you feel that, based on that, that we should give
the, as I think this will do, this bill, the death penalty,
essentially, to the private market? Why not give them 30 years
in prison rather than the death penalty? Why is it you want to
come down so hard?
Why not let an exchange function, at least for a period of
time, to see how that competition works to bring down prices,
as it has indeed done by the prescription drug plans in Part D
of Medicare?
Mr. Kirsch. So, let me just say that single-payer would be
the death sentence. This option is, in effect, saying, ``You
get a chance, but you don't get to have the field to
yourself.'' I want to address----
Mr. Gingrey. But let me interrupt you just for a second.
You understand I feel like that a public option is a step, a
giant step, toward a single-payer.
Mr. Kirsch. So I was just going to address, if I could--and
this level playing field thing drives me crazy.
Private insurance companies have 158 million to 170 million
customers. There are networks in place, they have years of
brand loyalty, they have contracts with businesses, they have a
well-established place in American society. They are going to
continue, as they have done in Medicare, to try to do
everything possible to cherry-pick and avoid people who have
high health care risks even in a regulatory scheme.
In terms of a level playing field, the public health
insurance option is going to start at an enormous disadvantage
because it doesn't have all those things in place. And when the
private insurance companies whine that can't compete with the
government, I have to begin to wonder, do they really believe
the polls that say that 93 percent of Americans don't trust
them, and that is why they can't compete?
Mr. Gingrey. Well, let me ask you this question. You say on
page 2 of your testimony, and I quote, ``The good news is that
we can fix what is wrong with the system with a uniquely
American solution''--a uniquely American solution similar to
what we did with AIG, uniquely American solution similar to
what we did with General Motors?
What is uniquely American about interfering with the free-
market system in this country?
Mr. Kirsch. Well, first of all, we are not talking about
bailing out the insurance industry like we bailed out General
Motors and AIG. We are talking about giving the insurance
industry some competition.
And what is uniquely American about this is saying, we are
not going to have a system that is just private, we are not
going to have a system that is just public; we are going to
build on what works in America.
What works, in some ways is private insurance, has got
problems, has worked for our parents and grandparents, is
Medicare. We are going to use two systems you are familiar with
and combine them, and that is the uniquely American part of the
solution.
Mr. Gingrey. Let me switch to Mr. Parente.
Mr. Parente is an economist. I would like to get your
opinion on what impact will the employer responsibility
policies in this draft have on employers' ability to create
jobs and put more people back to work? I want you to answer
that.
And I also want to know if you have seen anything in this
draft legislation in regard to the reserve funds that the
public plan would have to come up with. And where would they
get that money to be on a level playing field with the private
health insurance plans that also would be competing in the
exchange?
Mr. Parente. The employer question, first of all, it really
depends on the size of the employer. There is--I have to look
at this more carefully, will before 8:00 a.m. Tomorrow morning.
But there is the provision that there has to be some pay or
play option that is in this. That will always impact employers
in a way depending upon the size of those particular employers
that are in place.
And your second question?
Mr. Gingrey. Well, let me switch it over to Mr. Neas on the
second question.
Mr. Neas, do you see anything in this draft that calls for
the public plan providing a reserve fund before they can do
business, just like any other health insurance company doing
business? Any State in this country would have to have a
certain amount of money available before they could start
offering a product so that they could cover these claims that
occur. They would have to have that reserve.
Where would it come from in the Federal Government plan,
and how much money are we taking about?
Mr. Neas. Mr. Gingrey, I must confess not to knowing every
single phrase or sentence in the bill. My recollection from
going over the materials over the weekend was that the
committees plan to have this public insurance option compete on
an equal level, be competitive.
And, as I understand it, also that there would be an
initial investment with respect to the reserve at the
beginning, and then the public insurance option would be self-
sufficient after the second or third year.
I defer to counsel and others up there, the members, but I
think that is my recollection.
Mr. Gingrey. Mr. Neas, thank you.
And, Mr. Chairman, thank you for your indulgence.
I assume that money would come from the general fund and
from John Q. Taxpayer.
Thank you, and I yield back.
Mr. Pallone. Our vice chair, Mrs. Capps.
Mrs. Capps. Thank you, Mr. Chairman.
And thank you for your testimony, to each of you.
Mr. Kirsch, your organization, Health Care for America Now,
has good representation in my district, so I will be addressing
my conversation with you, because it comes right from some of
the people who have been talking with me.
But I did want to mention in this discussion of
competition, which I am happy we can get in to, agriculture is
the basis of my congressional district in California, and large
parts of it are rural, therefore. And, in those areas, there is
only one private option. I don't call that competition. Maybe
that is why there is such enthusiasm among many of my
constituents for change, because they see a monopoly in health
care delivery. If you make too much money so that you can't be
on Medicaid, then you have to buy this plan that they keep
raising and they do. Plus, we have a provider issue because it
is a locality problem with our low reimbursement rate.
So that combination is really--in so much of America we
didn't bring those points together. It is a part of our reform
legislation, as well. So I am pleased that we have this
opportunity to really get into what competition means.
And I want to get to that in a minute, but would you just
expand for maybe a minute on so on why we cannot wait any
longer?
There are a lot of people here in Washington, D.C., and
some who are overwhelmed with our financial burdens, our
economic situation, plus our debt, they are saying, ``Why would
you want to bring this up now?'' to our President. And some of
us, maybe, are wondering, too, because our agenda is really
full.
Now, as I said in my opening, as a public health nurse,
this is why I came to Congress, in large part because we have a
system that isn't working, that is already so costly. I mean,
we are talking about the huge costs of health care. We are
already paying more than any other country in the world for
health care.
So why must we seize on this very crowded moment in our
agenda to do this?
Mr. Kirsch. Well, I think you have answered the question
yourself. I mean, you know, the fundamental point that to fix
the economy in the long run we have to fix health care is just
true. It is a point that the President has made, that Peter
Orszag has made.
Our failure to do that, our failure to have a system which
provides good coverage to everyone and systemic ways of
controlling costs, is why we continue to have a system where
health care inflation is larger than greater inflation, why we
continue to outpace the rest of the world in how much we spend
and yet get poor results.
What is true about the rest of the world is they understand
that health care is not a private good, it is a public good.
And there are two things you do with a public good: You
regulate it or you provide it directly.
Mrs. Capps. Let me interrupt you. Do you think that feeling
is shared in this country, that that is what it ought to be?
Mr. Kirsch. Absolutely. And, again, the New York Times
poll, great data from this about the public's feeling--I will
pull it out--but that the government can do a better job of
controlling health care costs than private insurance.
What the public actually understands is really interesting
in this. They understand that nobody other than the government
is strong enough to stand up to private insurance and the role
they have in their life, the kind of thing your constituents
see all the time. They want a strong, public government role
for regulating the private insurance industry and providing a
choice, so the only choice isn't private insurance.
And, you know, if you look at why so many larger employers
now are saying they want reforms, it is because they understand
the current system is unattainable, and small business--
unsustainable.
Mrs. Capps. Let me ask you to use--and I wish I had time to
ask all three of you. I think there is a huge lack of
understanding. And I hope that these hearings and our
President's press conference today and all the other things are
going to really help explain to the American people what a
public option is, that it is a level playing field, that the
public option isn't a government-subsidized program any more
than any of the other options will be. If we have health
reform, we are going to give an opportunity for everyone to be
participating. And most people, so many people, up to 400
percent of poverty, are going to need help.
Mr. Kirsch. Right. And I think what I am finding as I talk
to constituents, and you may find the same thing, is there is a
huge confusion between the exchange and the public insurance
option. This is a new concept for people.
So people ask me questions like, I was on the phone
yesterday and they said, ``Well, will the public option cover
the following things?'' I said, ``This is the wrong question.''
Mrs. Capps. Yes.
Mr. Kirsch. We are going to have a system--and what your
bill does, which is great, is it says that every plan in the
exchange will have to meet these benefits. And, actually, after
5 years, every employer will have to meet these benefits. So we
are establishing a standard across the country.
And so much of what your legislation does, which is
important in terms of a level playing field, is it says we are
going to create a basic standard of health care in the employer
system, which is one reason that we won't have the crowd-out,
as well as in the exchange, and the public option will be one
more option in that.
But that gives everybody the question of, again, will I be
guaranteed good, affordable health coverage? Well, you know it
will be good if it meets those standards.
Mrs. Capps. Uh-huh. And I think you are absolutely right
that what the public is asking for is certainty. The great fear
that people have with the health plan that they may even like
is that there is no guarantee that next year the premiums will
go up.
We did this Managed Care Modernization Act, and seniors
welcomed the opportunity for a chance at lower costs, but then
they found out that, at any moment, those companies--the
insurance companies have had nobody overseeing the way they
were able to manipulate the markets.
I will yield back for now, but thank you very much, all of
you, for helping us have this conversation.
Mr. Pallone. Thank you.
The gentlewoman from Tennessee, Ms. Blackburn.
Mrs. Blackburn. Thank you, Mr. Chairman.
And I want to thank all of you for being here. And I have a
list of questions that I would love to go through with you all.
Mr. Neas, I think I will start with you. You know, you make
a pretty bold statement on page 1 your testimony. ``The
economic crisis facing us cannot,'' which you underline, ``be
addressed successfully without the simultaneous adoption of a
comprehensive, sustainable overhaul of America's health care.''
Do you have specific research that you are citing in that,
and would you like to submit that for the record?
Mr. Neas. Yes, I do----
Mrs. Blackburn. Great. I would love to have----
Mr. Neas. --Congresswoman. I would love to depend on the
chairman of the Federal Reserve----
Mrs. Blackburn. OK. And let me ask you also----
Mr. Neas. May I finish that question?
Mrs. Blackburn. Do you have any program that was a public-
private option, competition, that you can point to that has
been successful or successfully implemented?
Mr. Neas. I think there are many examples of where there
has been a public-private----
Mrs. Blackburn. Can you cite one for me for the record?
Mr. Neas. I would certainly say that the Medicare and
Medicaid and Veterans, all the so-called public programs have
much interaction with the private----
Mrs. Blackburn. Can you look at the States and give us one?
Because we know in Tennessee and Massachusetts they have both
been shown as being examples that do not work.
And, you know, there was a question, in our question
period, someone mentioned price-fixing with the public plan.
What we found in Tennessee is that you cap what is going to be
paid through that public plan and everything gets cost-shifted
over to the private plans. And then you limit your access, and
your private insurance becomes unaffordable. And rural areas
like mine lose out.
So it just really--it doesn't have a great track record. So
I appreciate your willingness.
Second question for you: Do you think this can only be
addressed by the Federal Government? Can the States not help
address this? Can the private sector not address this?
Mr. Neas. The States have to be part of this. The private
sector has to be part of this. But we also need a national plan
that is systemic and systemwide----
Mrs. Blackburn. And you think everybody has to be in the
plan?
Mr. Neas. Absolutely.
Mrs. Blackburn. OK. Then do you agree with the premise over
in the Senate where they are wanting to exempt the unions and
the union workers would not have to pay? Let's see, those that
are covered under collective bargaining agreements would not be
subjected to the tax. The tax is on the health care benefits.
Mr. Kirsch, I see you weighing in on that. Do you want to
speak on that one?
Mr. Kirsch. Sure. I mean, first of all, you are talking
about a question of whether or not we should be taxing people
who have good health care benefits. And I think that is the
wrong direction.
Mrs. Blackburn. So tax everybody but not the union.
Mr. Kirsch. No, no, no. We don't think you should tax----
Mrs. Blackburn. OK.
Do you, Mr. Neas, think the unions ought to be exempted, or
should union workers have to pay on this also?
Mr. Neas. I don't think there is any provision in the
Senate that is trying to treat union members differently than
any member of society.
May I answer a couple of your questions just for 20 seconds
or so?
I do want to go back to the private-public blending, the
partnership. But, most importantly, you just can't, as in
Tennessee or Massachusetts, address coverage for all or one
these principles. You have to look at the cost, you have to
look at the financing and the administration. $2.5 trillion a
year in health care spending, approximately a trillion of that,
according to dozens of studies, is waste and inefficiency. The
money is there----
Mrs. Blackburn. OK. Let me interrupt you. Reclaiming my
time, I appreciate that. And I would like--I am so limited on
time, and I have so many things.
But Mr. Kirsch has just said that he is opposed to a
single-payer system. And then your group sponsored a rally last
year, and here is a comment that was made by a Member of
Congress, said, ``I know many people here today are single-
payer advocates, and so am I. Those of us that are pushing for
a public insurance option don't disagree with the goal. It is
not a principled fight. This is a fight about strategy, about
getting there, and I believe we will.''
So, you know----
Mr. Neas. Congresswoman----
Mrs. Blackburn. --we have to look at this. If we have those
that say, ``I am not in favor of a single-payer system; we
really don't want to go there,'' and then others that say,
``Well, this is a step along that way,'' as others members, in
their questioning, have asked you today, I think that that
causes us tremendous, tremendous concern.
And, Mr. Kirsch, I think it is fair to say that maybe you
don't like the insurance companies, but, nevertheless, would
you--your wanting to get to good, affordable coverage for all,
that is a goal that I have. Going through what we have done,
access to affordable health care for all of my constituents I
think is an imperative. And everyone should be able to have
access to that.
Now, are you completely opposed to a private-sector
solution? Are you open to that? Or do you feel like it has to
be done through government control?
Mr. Kirsch. Well, let me just quickly--if you are saying we
are going to continue to have this solved through the private
market that got us into this mess, yes, I am opposed to that.
Mrs. Blackburn. OK.
Mr. Neas. Fifteen seconds, Congresswoman? We did not have a
rally last year. No one said anything like that at one our
rallies. I think your facts are incorrect.
Mrs. Blackburn. OK, I appreciate the clarification.
Mr. Chairman, I will yield back. And I have some questions
I didn't get to that I would love to submit for the record.
Mr. Pallone. Every member can submit questions for the
record. I will mention it at the end, but I can mention now,
within 10 days we usually ask members to submit their written
questions and then we ask you to get back.
The gentleman from Georgia, Mr. Barrow.
Mr. Barrow. I thank the Chair.
We have heard a lot about how beneficiaries are going to
benefit under various proposals in the tri-committee draft. I
want to hear a little bit about how providers are going to
benefit.
Where I come from, people are mighty concerned about being
able to keep their choice of doctor and their choice of
hospital, but it would probably be more accurate, where I come
from, to talk about getting that choice back, because a lot of
folks don't have a choice in the current system as to where
they can go to get the treatment.
And you talk to doctors, and they have this problem writ
large. The consolidation of business in the health insurance
sector has allowed fewer and fewer insurers to exert and abuse
what is essentially a monopoly power to decide what folks are
going to get reimbursed.
So when I hear folks talking about how participating in a
public plan is going to get you at least what you get with
Medicare plus 5, or something on that order, you are talking
about a system that is already so bad it broke, where they were
ignoring what is going on in the private sector, where the
private insurers say, ``If you are not in our network, you
don't get to treat anybody, because we are the only insurer in
town.''
So what I want to know is, how are the rights of doctors
and hospitals going to be strengthened here? I read a lot in
the summaries about how the interests are going to be served
pie-in-the-sky-wise, you know, down the road--we are going to
grow the universe of providers, we are going to provide
incentives to get more folks into the game.
Well, that stuff sounds good, but what about the rights?
What can folks expect, as a matter of law, if this draft were
to be enacted, in terms of what doctors get to participate in
what plans, how insurers can discriminate against doctors of
good standing in their community? How is this going to change
in terms of how the world looks to doctors?
Who can go first on that? Mr. Kirsch, do you want to take a
stab at that?
Mr. Kirsch. Well, I think the first thing to note is that,
while there are some access problems in Medicare, 97 percent of
doctors accept Medicare. And, you know, seniors find that they
get covered with a large variety of doctors in their community
through Medicare, and you don't have the kind of network
problems you have in private insurance, where you have
restricted networks and, you know, you may change insurance
plans and you lose your choice of doctor.
Mr. Barrow. The range of the benefits package is good, or
at least it is standardized. Folks have a pretty good idea of
what to expect in terms of what is covered. Doctors don't like,
though, the way we have abused the system with the constant--
you know, the sustainable growth rate issues have sort of
abused that system so much that it is no longer the gold
standard, in terms of what doctors look for and what they
expect to get. They need to be reimbursed for the reasonable
cost of what they are doing.
Mr. Kirsch. Right. And I know that, you know, one of the
things about the STR fix will hopefully mean that we are on a
long-term path to make that more comfortable for physicians. At
the same time, from a point of view of physicians
participating, they participate in Medicare, and one of the
things about a public option, having a stable--stability--and
we would expect physicians participating the same way they do
in Medicare, particularly in your legislation, paying 5 percent
more than Medicare. You would then solve a lot of this problem
of choice and stability for individuals, and then doctors would
have a system that they can enter in at an enhanced rate for
Medicare, particularly with that STR fix.
Mr. Barrow. So, basically, what you are saying is, if the
doctors are being pushed around by the one or two dwindling
providers--payers in the market, they have a place to go----
Mr. Kirsch. Absolutely.
Mr. Barrow. --that they don't have right now? It is
guaranteed to be open to them.
Mr. Kirsch. Yep.
Mr. Barrow. OK. How about hospitals? How will hospitals
come out of this, especially rural hospitals? How are their
interests going to be strengthened or served by the draft?
Mr. Kirsch. Well, you know, a huge burden for hospitals is
uncompensated care. It is an enormous, enormous burden. And,
you know, hospitals are always faced with, what do you do when
someone comes to the emergency room who needs medical care and
isn't covered? Let's provide coverage for those folks. And that
is a revenue source for the hospitals, as opposed to having to
collect--you know, not have the revenues, hurt their bottom
lines, cost-shift to other payers.
So, you know, the estimates are that, actually, insurance
policies--the average family insurance policy includes $1,100
for uncompensated care. Most of that is in hospital settings.
And it is one way that, over time, as we get everybody in the
system, we can reduce other premiums and also have a revenue
source for hospitals that they don't have now.
Mr. Barrow. Mr. Neas, do you want to chime in?
Mr. Neas. I just wanted to add, regarding the doctors, this
is a very important point. I said in my testimony that we have
78 organizations that stand for 150 million Americans. One the
best things is we have about 10 medical societies in the
National Coalition on Health Care. That was not the case in
1993 and 1994.
And I know, sitting down with the doctors and nurses and
others, with Henry Simmons and others on the staff, I said,
``Why are you doing it this time?'' And they said, ``This time
is different. We see an attempt to have comprehensive,
systemwide, systemic reform. We don't mind making some
sacrifice, as long as it is a shared sacrifice, a shared
responsibility. We can give up something if everyone is going
to be giving up something.''
They want predictability. They want to make sure they are
getting reimbursed. But they want a system that works, that is
sustainable. And I think ``sustainability'' might be the most
important word that I am going to state today before this
committee. But I think that is why you are getting so much
participation from all the stakeholders. This is such a
different environment than 15 years ago, and I think that is
the reason why.
Mr. Barrow. Well, we are addressing the interests and the
rights of the existing universe of health care providers. Let's
go back to the subject I passed over for a second, and that is
the long-term problem of supply and demand, the fact that we
don't have enough primary health care providers, for example.
Mr. Neas. That is a big----
Mr. Barrow. Do you think the incentives and the proposals
that are in this bill are adequate enough or robust enough or
are muscular enough in order to be able to provide us the
growth in the sector of the health care community that is being
underserved right now, not by area, but by area of practice?
Mr. Neas. We have been meeting with the medical societies
and one of our newest members, the American Association of
Medical Colleges and Teaching Hospitals, and they have been
pointing out to us this extraordinary workforce issue.
And, as you know all too well, primary doctors now only
account for about a third of all the doctors in the country,
sort of the reverse of what it was just 20, 25 years ago. We
need more nurses, we need more doctors, we need more training,
we need more money. We have to invest in our providers and our
doctors and our nurses.
Mr. Kirsch. And there are several measures in this
legislation that do that. There are increases to the National
Health Service Corps----
Mr. Barrow. My question was, though, are they adequate
enough? Do you think they are strong enough to actually make a
difference, to bend the curve in the areas that are being
served by----
Mr. Kirsch. Well, there are significant investments in
doing this, which is really neat, in a whole variety of
measures that the bill includes.
Mr. Barrow. All right.
Thank you, Mr. Chairman.
Mr. Pallone. Thank you.
Ms. Christensen.
Mrs. Christensen. Thank you, Mr. Chairman.
Let me begin with Mr. Neas. And I thank all of you for
being here this morning.
Mr. Neas, I agree with your statement in your testimony
that this is not the time for halfway measures, but I also take
the position that coverage alone doesn't reform the system.
None of the principles in the national coalition address the
huge gaps that exist in the health of people of color, in rural
areas, or the poor.
Where and how does the elimination of these disparities
that drain the system and our communities fit in your agenda,
or is it included inherently in those five principles?
Mr. Neas. You raise such an important issue. I was just
meeting last week with many of the groups who are working on
the disparity issues.
The question has been asked about how urgent this issue of
enacting this bill is, and what is the crisis. It is an
extraordinary crisis; we cannot afford to wait.
And I am addressing your issues. It is not just the Federal
Government's fiscal crisis and economic crisis or the State and
local governments', but it is the people who are being
affected. 400,000 Americans die every year because of
preventable medical errors, infections that they get in
hospitals, just by mistakes. Millions more are harmed.
Those who are uninsured or those were are underinsured--
many disproportionately are minority people without wealth--are
the most affected by this. But it affects all of society. It
affects our productivity. It affects the bottom line of
businesses and the State and local governments. This is a
crisis of enormous proportions that cannot wait. The costs of
inaction are unbelievable.
Mrs. Christensen. Oh, I am not suggesting that we should
wait. I am suggesting that all of it ought to be included.
Mr. Neas. That is our position. That is why we say
systemic, systemwide, which would address the issues that you
are raising, which are very important. And without systemic,
systemwide reform, you can't get to that.
And we have to make special efforts to make sure every
American, including those who do not now have access or do not
now have the affordability issue or the quality issues
addressed, get those issues addressed.
Mrs. Christensen. Thank you.
Mr. Kirsch, I know that eliminating disparities is one of
your principles. But to be able to answer the question, as you
say, at the end of the day, ``Will I have a guarantee of good
coverage I can afford?'', if to be able to answer that
affirmatively we have to fund this bill without a complete
offset, should we cut back on being able to answer that
question fully just to meet the $1 trillion limit? Or do you
see us maybe budgeting for prevention, knowing that it will
save money in the long run?
Mr. Kirsch. Let me say that there are eight specific--by
our count, there are eight specific measures to deal with
inequities in health care for communities and people of color
in your draft legislation. So that is really encouraging, and
we are glad to see that.
But to this question of should an artificial, a trillion-
dollar figure be used for this? Absolutely not.
You know, I understand that the Bush tax cut was $1.9
trillion over 10 years, and $1.3 trillion of that was for the
20 percent of people in the upper-income brackets. You all made
the right decision, I think the right decision, to spend about
$800 billion just for 2 years on the economic situation. We are
going to be spending around $42 trillion on health care in the
next 10 years. That is assuming a 5 percent inflation rate for
health care, which is actually probably an optimistic rate.
So if we are talking about, at $42 trillion, adding $1
trillion or $2 trillion, it is really important to realize that
if we believe what we do believe, which is that we have to
create the kind of systemic reforms along with lower costs, we
need to make the investment to realize those goals.
And these figures that sound so large, when we are talking
about 10 years and the size of the health care system, are
really not that large. So this should be driven on doing it
right and coming with the resources to do it.
Mrs. Christensen. Thank you.
Dr. Parente, much of the savings and reduction in health
care costs, although they may be realized outside of the 10-
year window, will come from community public health measures
and broader policies implemented across all agencies, as well
as for a more efficient system and the elimination of fraud and
abuse.
Did you have any models that took into account community
public health measures that would be implemented, or addressing
the social determinants of health, and did that affect the
costs?
Mr. Parente. The models just aren't precise enough to do
that.
I mean, I personally recognize those are very good things.
I actually brought along a book from 1932 that states that all
of the same objectives that we want to achieve here today with
this bill pretty much were there. This is a longstanding goal,
what we are trying to do. This is from the Committee of the
Cost of Medical Care from University of Chicago.
But they can't be accounted for. And, actually, a lot of
things cannot be accounted for. Health IT savings cannot be
accounted for easily. Prevention can't be accounted for quite
easily, as well. And a 1 percentage point difference, in terms
of the cost increases in health care, vastly change what these
projections will look like, as well.
Mr. Pallone. Thank you.
The gentlewoman from Illinois, Ms. Schakowsky.
Ms. Schakowsky. I want to talk about cost for a minute,
because the cost numbers--and let me ask you, Mr. Neas. Dr.
Parente's study looks at the funding for the Federal Government
as if that is the only factor that we ought to consider. And I
don't know, the $4 trillion or whatever, I have some
disagreements over the--or at least my staff suggest that,
having looked at that, some problems with the methodology. But
that is not the central question.
When do we consider total costs spent by Americans--
businesses, individuals, out-of-pocket, premiums, co-payments,
all those things? When we talk about costs, don't we have to
think about the aggregate and not just the Federal spending?
Can you answer that, Mr. Neas?
Mr. Neas. Absolutely.
Some people were upset last week by CBO, by Congressional
Budget Office. And I am not saying I agree with how they scored
everything, but we are going to look back and thank the
Congressional Budget Office, because they put on the table the
cost issue. And I think, for this to be sustainable, we have
to, as the President has said, make this budget-neutral.
But you asked the right question. It is not just an issue
of pay-fors or the issue of the Federal Government; it is
looking at the entire system. The best phrase that I heard so
far in the last 6 months, again, out of the President, is
shared responsibility, shared sacrifice.
Let's take the pharmaceuticals, let's take the insurance
industry. They are obviously very happy about where this is
going in terms of 10, 20, 30, 40 million new customers. They
are going to the table, they are participating, and I applaud
them. And I know they want predictability. I know they are
scared, like we all are, by the economic conditions. But they
have to come to the table and give up something too.
There is a lot of money that has to be saved by the
pharmaceuticals, by the providers, by all of us, by the
insurance companies. I said before about that, $2.5 trillion.
The money is in the system; we just have to spend it well. We
have to look at the cost containment----
Ms. Schakowsky. OK. Let me see if anyone else wants to
comment.
Dr. Parente.
Mr. Parente. Well, the cost issue is, I think, the dominant
concern that you really need to address here. Because of the
situation we were in, actually the day that I testified last--
--
Ms. Schakowsky. See, I don't even agree with that. I mean,
I don't even agree with that. I mean, I think that the polling
showed, too, that the American people, a majority, said they
would even be willing to pay somewhat more to have universal
health care.
So your--but go ahead.
Mr. Parente. Let me put it back to you as a question.
Ms. Schakowsky. Yes, go ahead, sure.
Mr. Parente. Are the American people willing to take
hyperinflation that could come if this thing basically capsizes
treasuries? Because if that happens, it will come because of
this bill.
Ms. Schakowsky. Mr. Kirsch?
Mr. Kirsch. Well, you know, I would say what Mr. Orszag
says, which is that the current biggest threat to the Federal
Treasury right now is the current health care system. And if we
don't get our hands on that, we are really in a huge economic
problem in the long run.
Mr. Parente. And the only way you can bring those costs
down is a statist solution that would control costs, which--
let's be honest--that is what you are advocating, a statist
solution.
I am sorry, I was out of order.
Mr. Kirsch. We are actually advocating a system that has
systemwide cost containment in a way that focuses on better
delivery.
And, you know, there has been a lot of discussion of this
trip from Dr. Gawande to McAllen, Texas, and looking at the
perverse incentives there that lead to such high Medicare
spending versus the, kind of, right systems that you have in a
place like Mayo or others.
So we have to focus on good delivery, on prevention, all
those things. And what I do think is important about your first
question is that we have to look at this as a whole system. For
instance, if we don't provide coverage for someone with a
benefit package, it doesn't mean, like, their health need
disappears.
Ms. Schakowsky. Right.
Mr. Kirsch. If you don't, for instance--I mean, I think you
generally have a good benefit package. I would criticize one
thing: You have left out dental. Now, you get that as part of
your basic package in Congress.
Ms. Schakowsky. Very poorly.
Mr. Kirsch. Very poorly, but there is none in this. And it
means that, you know, how many members of the committee may
have been to a periodontist, and what would happen if you
couldn't have it?
So, understand that leaving it out may save the Federal
Government money, but it shifts tremendous cost onto that
family, it makes their health more expensive, it makes them
harder to be in the workforce. It is a whole system we have to
look at.
Ms. Schakowsky. I wanted to just make a comment. I may have
time for that.
This issue of competition, I think, is also bogus, because
right now the insurance industry and Major League Baseball are
the only businesses exempt from antitrust laws, from McCarran-
Ferguson. And so, 94 percent of markets are noncompetitive
right now. So this argument that somehow, you know, we ought to
leave it to the private sector and competition is just
absolutely false.
The insurance industry has tried all its time to avoid
competition, and it seems to me that the injection of a private
health insurance option--and, frankly, I cannot think of a
public interest reason why that is not an advantageous thing to
do. To have a choice would actually inject competition.
And I yield back.
Mr. Pallone. Thank you.
The gentleman from Texas, Mr. Green.
Mr. Green. Thank you, Mr. Chairman, for our first full
hearing on the draft.
And I appreciate our first panel of witnesses for being
here.
I have a district in Houston, Texas, and Texas has the
highest percentage of uninsured in the country and also the
highest number of uninsured. And I will give you an example of
why we need, I think, a public plan to compete. If the private
sector could have dealt with the 45 million estimated number of
people, they would have already done it, because they would be
making money on them.
I have huge refineries in my district, chemical facilities.
About 3 years ago, the CEO of Shell Western Hemisphere sat in
our office and said he was transferring some production jobs
from their chemical facility in our district in Deer Park,
Texas, to the Netherlands. Two reasons: The natural gas at that
time from the North Sea was cheaper, and the cost for health
care in the Netherlands was cheaper than the cost in Deer Park,
Texas.
Now, it is a union-organized plant, but that was the
business decision they made. And for a number of years, sitting
on this committee, I have been wanting to hear from the
business community, saying, ``Look, this is a cost issue that
we have. We can't compete in Deer Park, Texas, because of our
high cost of health care in our Nation.''
So I know there are a lot of businesses who are part of the
coalitions, various coalitions, on this. And I wish if could
just address that. And I know it came up in the last
questioning.
You know, we have polls all over the board, but I think the
one that I saw over the weekend and talked about, 70 percent of
the American people want some type of government-run insurance.
Now, a public plan is not government-run insurance, by any
means. But a public plan that will give the insurer hopefully
not last resort because otherwise it will be so costly, but an
insurance product that people can go to have a medical home
instead of showing up at emergency rooms.
And I will start with you, Dr. Parente.
Mr. Parente. Yes, I appreciate the concern about jobs. I
mean, there has been research that shows that it is ambiguous
just how much job loss is associated with essentially the
provision of health insurance, or that cost that is associated
there.
That said, let me tell you what I think could work. It
starts with understanding, what is insurance? Insurance
technically is a provision of a policy, therefore fairly high-
cost with low-probability event. That is not health insurance,
nor is it health care. We throw those terms around quite a bit.
If we were to offer insurance for all and call it really health
insurance, that is a catastrophic plan, probably with a $5,000
or $6,000 or $7,000 deductible.
And to answer the previous question about what we can do
better to do with $2.5 trillion a year, if you distributed that
with an individual mandate to the entire country, you would
have money left over. But that is not what we do. And because
of that, we have, over a period of time, basically thrown in
prevention, other services.
If you think about what the medical home originated from,
it originated from the HMO Act of 1974, more or less saying
let's move to a capitation model. It seems like it is back to
the future. What was missing was health IT and actually some
sort of cost accounting to make performance metrics come in.
Maybe now with the stimulus bill that will happen, but that is
still a long time coming.
The concern is that that design tried to emphasize
prevention financially by having extremely low co-pays. The
unintended consequences of that was that when pharmaceuticals
went from basically nontrivial expenses to suddenly being
covered by generous health insurance plans, those $5 or $10 co-
pays got translated beyond just an office visit practice with a
gatekeeper that was mandatory to everyone. That is what has
driven up our costs. We are the enemy of ourselves here.
So the way to fix it, if you want to fix it and have it be
budget-neutral, individual mandate, catastrophic plans, let the
rest buy up by State preference, however you want to do it,
that is budget-neutral. And it would actually preserve the most
important thing that I think Americans want, and I think it is
in your surveys----
Mr. Green. Well, let me respond to that, because I only
have, actually, 25 seconds last.
Again, coming from the State of Texas where we have
individual State options, we have 900,000 children in Texas
right now who are qualified for SCHIP or Medicaid who are not
on it because the State won't pass the match.
The one thing that I asked the Chair: to have a national
plan. And don't come up with something that will say the States
will make this option, because we know what will happen in
certain States. And, again, I was a legislator for 20 years in
Texas, and so I bring that as experience to you.
I know I am out of time, Mr. Chairman. Thank you.
Mr. Pallone. Thank you.
The gentlewoman from Wisconsin, Ms. Baldwin.
Ms. Baldwin. Thank you, Mr. Chairman.
I wanted to just comment. I am going to sound a little bit
like a broken record on this, because my fellow committee
members have heard me talk about the public option we have
available in Wisconsin in our Medicare Part D program. And I
don't know if any of the witnesses today have had a chance to
study that, but, to me, it is ample evidence that a public
option can be available and can compete favorably.
Let me just quickly comment on it. For perhaps a series of
coincidences, we had a pharmacy waiver before the Medicare Part
D program was implemented. We had a program available to
seniors in Wisconsin called SeniorCare. Our congressional
delegation fought on a bipartisan basis to keep that program
when Medicare Part D was implemented and make it a choice
available to seniors and other eligible folks in Wisconsin.
And it has operated at about a third of the cost per
enrollee compared with the private-sector options. But for
those who think that having such a public option would drive
away the private-sector competition, I can also tell you that
Wisconsin has among the most vibrant array of private options
for its citizens, I think I have heard more than any other
State in the union.
So I just want to draw that to people's attention and
perhaps, when grilled about is there an example that you can
point to anywhere in the country of an exchange that has been
set up with a public option competing with private options, you
can study this, and I think it is a great example.
I want to move from that to a related issue of State
innovation as we move forward with this.
Mr. Kirsch, you are committed to a strong and robust public
health insurance option, and I am interested in your
perspective on the role of States. Do you think that the
ability of States to play a role in running these exchanges
will enhance a national exchange? And do you think that this
ability will empower them to build upon the reforms that we
pass at the national level?
Mr. Kirsch. Well, the legislation, as I read it, says
States or groups of States can set up exchanges. And, you know,
we think that that is an important option. It doesn't have to
be just an individual State. I mean, you want these exchanges--
every time you create an exchange, you have to set up another
entity. And so, if groups of States can do it, it may be more
efficient than having individual States do it.
And, you know, if you have a national public health
insurance option, such as we have posed, then it is going to
deal with each exchange. And so it becomes one more way of--
less administrative hassle if it is dealing with fewer
exchanges.
So it is fine to say States can do this, but we think
groups of States doing it, looking at more efficient ways to
set up exchanges, manage them, makes sense too. There is no
reason, just because we have 50 States in the country, that we
have to have 50 separate exchanges.
Ms. Baldwin. I don't know if Dr. Parente or Mr. Neas have
any comments on the State role in this.
Mr. Parente. I think States are a tremendous place for
innovation. Actually, what I would welcome to see, how an
exchange would go forward, is it actually would be something
that would repeal McCarran-Ferguson and allow plans to compete
across State lines. Because that would allow the innovations of
those private players in Wisconsin that have demonstrated such
innovation to actually compete in Santa Fe. I think that would
be a nice solution.
Ms. Baldwin. Mr. Neas?
Mr. Neas. Congresswoman, I think this is an excellent
question to ask, and it reminds me of a conversation I just had
with my boss, Dr. Henry Simmons, a few days ago. We are
talking, obviously, about having a comprehensive, systemwide,
national health care plan.
However, this is only the first half of what we have to do.
Once this is enacted this year, then we are going to have to
implement it, oversee it, and enforce it. And I think the
States are going to play an incredibly important role in that
and be partnering with the Federal Government.
I think it does reinforce what this committee's role is
going to be in overseeing whatever does get done at that level,
as well as organizations like ourselves. The implementation and
enforcement of this law, which will hopefully be done in
conjunction with the States, is a question that should be
addressed now and forevermore.
Ms. Baldwin. Thank you.
Mr. Pallone. Thank you.
The gentleman from Kentucky, Mr. Whitfield.
Mr. Whitfield. Thank you, Mr. Chairman.
Dr. Parente, you mentioned the staggering national debt.
And we are on the verge of making a multi-trillion-dollar
decision relating to health care.
In your mind, are there more cost-effective alternatives to
expanding health insurance coverage than the Kennedy bill or
the bill before us today?
Mr. Parente. As I said in the testimony, it is hard to,
sort of, have a silver bullet for this at all. I think if you
have a mandate on some very basic coverage, with some
provisions for prevention, that will lower the price tag
considerably, perhaps by half.
It still may not make it free; you are going to need to
find some way to have this be paid for. But what it does is it
actually, sort of, says to the American people, ``You have a
right so that if something happens and you face a catastrophic
illness, you will be covered, and you will have choice of
physician, and that is what we will guarantee.''
But to actually go beyond that and to put it into ``you
have a right to a public option plan, which is based on sort of
an FEHBP model of a BlueCross BlueShield plan that has been
morphing for the last 60 years'' adds a little too much extra
cost, approximately probably 70 percent extra cost than you
need to have, and probably reinforces the same behaviors you
have in the inefficient system we have today.
Mr. Whitfield. Well, you know, of course, all of us are
concerned about cost, and that is particularly important today
with the economy being what it is and the amount of money that
we are spending. But, in addition to that, of course, the
American people want a quality health care system that they all
have access to. They want health insurance that they can
afford. And we want models that can be adopted, that we do not
have the spiraling costs in health care.
And I have been reading recently, and I know he has
testified over on the Senate side quite a bit, the CEO of
Safeway. And I know that when the Medicare program started in
1965, CBO estimated that by 1990 the cost would be somewhere
around $9 billion. As it turned out, in 1990 the cost was
around $100 billion or so.
The thing that I like about this Safeway model, it appears
from the evidence that the CEO is providing that they have
actually been able to control health care, the cost, but, more
important, they have given their employees the right to make
decisions on who they want to see. And they also have developed
a system of transparency so that employees can shop around and
determine the costs that various providers charge, and there is
a real disparity in that.
So I would like to get your comments, those of you familiar
with the Safeway program. And, Mr. Neas, I know you would like
to make a comment on that, so go ahead.
Mr. Neas. I do want to salute Steven Burd, I believe is the
CEO of Safeway, and all those who make voluntary efforts with
respect to well-being and prevention. I don't think there are
any independent studies that corroborate what Mr. Burd has put
before the committees of the House and the Senate.
And you are talking about cost, I do think that much of
what is in the bill, whether it is the Kennedy bill or this
bill or things that the President has brought up, there are
good, long-range, cost-savings measures. I don't think anyone
really has yet addressed the short term. And I think we are
going to need some short-term regulatory constraints on the
increase in the expenses systemwide.
As Congresswoman Schakowsky was saying, it is everyone's
responsibility, but we need some short-term cost control in the
bills that come out of the House and Senate, not just the long-
term cost-saving measures. And I would hope that would be
something that this committee and others would address.
Mr. Whitfield. Yes.
Mr. Kirsch. I think what is good about what Steve Burd has
done at Safeway and people have done at Pitney Bowes and a lot
of other companies in the country is they have actually looked
at ways to control costs. And, as you said, the key has been to
not have financial barriers to preventive care, to get people
in the system early.
One of the reasons we want a hybrid system is to encourage
that kind of innovation and encourage it more in Medicare. If
you look at Senator Baucus's options paper, it is all these
things that Medicare has done to be innovative. So let's have
the private sector innovate, let's have the public sector
innovate, let's look for better delivery systems. That is what
we have to do if we are going to move toward a solution that
makes this affordable for everybody.
Mr. Parente. Just a quick comment. I studied consumer-
driven health plans, and actually there is a report I have that
was published by HHS last year that looks in design very
similar to Safeway and found that it actually saved costs, at
least bent down the curve, and prevention wasn't touched.
That is why I am advocating that as a model, because I
think that could be a very cost-effective solution if the
financial incentives are structured that way.
Mr. Whitfield. Thank you. I guess my time has expired.
Mr. Pallone. Thanks.
The gentlewoman from Florida, Ms. Castor.
Ms. Castor. Thank you, Mr. Chairman.
And thank you all for your advocacy efforts.
Briefly, could you all, in 20 seconds, take a turn and
characterize CEO profits of HMOs and CEO salaries, HMO CEO
salaries and HMO profits over the past 10 years?
Mr. Neas. I would have to give you my personal anecdotal
response to that, that it seems excessively high over the last
10 years. There seem to have been numerous press stories that
underscore the extravagance of some of those salaries and some
of those profits.
Mr. Kirsch. I think we are looking at average CEO salaries
of $12 million for the top 10 insurance companies in 2007;
average profits of about $12 billion, $13 billion.
Ms. Castor. Did you say billion?
Mr. Kirsch. Billion for the profits. Top 10 CEO salaries of
$12 million. And I believe there was a 400 percent increase in
profitability from around 2000-2007. I am doing this from, sort
of, my visual memory, but it gives you a scale of the kind of
increase in profits we have seen in the industry over the last
years.
And I want to conclude with a quote from Angela Braly, the
CEO of WellPoint, We are talking a financial analyst, about
what kind of decisions they are making. She says--this is a
whole sentence--``We will not sacrifice membership for
profitability.'' In other words, we are not insuring more
people if we are going to lose money on them because they cost
us too much.
Mr. Parente. They have been going up; we all know that. The
question is whether or not they are returning value.
I spent 2 or 3 years working at a nonprofit BlueCross
BlueShield plan. I liked the people, I liked the management. I
was sort of disturbed by how inefficient everything could be.
That is what drove me to become an academic, I suppose. And no
comments there.
But what I found in terms of some of the good plans that
are publicly traded is they introduced innovations that I was
dying to see done in those nonprofit BlueCross BlueShields. And
if there is anything that I think is of virtue to this public
option plan, it is to put some competition into those plans for
better business practices.
But keep in mind, those better business practices I see are
coming mostly out of the for-profit plans that are being
demonized. So I am of mixed mind when talking about what the
return on investment of those salaries tend to be.
Ms. Castor. Well, let's just--I think we can all agree the
American people are concerned, to put it mildly. I would say
that they are angry.
In my home State of Florida, there is a recent example of
the largest managed care provider, private HMO, whose offices
were raided some time ago by the FBI, charged by the Justice
Department, and just settled the case because Florida had
embarked on a pilot project to privatize Medicaid.
So this private HMO came in and won the bid, and it turned
out that they were paid money to provide health care services
for children under Medicaid and under the State children's
health insurance company. And rather than provide the medical
services, they pocketed the money, and have just settled the
case for $80 million that they are going to pay back to the
State of Florida.
Meanwhile, the CEO was receiving multi-million-dollar
salaries. They were posting the highest profit margins in the
history of managed care in our State.
So when we talk about cost, isn't there enough cost--isn't
there enough money in the health care system now? In fact, the
CEO of a Florida HMO paid a visit last week, and that is
exactly what he said to me: ``There is enough money in the
system. If you adopt a public option and a comprehensive health
care reform bill, we can get this done.''
In contrast to all that, what is happening to the average
American family? Health care costs are driving Americans into
financial ruin. A recent Harvard University study said that 62
percent of bankruptcy cases now are caused or influenced by
medical bills--62 percent. In 2001 it was 50 percent, and in
1981 it was 8 percent.
And now with the rising numbers of uninsured, they are
often completely hammered because they have to pay the entire
bill, whereas if you actually have health insurance, you
benefit from the negotiated lower prices.
Many people, in this day and age, really have nothing left
because they took out a mortgage on their home; now their home
is worth thousands and thousands of dollars less.
Isn't the real crowd-out issue the fact that Americans do
not have access to affordable health care? Health care costs
have skyrocketed, and their paychecks haven't kept up. Isn't
that the real crowd-out issue we are going to tackle in this
health care reform?
Mr. Kirsch. Absolutely.
Mr. Neas. Absolutely.
Mr. Parente. Just very--I know I only have a second here.
The reason why costs go up is that we like medical care and it
works really well. And, societally, that is a decision we are
taking.
Individually, everyone has their hardship concerns, and I
do not belittle at all what you are saying. But understand why
this is occurring. Health care is a good, and we all want it.
And we are not willing, necessarily, collectively, or have
found the right mechanism to distribute that desire to meet our
economic challenges.
Mr. Kirsch. I would just say, if you look around the world,
you see there is higher utilization in a lot of countries and
they spend a lot less and get good quality. So I would disagree
with Dr. Parente.
Mr. Parente. And let me make one personal comment back to
that.
I worked for the British National Health Services, my first
job, because I believed in single payer when I was 21 years
old. When I worked for the British National Health Service, I
was in southwest London in a teaching hospital.
Here is how they saved money, because they still do it the
same way. Would you like to guess here, anyone, how many long-
term beds, skilled nursing beds, they had available to a
quarter-million people in that space? Anyone? How about 31.
That is how you save money and how they did it.
That is why U.K. has the most advanced hospice program in
the world, because, in order to save those resources, with a
soft, velvet touch, you basically were able to say to someone
who was 80, ``You have CHF. I am sorry. This is the end of the
road. Let's make you comfortable.'' Here, we don't do that as
much.
Mr. Neas. Congresswoman, you are really getting to the
heart of the matter here as to why we have the kind of polling
that we have. People are starting to find out about these
outrages. And we do have some of the finest, if not the finest,
health care in the world, but, as Mrs. Christensen said, if you
can afford it. But there are tremendous disparities.
And I said a little while ago, 400,000 preventable deaths
per year in our system--400,000--costing $700 billion, $800
billion a year. These are all costs that could be addressed by
systemic, systemwide care. This is a scandal that this is
happening, absolutely a scandal. And you were talking about the
cost for individuals and the bankruptcies, four times as much
for health care costs as the increase in wages.
When people find out about this, as good as the polls are
now, they are going to be even better. There is going to be a
popular uprising on behalf of this kind of bill and for
comprehensive health care reform this year. It is absolutely
necessary.
Mr. Pallone. I let them go because I didn't want them not
to have the opportunity to answer your question, but we have to
move on. Thank you.
The gentlewoman from Ohio, Ms. Sutton.
Ms. Sutton. Thank you, Mr. Chairman.
Mr. Kirsch, I want to thank you for being here. I want to
thank you all for being here. And, Mr. Neas, thank you for your
leadership of your very diverse coalition. We appreciate it.
But, Mr. Kirsch, the coalition's five basic principles for
health care reform: coverage for all, cost containment,
improved quality and safety, simplified administration, and
equitable financing.
That is how you--or is that Mr. Neas? I am sorry, Mr. Neas.
I apologize.
Mr. Neas. That is all right.
Ms. Sutton. I bet you agree with those.
Mr. Kirsch. Sure.
Ms. Sutton. Mr. Neas, those are the broad principles that
your coalition is fighting for in health care reform; is that
correct?
Mr. Neas. Those five principles, buttressed by many, many
specifications that are part of our pamphlet. I bring this
everywhere. Just like Senator Robert Byrd brings his copy of
the Constitution, I bring this blueprint for reform, which has
specifications that 80 organizations spent 18 months putting
together to implement those five principles.
Ms. Sutton. And I appreciate that and I appreciate that
commitment, much the way I appreciate the commitment to the
Constitution.
Dr. Parente, do you agree with those five basic principles
for health care reform?
Mr. Parente. Yes.
Ms. Sutton. OK.
And I just have a question, Dr. Parente, about--I apologize
that I didn't get to hear your testimony, but I did get to read
it. And so, based on that, you discuss at some length the parts
of health care reform that can create costs without any regard
for the many cost savers that will be included.
So, in particular, I am interested in your score of the
public health plan option. You don't seem to consider that with
a public health plan comes increased competition. You sort of
almost scoff at that in your testimony, that it will increase
access and drive down premiums for beneficiaries.
Why do you choose to disregard that?
Mr. Parente. Because there is not a study to show that it
would work.
Ms. Sutton. OK. So, until somebody shows you a study--and I
heard Ms. Baldwin talking about what is true in her State. Are
you saying that there is no demonstrable evidence based on what
is happening there to support this kind of conclusion?
Mr. Parente. Not on a national scale.
I am from the upper Midwest, as well. We in the upper
Midwest, as was in the New Yorker article, just do things
differently. We are more cooperative, maybe because it is cold.
But to generalize this out to the Nation is not easy to do.
I mean, just take the examples from Florida. I guarantee
you, Wisconsin and Iowa and Minnesota are really low on fraud.
Florida, on the other hand, is the capital for the world.
To find a one-size-fits-all solution is going to be
difficult. That is why I propose, if you are going to do
something like an exchange, let insurance companies buy in each
other's markets or compete in each other's markets and not be
constricted to the same State-specific things that McCarran-
Ferguson does today.
Ms. Sutton. You know, a couple of things. You will concede
then, though, that there is some, on a State-wide basis,
evidence to support that a public plan can drive down costs and
increase competition?
Mr. Parente. No, I--not at a national scale.
Ms. Sutton. I know. I said at a State level.
Mr. Parente. There is evidence of State innovation that is
successful.
Ms. Sutton. OK.
Mr. Kirsch, would you like to comment?
Mr. Kirsch. Well, Medicare has less than 5 percent annual
inflation. Private insurance is about 7.5 percent inflation.
Commonwealth Fund thinks the premiums--if we use Medicare
rates, you guys are talking about Medicare plus 5 percent,
would have 20, 30 percent savings.
So there are studies. Urban Institute says it will save
money. Jacob Hacker at Cal-Berkeley thinks it will save money.
So there are a bunch of studies that say it will actually save
significant money. And we have seen that Medicare has lower
inflation than private insurance. So I would beg to differ.
Ms. Sutton. OK, thank you.
Dr. Parente, can you tell me, do you think that the
majority of the millions of uninsured Americans, do you think
that they are just simply waiting for the right plan to come
along?
Mr. Parente. No, I--no. I think that there is a real
problem. You know, most people would refer to this as a market
failure, to have this level of folks be uninsured.
I think the question people have to ask is, when people
hear that 45 million or probably now 50 million number by the
time this year shakes out, you know, it is--the question I
think people think about is, is that the number of people that
started the year uninsured and ended the year uninsured and
found nothing in between? Because that number is quite
different. That number is a fraction of 50 million.
Ms. Sutton. With all due respect, I think people, when they
hear that number, think that is totally unacceptable in a
country as great as this, that we would have millions of people
uninsured with access to care when they need it.
But I am going to move on. I just have----
Mr. Parente. I just--I would agree. What I am saying is
focus on the folks that start and finish the year uninsured.
That is a priority.
Ms. Sutton. Do you think that the American people who have
insurance through the private insurance industry are very
pleased with their care?
Mr. Parente. I have seen surveys that suggest that they are
not. But it is heterogeneous mix, and they are upset for
different reasons.
Ms. Sutton. Do you think that it is appropriate that the
pre-existing condition exclusions that exist in the private
market should continue?
Mr. Parente. It all depends upon whether those pre-existing
conditions actually really get premium to a point where
insurance is unaffordable, which, actually, in several States
it has done.
Ms. Sutton. OK.
I know that my time is up. Thank you.
Mr. Pallone. Thank you.
The gentlewoman from California, Ms. Matsui.
Ms. Matsui. Thank you, Mr. Chairman.
I would like to focus in on one area. I would really like
to ask a lot of questions, but this is one area I am really
focusing in on, and this is prevention as an overall part of
the health care reform.
And we can't forget it, because we understand that we need
to prevent people from getting chronic diseases like heart
disease, diabetes, and asthma. And unless we do, the costs of
our health care system will just go up, no matter how well an
insurance exchange is structured.
More than 75 percent of the health spending in this country
today is attributable to chronic illness, but only about 3
percent of our health care spending is for preventive services
and disease promotion.
Mr. Kirsch, your organization platform states that health
care reform will emphasize quality care, including coverage for
prevention and primary care, and good management of chronic
conditions. And, as you know, our draft bill requires insurance
companies to cover preventive services and waives our co-
payments for these services.
Is your organization's vision for preventive care fulfilled
in this legislative draft before us today?
Mr. Kirsch. Well, yes, in terms of the benefit package,
absolutely. Because what you have done is, as you have said,
you have made prevention a standard part of the benefit package
and, eventually, employer-based coverage, as well as the
exchange, and you have done it without financial barriers to
care. And you have also made a significant investment in the
legislation into increasing the number of primary care
providers, because we are going to need that to be sure this
preventive care is delivered.
Ms. Matsui. But do you think the bill could be strengthened
to place an even greater emphasis on preventive care?
Mr. Kirsch. Well, the benefit package in terms of
prevention is good. Now, some of the details of the benefit
package are going to be left, under your bill, to a board to
set that. The question is how much is put in law now versus
not.
But the point is, you have said prevention, you have said
financial barriers, and you have made the investment in a
primary care infrastructure. So we think these are really,
really good.
Ms. Matsui. OK. Given that the draft bill requires a
certain level of coverage for preventive care services already,
do you see any role for the public option in driving private
insurance toward a model that focuses more on services that
will help people avoid getting sick in the first place?
Mr. Kirsch. Well, we hope so.
You know, I had an interesting conversation years ago with
the CEO of an insurance company who said, ``It doesn't pay for
us to invest in prevention, because we are only going to have
these folks for a year or 2, so any savings won't accrue to our
benefit.'' That is the kind of calculation you make if you run
an insurance company. Or you just do your marketing to people
who don't need a lot of health care in the first place.
A public option whose mandate is the public good, who is
looking at the long term, will have a different set of
incentives to look at: how do we promote the public health, how
do we keep people in, how do we avoid them getting sick, having
good chronic care management and innovate in that.
And it is very important that one of the goals you
specifically laid out in this legislation for the public option
is innovating delivery system options that do that. And so not
being simply--you know, Medicare has done some of that,
Medicare needs to do better. But the fact that you all made
that a specific mandate for the public option is incredibly
important.
Ms. Matsui. So you think this is a real opportunity here on
the public option aspect of it?
Mr. Kirsch. The public option, actually, specifically is
charged by the legislation with doing that kind of innovation
delivery system to focus on better chronic care management, to
do the kind of things you are asking about.
Ms. Matsui. Mr. Neas.
Mr. Neas. I just want to add to that.
There are some excellent provisions in the bill, and I
think there is more and more discussion with respect to best
practices and looking at Intermountain and Cleveland and Mayo
and other places.
But I think it is very important to make sure that your
deliberations and your eventual decisions and how it is
implemented is evidence-based. And I think that is so essential
for making this all work.
Ms. Matsui. I believe that, too, and I think that there is
evidence available. It is trying to get the evidence in the
manner in which we can actually compare. And prevention and
wellness, for many people, seem to be more something that is a
fluffier side. But, for me, I would rather not get sick. And I
think if we don't get sick, we will probably lower the health
care costs anyway.
But I was also considering, too, what--Mr. Neas, you did a
lot of work on health care costs and how they hurt small
businesses. And can we use the same model here that Safeway has
used, as far as what they have done as far as prevention and
wellness, as far as having small businesses do the same things
too?
Mr. Neas. I had an opportunity to respond to another member
regarding Steven Burd and Safeway and saluted him for his
innovations and his well-being and prevention efforts. I also
did hasten to add that there hadn't been any independent study
to corroborate some of the claims that have been made.
But, certainly, we want to welcome efforts by the private
sector, by everyone, to try to keep people well, to prevent
things from happening. That is an important part of the
equation.
Ms. Matsui. I think I have run out of time. Just quickly.
Mr. Kirsch. Just quickly, though, I think the key and one
of the reasons to have a strong public option is, how are we
going to take--it is great that Safeway or Pitney Bowes or IBM
can do it; how are we going to translate that into small
businesses?
If we have a public option that drives those things and
then small business, in exchange, can benefit for their
employees, we can make it more than just the innovators in the
private sector.
Ms. Matsui. That is great. Thank you.
Mr. Pallone. Thank you.
The gentleman from Utah, Mr. Matheson.
Mr. Matheson. I waive.
Mr. Pallone. The gentleman from Massachusetts, Mr. Markey.
Mr. Markey. Thank you, Mr. Chairman, very much.
This is an historic time, and we are very proud in
Massachusetts that we adopted a new law that puts us in the
same role, as revolutionaries, that our State has historically
played in many other areas, except we are not any longer
talking about Minutemen but MinuteClinics up in Massachusetts,
and not Red Coats but the white coats of doctors, in terms of
this revolution that we are trying to create.
What I would ask is, if we could, get your opinion as to
this Massachusetts plan, and what lessons you draw from it, and
what you would try to emulate or avoid in moving forward.
And we have moved now to 97.4 percent of our citizens with
coverage, which is something that obviously we had as our goal.
It has only been in place for a couple of years, but it
obviously has been successful to that extent.
But, Mr. Neas, could we begin with you? And welcome back to
this committee, for the many times you have been here. And
whatever observations you have I would very much appreciate.
Mr. Neas. Mr. Chairman, it is an honor and a pleasure to be
back here. And, as you know, as a product of Massachusetts, as
the former chief counsel of Republican Senator Edward W.
Brooke, I am very proud of what Massachusetts has done--Senator
Kennedy, yourself, the legislature, Mitt Romney, and others--
especially with respect to, I believe, including about 95
percent so far of the population of Massachusetts.
Having said that, I know Massachusetts made a political
decision several years ago that it was not going to address the
cost management issues at that time. So we have my very good
friend, Governor Deval Patrick, going to the legislature right
now and going around the State to make sure there is additional
legislation that would address the skyrocketing costs and
increase in costs that affects Massachusetts and every other
State in the Union and is such a national emergency.
So there are wonderful lessons to be learned from
Massachusetts. There are also lessons that you expected, that
it was not a sustainable plan unless the money was going to be
raised and/or the cost-containment issues were going to be
addressed. I think Massachusetts is starting to do that.
And I believe, with a national plan that addresses health
care reform in a systemic, systemwide way and works in
partnership with Massachusetts, the Paul Revere work that has
been done will be completed over the next few years, the next
number of years.
Mr. Markey. Thank you, Mr. Neas.
Mr. Kirsch.
Mr. Kirsch. Sir, I have a daughter who is a nurse at
Children's Hospital in Boston.
Mr. Markey. Beautiful.
Mr. Kirsch. But, in terms of your question, more
importantly, I have a daughter who just moved to Boston,
Somerville, has taken not a very well-paying job between
college and graduate school, but has good health insurance
because of what you have done.
And when she was between jobs, we had to pay more than $300
for a medication she is on for a chronic condition. That was a
lot of money for us to pay. What would have happened if she
weren't able to have that--now be able to get that coverage
through the plan?
The plan has been successful by expanding coverage to low-
income and moderate-income people in Massachusetts. It is
extraordinarily important.
Where are the things that we think can be improved?
One is, unfortunately--and this is a fiscal problem because
the State is just doing it--the subsidies don't go more than
300 percent of poverty level, which means there are a set of
people who have been exempt from the program because it is not
affordable. What is good about your legislation is it goes up
to 400 percent of poverty level. It also allows you to look at
regional differences in costs, which is very important.
Second of all, it doesn't have a public option in
Massachusetts. And by injecting that kind of role in
controlling costs, that is an important factor.
Third, you don't really have employer responsibility
because of the ERISA challenges and also because Governor
Romney wasn't crazy about it. Employer responsibility is very
important in terms of finding a lot more revenues. You are able
to get away in Massachusetts because you are one of the highest
employer-sponsored insurance penetrations in the country. You
can't do that in other places.
So a lot of good things in the Massachusetts model were
shown, but some things that we think can strengthen it. And, as
Mr. Neas said, you are all starting to deal with the cost-
control issues, which are being built into the Federal reforms.
Mr. Markey. OK. Thank you, sir.
Dr. Parente.
Mr. Parente. I think you should be applauded for doing it.
I think it is a landmark initiative.
Costs are the big issue, as are being discussed and have
been previously mentioned. I think also there could be longer-
term issues in terms of competition.
One thing that was learned that actually some of our work
showed previously was that some of the higher-deductible plans
or the low-option PPOs would be the magic price point to get
many people to get the right incentives to come in. And we just
have to be sure that if this happens, what we are discussing
here, that those options are on the table as well.
One thing that--I will make this very brief comment--was
that you really need to have as many private insurers to
compete as you can. And I remember that that wasn't an initial
concern, but that looks like it is being addressed.
Mr. Markey. Thank you, Dr. Parente.
But there are a lot of things in common, Mr. Chairman. You
know, it includes expanding Medicaid, creating a connector to
help patients select a plan, and helping to subsidize the low-
income citizens so that they can have access to health care.
So I think the general principles are very similar. And we
can learn, actually, from what went well and what needs to be
reformed in the future.
And I thank you for your leadership.
Mr. Pallone. Thank you.
And I think we are done--Mr. Dingell? Chairman Dingell.
Mr. Dingell. Thank you, Mr. Chairman.
Your study of the costs was just limited to the Kennedy
bill; is that correct?
Mr. Parente. It was also done, one on Coburn-Ryan and also
one on the Senate Finance Committee, as well.
Mr. Dingell. I see. You have not done one on the bill that
is right now, the draft?
Mr. Parente. No. As I mentioned earlier, I hope to have
estimates on that done by tomorrow morning at 8:00 a.m.
Mr. Dingell. OK.
Now, I am curious, you have mentioned the English health
system. Is there any significant similarity between the English
health system, of which you appear to be critical, and the
discussion draft that is before the committee?
Mr. Parente. Actually, I am not critical of the English
system. I am just bringing it up as a comment. I think both
systems grew out of, if you will, the socioeconomic history of
each country.
Mr. Dingell. But there is no similarity between the two, is
there?
Mr. Parente. Well, there will be increasing similarities if
we have to ration care.
Mr. Dingell. Why do you make that statement?
Mr. Parente. Because the only way you can actually hold the
cost curve down effectively with Medicare is effectively to
limit patients.
Mr. Dingell. This is your assumption; is that correct?
Mr. Parente. It is an assumption----
Mr. Dingell. And, as in all other studies, the study is
only as good as the assumption, isn't that right? Garbage in,
garbage out.
Mr. Parente. Not necessarily. But if it is garbage in,
garbage out, then all the Commonwealth stuff has to be thrown
out, too, Congressman Dingell.
Mr. Dingell. Now, this is not a single-payer system that we
are talking about here, is it? The European system is a single-
payer system to which you are referring; isn't that right?
Mr. Parente. The European system is made up of many
countries----
Mr. Dingell. Let's talk about the British.
Mr. Parente. They are not all single-payer systems.
Mr. Dingell. The British system is a single-payer system,
is it not?
Mr. Parente. It is a single-employer system, yes.
Mr. Dingell. Now, your assumption that there will be
rationing, there is rationing right now, isn't there?
Mr. Parente. Yes, there is.
Mr. Dingell. We have 47 million Americans who don't have
any health care. And, during the course of a year, we have as
many as 86 million who have no health care. Obviously, those
people without health care are being rationed, are they not?
Mr. Parente. Yes, they are.
Mr. Dingell. OK.
I guess that is all the questions I wanted to ask. Thank
you, Mr. Chairman.
Thank you, gentlemen.
Mr. Pallone. Thank you, Chairman Dingell.
And I think we are done with questions, so I want to thank
you all. It was very helpful. Appreciate it. And, you know, as
we move along, we are going to certainly keep your ideas in
mind. Thank you.
And I would ask the next panel to come forward.
And let me remind members that we are not taking a lunch
break. And the reason for that is because I think, as the day
goes on, we will get more members of the full committee, who,
as I mentioned, can participate. So if you want to take lunch,
maybe go while another member questions.
We are going to get right to it, so if the second panel
would be seated, I would appreciate it. If you could take your
seats.
Are we missing Dr. Shern? I think we will start, at least
with the introductions. Is that Dr. Shern? OK, thank you.
Let me introduce the panel. Again, this is the panel on
consumers' views. And from my left is Dr.--I shouldn't say
``doctor.'' You may, in fact, be a doctor, but she is certainly
well-known in any case--Marian Wright Edelman, who is president
of the Children's Defense Fund.
Thank you for being here.
Next is Jennie Chin Hansen, who is president of AARP. And
then we have Dr. David H. Shern, who is president and chief
executive officer of Mental Health America; Dr. Eric Novack,
who is an orthopedic surgeon with Patients United Now; and,
finally, Shona Robertson-Holmes, who is a patient at the Mayo
Clinic.
I assume in Rochester right?
Ms. Robertson-Holmes. Actually, no, Arizona.
Mr. Pallone. Arizona, OK.
Again, you know we have 5-minute statements. Your full
statement will be submitted for the record, and whatever else
you would like to put forward. And then we will have questions
after. And we will get written questions, you know, in the next
few days to be submitted to you in writing.
And I will start with Ms. Wright Edelman. Thank you for
being here. You have been here so many times.
STATEMENTS OF MARIAN WRIGHT EDELMAN, PRESIDENT, CHILDREN'S
DEFENSE FUND; JENNIE CHIN HANSEN, PRESIDENT, AARP; DAVID L.
SHERN, PH.D., PRESIDENT AND CHIEF EXECUTIVE OFFICER, MENTAL
HEALTH AMERICA; ERIK NOVACK, MD, ORTHOPEDIC SURGEON, PATIENTS
UNITED NOW; SHONA ROBERTSON-HOLMES, PATIENT AT MAYO CLINIC
STATEMENT OF MARIAN WRIGHT EDELMAN
Ms. Edelman. Well, thank you so much for the opportunity to
testify on behalf of the 9 million uninsured children and the
millions more underinsured children, which we have a chance to
correct this year.
And we have said many good things about your proposals.
They are in the written testimony. And I want to just limit
myself to my hopes for true health reform for all children and
pregnant mothers within any health insurance plan. So, whatever
you adopt as a health insurance plan for all Americans, I want
to just make sure that all children, all pregnant women are
treated equitably and get affordable, comprehensive coverage.
And what a great opportunity this is. I am so pleased. And
thank you for the CHIP bill that you enacted and the President
signed, and that was a significant step, but we now have a
chance to finish the job. That was not true health care reform
for all children, and it is not the child health mandate that
the President promised. But here we can do it now.
The need for health care reform that expands coverage for
all children, cure benefit inequities between CHIP and Medicaid
children, and establish a national floor of eligibility of 300
percent to end the lottery of geography across 50 States and to
simplify enrollment and retention, particularly in Medicaid and
CHIP, are the key things that I would hope that you will
address in your final health proposal.
In these particularly devastating economic times, when the
number of poor children could rise by 1.5 million to 2 million
more, the need for a guaranteed, strong health care safety net
to ensure their continuous access to coverage and every
opportunity for a healthy start in life is absolutely urgent.
I want to just address these four points for a brief moment
each.
One is I hope you will ensure health care coverage is
affordable for all children and pregnant women and with a floor
of 300 percent of the Federal poverty level, which is about
$66,000 for a family of four.
Just as all children in the United States are entitled to a
free public education, all children should be entitled to
affordable health care. The high number of uninsured children
exacts a high health, economic, and social toll on these
children, the families, and our Nation. Uninsured children are
at high risk of living sicker and dying earlier than their
insured peers and are almost 10 times as likely as insured
children to have an untreated medical need. These consequences
of untreated medical needs can carry on into adulthood, and we
must prevent them.
The consequences of being uninsured fall disproportionately
on children of color, who represent almost two-thirds of all
uninsured children. Children of color are at higher risk than
white children of having unmet health and mental health and
dental health needs. And they are at greater risk of being
sucked--because of the absence of this preventive health and
mental health coverage--of being sucked into something the
Children's Defense Fund is very concerned about that we call
the cradle-to-prison pipeline.
Many children without mental health services are having to
be locked up in order to get mental health care in their
community, at an enormous cost of $100,000 and $200,000 a year.
Children should not have to go to jail in order to get mental
health coverage. You can cure that this year.
The need for health care begins with maternity coverage. We
have 800,000 pregnant women who are uninsured and having babies
every year. They receive less prenatal care than their insured
counterparts. They face greater risk for expensive and tragic
outcomes, including complications, low birth weight,
preventable illness, and even infant and maternal death.
We have about 350,000 low birth weight babies in the most
recent data. The cost is 25 times greater than normal birth
weight babies. We are the only industrialized country that does
not provide prenatal care to all of its mothers. You can cure
that. I hope your health reform act will do that.
All of our children need to be able to get what they need
regardless of the State they live in. Today, each State sets
its own income eligibility level for CHIP and Medicaid, which
results in a profoundly inequitable patchwork of eligibility
across the United States.
Imagine being a low-income parent or grandparent raising
several children. One is eligible for Medicaid, the other is
eligible for CHIP, with different income eligibility standards
and benefit packages for each program. Why should a child in
North Dakota be eligible for CHIP if their parents earn more
than 150 percent of the Federal poverty level, while in 12
States and the District of Columbia families can earn twice
that amount and children are still covered?
Children's ability to survive and thrive and learn must not
depend on the lottery of geography of birth. A child is a child
wherever they live. They should have the comprehensive
benefits. We must end this inequitable system.
Ten States have no children eligible for Medicaid above 133
percent, but half of our States offer Medicaid to children of
all ages with families with incomes above 133 percent of the
Federal poverty line. Almost half cover children at 200
percent. Thirty-nine States offer CHIP to children of families
between 185 and 400 percent of the Federal poverty line.
We urge a national eligibility floor of 300 percent for all
children and pregnant women wherever they live. And we should
not force parents to have to choose between paying for child
care, paying for health care, paying their rent. And so this is
our chance to, sort of, give them the kind of national health
safety net that I, as a grandma, have. I think I am important,
but I think my grandchildren are even more important, and we
should treat them fairly.
Secondly, we hope that all children will have the same
comprehensive benefit packages, which include health and mental
health coverage. We like the EPSDT program. It was designed and
is appropriate for children. Children are not little adults. It
has health and mental health coverage.
We believe and if you believe that every child's life is of
equal value and that children don't come in pieces and they
should get what they have to have their conditions diagnosed
and treated early and prevent later costs, I hope you will make
sure that every CHIP child and every child in the exchange will
get the same benefits that the Medicaid children get.
Mr. Pallone. I hate to slow you down, but you are a minute
over.
Ms. Edelman. I am a minute over already? Good gracious.
Two last quick things, and I will just end, Mr. Chair.
Thirdly, all of our eligible children should have
simplified ways of getting and keeping enrolled. The
bureaucratic barriers that keep 6 million of the 9 million
uninsured children now unenrolled need to be addressed. The
package, as I see it, does not do that. We think that--and we
lay out in our testimony, our written testimony, and we lay out
in specific legislative language in the All Healthy Children's
Act the steps that you can take to make Medicaid work.
I am glad you have moved to 133 percent of the Federal
poverty level for adults, but children are already eligible for
133 percent but they are not getting it because of the
bureaucratic barriers which you must address through the
simplification measures we lay out.
And lastly, I just want to say, I know people are saying
cost and we can't afford it. Well, you know, we can afford
whatever we want to afford. We do not have a money problem in
our Nation with a $14 trillion GDP. You found the money to bail
out the banks, you found the money to bail out the insurance
companies, you found the money to do the alternative minimum
tax. We can find the money if we believe in it to make sure
that we give our children a chance to survive and to thrive.
That is cost-effectiveness.
And while CBO may not score prevention, we know that
dollars invested in immunizations save States millions
annually. And we know that if you give a child an office visit
in a primary health care setting, which is about $100 in Harris
County, Texas, it is going to cost you $7,300 if they go to the
emergency room and have to be hospitalized.
If you want to contain costs, children is where you do it.
All of them should be covered. All should get the same
benefits. It should be simple and easy. And you have a great
opportunity to do it right this year.
Thank you.
[The prepared statement of Ms. Edelman follows:]
Mr. Pallone. Thank you.
Ms. Jennie Chin Hansen?
STATEMENT OF JENNIE CHIN HANSEN
Ms. Hansen. Thank you.
Chairman Pallone, Ranking Member Deal, and distinguished
other subcommittee members, I am Jennie Chin Hansen, president
of AARP. Thank you very much for inviting me to be here today
and for your leadership on leading comprehensive health care
reform.
Enacting legislation to give all Americans quality,
affordable health coverage options is AARP's top priority this
year. The draft tri-committee legislation marked substantial
progress toward this goal.
Today, I am really proud to represent nearly 40 million
members of AARP, half over the age of 65 and half below 65.
Both age groups face serious problems in today's health care
system, especially the 7 million people aged 50 to 64 who are
uninsured.
The draft includes critical reform priorities for AARP
members for all ages. For our younger members, it would curtail
discriminatory insurance market practices that use age and
health status to block access to affordable coverage. Reforms
must include strict limits of no more than 2:1 on how much more
insurers can charge to people who are in this age bracket of 50
to 64.
Reform must also provide sliding-scale subsidies for those
who need help to make coverage affordable, as well as provide
some strict limits on cost-sharing. The draft legislation
achieves our goals on these vital points in health care reform.
For our older members, the draft closes Medicare's
prescription drug donut hole so that they will be able to
afford the medications that they need. This drop in coverage
has been a major reason why one in five people who get drug
coverage through Medicare delayed or didn't even fill the
prescription because of that cost. Under current law, the hole
keeps getting larger every year. The draft begins to close the
donut hole and includes other steps to lower drug costs.
And for people with limited incomes, the draft closes the
gap right away by strengthening the Part D low-income subsidy
and eliminating its asset test that penalizes people who really
did the right thing in saving for a small nest egg in
retirement.
The draft also fixes Medicare's broken system for paying
doctors and puts Medicare on a path to fiscal stability by
revising payment systems to reward quality instead of quantity
of care. It includes incentives to reduce costly and
preventable re-hospitalizations. It strengthens our health care
workforce that we know is actually, at this point, short
already, let alone what will happen in the future. And it takes
important steps to address racial and ethnic disparities in
care.
Many challenges remain on the road to really full,
comprehensive health reform. But AARP and many other
stakeholders share a broad and growing consensus that any
differences that we may have cannot stop us from finding common
ground and enacting comprehensive health care reform this year.
We know--and it has been said time and time again--the status
quo is just unsustainable, and we cannot afford to fail.
Thank you all for your leadership, and we continue to
looking forward to work with all of you in Congress to enact
this comprehensive reform this year.
Thank you.
[The prepared statement of Ms. Hansen follows:]
Mr. Pallone. Thank you.
Dr. Shern.
STATEMENT OF DAVID L. SHERN
Mr. Shern. Mr. Chairman, members of the committee, Mental
Health America is honored to participate in today's hearing on
ways to reform our health care system.
I want to start by expressing our appreciation for the many
important proposals included in the tri-committee bill released
last week that recognize how integral mental health is to
overall health.
You know, this is our centennial year; our organization is
100 years old this year. And for the last 100 years, we have
advocated for people with mental health. And from the
beginnings of our organization, we had kind of a dual vision.
On the one hand, we were concerned with people who had severe
and disabling illnesses, who would have traditionally been
treated in State hospitals. But, on the other hand, from our
very beginning we have had a commitment to a public health
perspective and to prevention as the only real way to drive
down the prevalence of illness.
So we are very heartened by this bill, because we see it as
including many of the issues that need to be addressed in order
to become the healthiest nation. We think that it addresses
historical patterns of discrimination by including parity for
mental health and substance use services. And, importantly, it
addresses the prevention and management of chronic diseases as
the real strategy to control costs and improve overall health
care status. We think these are very important.
You know, mental health and substance use conditions are
really paradigm cases for what goes wrong when we discriminate
against a class of illnesses and fail to prevent and
appropriately treat them. And this resonates very much to what
Ms. Wright Edelman was talking about, in terms of not
addressing issues of mental health services in children.
Increasingly, our science is telling us that mental health
and substance use conditions--we used to think they were
diseases of early adulthood. We now know that they are diseases
of adolescence. They are developmental disorders that occur
early in life. For all people who are going to develop a mental
health diagnosis during the course of their life, 50 percent of
those people will have that diagnosis by the time they are 14
years old. However, they will not receive services until, on
average, they are 24 years old.
So, during that 10-year period, substantial disability
begins to develop. Academic achievement starts to drop off;
these are very strong predictors of academic achievement.
Ultimately, occupational achievement is compromised. We need to
do a much better job at early identification and addressing
issues of mental health and substance use disorders if we are
going to develop the healthiest nation.
The reason that WHO estimates that mental health and
substance use conditions are, in fact, the most burdensome of
all health conditions, causing twice as much burden of disease
as cardiac illnesses, is in part because they are diseases of
early adolescence that we do not effectively address.
So, clearly, this bill, from our perspective, includes all
the key components that are necessary to start to address this
problem, at least structurally.
First of all, it clearly addresses the importance of
preventative services. You know, I think in some contradiction
to some of the things that were said earlier, we have a brand-
new report from the Institute of Medicine that was released in
March that is a comprehensive summary of what we know about the
effectiveness of preventative services for emotional and
behavioral disorders in children and young adults.
And we know a lot. Our science base is strong. We know that
community-based interventions work, and we applaud the
committee for emphasizing the importance of community-based
interventions. We know that early identification when coupled
with treatment works, as the Preventive Services Task Force has
indicated. And we applaud the committee for including those
services, as well.
It is also clear, if you look at what is required to manage
chronic disease, it is very clear that in order to do that you
need to address the entire person, not the person in segments
or subspecialties. The notion of the medical home that is
included in the bill I think is extraordinarily important, and
the inclusion of behavioral health services in that medical
home is absolutely critical.
Not only are mental health and substance use conditions the
most chronic illnesses, they are the most common co-occurring
illnesses with other chronic disorders. And when they co-occur,
they drive costs way up, drive outcomes way down. So the
medical home and comprehensive integrated care is clearly an
important part of what we need to accomplish here.
You know, we have a tragedy in this country in that people
with chronic mental illnesses who are served in our public
system die 25 years early--25 years early. They are dying on
average in their 50s. And they are dying from a broad range of
the same disorders that will kill all of us in our 70s or 80s
or 90s.
So it is a critical imperative that we address
comprehensively the needs of that population as well as persons
with other chronic conditions who are likely to have mental
health and substance use conditions.
Finally, I would just like to say that closing the donut
hole is very important for people who rely on psychiatric
medications, which can be very expensive.
The committee's attention to workforce provisions is
critically important. As several people have noted, we have a
very predictable workforce crisis coming up on us quickly.
And then, finally, a word about comparative effectiveness
research. You know, I left academia 3 years ago at the
University of South Florida, where I used to work for Ms.
Castor's mother, to join an advocacy organization because of my
frustration with our inability to get our incredible science
base to people who need those services.
Comparative effectiveness research provides a framework for
us to better codify and understand what works and to translate
it into information that can be supportive of individuals and
their clinicians, their caregivers, in making better decisions.
So I applaud the committee for all the components of the
bill, which seem to nicely round out both improving the quality
of care, emphasizing preventative services, and bringing better
science to bear in terms of our decision-making processes.
Thank you, Mr. Chairman.
[The prepared statement of Mr. Shern follows:]
Mr. Pallone. Thank you, Dr. Shern.
Dr. Novack.
STATEMENT OF ERIK NOVACK
Dr. Novack. Good afternoon. I want to thank Chairman
Pallone and the rest of the committee for having me here today.
My name is Eric Novack, and I am a medical doctor who has
actually spent the last 23 years training and working in health
care.
Make no mistake: The variability for everyone in this room
and your families to seek out the kind of health care you
believe is best is under direct assault. And the risk you will
lose control over your health and health care has never been
greater. Unbelievably, nowhere in the U.S. Constitution or in
the Constitution of any of the 50 States do any of us have any
right to be in control of our own health.
In November 2008, Arizona's Proposition 101 sought to place
two basic rights into the State Constitution: first, to
preserve the right of Arizonans to always be able to spend
their own money for lawful health care services; and second, to
prevent the government from forcing us to join a government-
sanctioned health care system.
Because once we are forced into a plan, our health care
options will be restricted by the rules of the plan, whether it
be public or private. It was a true grassroots campaign, and an
idea went from concept to well over a million votes in less
than 18 months and failed by less than one-half of 1 percent.
Fortunately, the Arizona legislature has courageously
recognized the critical issues raised by the initiatives and,
just yesterday, referred the Arizona Health Care Freedom Act to
the ballot in 2010.
Unfortunately, the reforms that have recently passed
Congress and the bulk of those that are being considered do not
appear to have much respect for the basic freedoms that the
Arizona initiative seek to protect.
The stimulus bill was used as a tool to vastly expand the
Federal health care bureaucracy. By the end of 2014, every
American will be forced to have an accessible electronic health
record that can be viewed by government officials without
consent, permission, or notification.
The stimulus bill created the Federal Coordinating Council
for Comparative Effectiveness Research, whose ultimate function
will be to become a Federal health care rationing board for all
Americans, starting with seniors. As Health and Human Services
Secretary Kathleen Sebelius said during her confirmation
testimony, quote, ``Congress did not impose any limits on it,''
referring to the council.
And now MedPAC may be empowered to make the full slate of
recommendations for every condition and treatment. Congress
will only be able to make an up-or-down vote on the entire
package.
The President recently spoke to the American Medical
Association, touting the importance of using evidence-based
medicine to figure out what works and what does not. When it
comes to the best treatments for our ailing health care system,
we have some compelling evidence.
Leaders in Congress regularly cite Massachusetts as the
model for reform. But what really is going on in Massachusetts,
and do we want to repeat it on a grand scale?
Costs are even more out of control than in the country as a
whole. Use of the emergency room for care has not diminished
despite the higher percentage of people with insurance. And
there is exactly zero evidence--there is exactly zero
evidence--that forcing people to have insurance has made any
difference on slowing health care spending.
Medicare has tried several disease management and
prevention projects. The idea that spending money upfront to
prevent Medicare patients from needing expensive
hospitalizations and disease complications will save money in
the long run.
Unfortunately, the results do not bear that out. Among the
conclusions in the June 2007 report to Congress on the trials,
quote, ``Fees paid to date far exceed any savings produced.''
In other words, the cost of administering the plan made the
prevention plan more expensive.
Real research also suggests that obesity and smoking
prevention, while admirable, do nothing to reduce health care
spending.
Supporters of the President have also reviewed the
literature on the impact of electronic health records on
spending and concluded, quote, ``We need the President to apply
real scientific rigor to fix our health care system rather than
rely on elegant exercises in wishful thinking.''
And research has been done demonstrating geographical
variations in health care spending, but there is no evidence
that having Washington forcibly taking money being spent in
Massachusetts, New York, or California and sending it to lower-
spending States will improve anyone's health.
We cannot afford to make mistakes that will mean our
grandchildren will, in the words of the President, suffer from,
quote, ``spiraling costs that we did not stem or sickness that
we did not cure.''
Congress should fix Medicare first before radically
changing the health care of every American. Congress should
demonstrate that the government can prevent the disturbing
failures even more exposed this week of the VA system before
radically changing the health care for all Americans. And
Congress should work very hard to increase the options and
availability for the 3 percent of Americans who are truly,
quote, ``chronically uninsurable'' before radically changing
the health care for the other 97 percent.
Health care reforms are critically needed. Our path is
unsustainable. But jamming through a piece of legislation that
few will have read and the American public will not have had
time to fully review makes no sense.
The cynics who shout that we cannot have health care reform
without sacrificing our personal freedoms are false prophets
offering a false choice. I urge the members of this committee
to consider health care legislation that protects individual
liberty, preserves privacy, limits government power, and has
reforms that have actually been shown to work--in other words,
reforms that protect patients first.
Thank you very much for the opportunity to present my views
today.
[The prepared statement of Dr. Novack follows:]
Mr. Pallone. Thank you, Dr. Novack. Ms. Robertson-Holmes,
thank you for being here.
STATEMENT OF SHONA ROBERTSON-HOLMES
Ms. Robertson-Holmes. Thank you. Thank you, Chairman and
members of the committee. Four years ago sitting in my doctor's
office, never did I believe I would be here in Washington
talking about this situation. But I am here because I was
fortunate enough to be able to in amongst my nightmare come to
this country and get treatment.
I actually am the face of public insurance. We have--I am
from Canada and we do have public insurance, a mandatory
monopoly on our insurance. And I am here to say when it doesn't
work, it doesn't work. Unfortunately, in Canada we have 33
million people, which is approximately the size of the State of
California, and we currently have 5 million people without
family doctors.
What started many years ago as a seemingly compassionate
move in our government to treat all equally and fairly by
providing the same medical coverage has in fact turned into a
nightmare of everyone suffering equally. Now we have limited
resources and funds that offer timely treatment to our
citizens.
A system like this starts to crack under pressure and
special treatment is ultimately given to those who have
contacts and resources to jump the line for treatment, and for
someone like myself, the average Canadian citizen, forced to go
to another country for care.
I will never get the time, money or life back that I have
dedicated to the fight to basic treatment that I was promised
by my government; but not only promised, it was ordered. I will
never forget the experience of the treatment in a facility
suffering so bad from government funding and shortages of staff
and resources.
I know that the American health care system is not perfect,
but I do credit the system for saving my life. It is because of
the choices available here in this country that I was able to
receive immediate care. We as Canadians have one insurance
company, the government. We have no options. We can't choose
another country, we can't supplement with after-tax dollars to
purchase extra care.
We can purchase health insurance for our pets, but not our
children. I have very few rights as a patient. Patients there
have to fight for every basic service and care, much less any
kind of specialized care.
Another thing that I would really like to point out is that
our health care is not free. In fact, I would argue that the
cost is much greater than the tax we pay each and every citizen
towards this care. The costs are loss of quality of life while
living with pain, discomfort, or just the fear of the unknown
and also for waiting long term for diagnostic testing, the cost
of employers and self-employed people waiting for employees to
be treated and be well enough to return to work.
Medications are also something that Canadians are
struggling like Americans to pay for. We are not covered for
our medications under our health care plans. We pay the cost of
local ERs closing, losing a wealth of talented doctors that
leave the country because they just don't have the resources to
do their job properly at home. We have rationed services and
treatments and a fear of living without a safety net.
The one thing that I wanted to sort of point out when I was
making my testimony today was if I have gotten any criticism
from anybody that I have done for what I have done is that I
must have had the resources in order to be here today. I am
here to say that I didn't. I am so average, and in order to get
what I had to do, my husband took a second job, he put a second
mortgage on our house. We owe every single person we know
money. And I will never forget all of that that has happened,
but I also want to wake up grateful for what happened to me in
America. And I want to have those same options in Canada.
And I just felt from the very beginning of my experience
that it was my job to point out to both Canadians and Americans
what we can do together and what we need to learn from each
other's situation.
Thank you.
[The prepared statement of Ms. Robertson-Holmes follows:]
Mr. Pallone. Thank you. And now we have questions, 5
minutes from the panel. And I am going to start with myself.
And let me just say I am not looking for a response. But I
really appreciate, Ms. Robertson-Holmes, that you came today. I
am not being critical in any way because I know you took your
time. But I really have to stress that this draft is not meant
in any way to put together a single payor system or emulate
Canada. Canada is a nice place, but I am not really looking to
create a Canadian system or even praise the Canadian system
because I really believe that the draft implements a uniquely
American system that in no way replicates Canada. But I
appreciate your being here. I am not trying to denigrate it in
any way.
Ms. Robertson-Holmes. The problem is it is a very slippery
slope. Once you start on that sort of road--and unfortunately a
lot of the Americans that I am talking to have said to me,
well, we are going to get free health care too, we are going to
get Canadian style health care.
Mr. Pallone. Well, I think you are right, that there are
some people who think that somehow this is single-payer, but I
just want to stress I don't think it is and I don't see how it
becomes a single-payer. But whatever, I appreciate your being
here. And I don't want to take away in any way the fact that
you came here and how difficult I am sure it was to be here.
Let me ask the question of Ms. Wright Edelman about
Medicaid. I am very proud of the fact that in this discussion
draft we really discuss Medicaid in a major way in the sense
that we are trying to cover and fill in the gaps with 100
percent Federal dollars for those who are not covered by the
States now up to 130 percent, that we are increasing the
reimbursement rates so that it is more like Medicare. A big
part of this is Medicaid, And I think in many ways it hasn't
really gotten attention, unfortunately.
But what I wanted to ask you is, there have been those who
say that once we--if we set up what is in the discussion draft,
that Medicaid would no longer be needed and that those people
who are in Medicaid should be put into the Exchange, be able to
get their insurance with the Exchange. The draft doesn't do
that and--because we are concerned that that might be harmful,
at least initially to Medicaid.
So I just wanted you to discuss the types of benefit and
cost sharing protections available in Medicaid that are
generally not found in private health insurance products. And
if you could talk about the need to keep and improve the
Medicare safety net undisturbed for years to come in response
to those critics. We are not putting Medicaid in the health
Exchange.
Ms. Edelman. I hope you will not. Do not put Medicaid into
the Exchange. Nobody should end up worse off than they are
currently. Medicaid is a crucial safety net. I applaud in my
written testimony your extension of 133 percent for all. And
the adults that need that help, I applaud you for it. I am glad
that you are reaffirming it for children, but all children are
currently covered at that level. So it will not result in an
increase.
But what we do hope you will do in protecting Medicaid--in
fact, I would like it if you want to take it up to 300 percent.
That would be wonderful, too. I don't care how you do it, as
long as you can kind of try to get all those folk who are
uncovered, but I think that Medicaid is essential, it is
comprehensive benefits. As I go for children, it is essential.
The fact that it is an entitlement is absolutely crucial, and I
think it is one of the strongest pieces of what you have done.
On the children's front, I hope that you will make sure
that Medicaid's benefit protections are extended to CHIP
children and children in the Exchange because we think it is
the most appropriate benefit package. So we hope you will do
that. But it also raises another important point because many
of the children now at 133 percent of poverty under Medicaid
are eligible but are not getting it because the bureaucratic
systems are impeding that. So one of the things that is
essential if the children under 133 percent of Federal poverty
level are going to get their Medicaid coverage, we are going to
have to simplify. And we have laid out a number of
simplification steps.
One of the good things you have in your provisions is
automatic enrollment of any child that is uninsured at birth. I
think that is fantastic. We would like to see automatic
enrollment for any child that is in any means-tested program.
We would like to have 12 months continuous eligibility. We have
laid out a number of steps that can be taken to ensure that
those children currently eligible for Medicaid will in fact get
it. But you are going to have to do the systems reform to make
it effective.
Mr. Pallone. I appreciate it. And I am sorry to stop you,
but I want to ask another question of Ms. Hansen. Yesterday the
PhRMA and the President announced some kind of a deal to cut
costs for seniors with incomes up to $85,000 in the doughnut
hole by 50 percent; in other words, to fill in the doughnut
hole in part, the people whose incomes are up to $85,000, that
they would only pay 50 percent for brand name drugs once they
fall in the doughnut hole.
Now, I am not taking away from that. I appreciate the fact
that the pharmaceuticals are doing that. But in the discussion
draft, we fill about $500 of this cost for the doughnut hole
immediately and then phase out the doughnut hole for all
Medicare beneficiaries over time. And we also reinstate the
ability of the Federal Government to get the best price for
prescription drugs for the most vulnerable low income Medicare
beneficiaries. Those are rebates again to fill the doughnut
hole.
How do you see this provision in the draft, the discussion
draft as working together with the commitment by the
pharmaceutical manufacturers yesterday? I don't see them as
mutually exclusive. I think they are both positive. But I just
wanted you to comment on that.
Ms. Edelman. Well, I have actually----
Mr. Pallone. Well, I was going to ask Ms. Hansen
originally. Go ahead. I am sorry. We are just out of time. Go
ahead.
Ms. Hansen. Thank you. Mr. Chairman, we agree with you.
This does not preclude the continuance of it because it is
actually only 50 percent of the doughnut hole and for people
who are at that income level. It doesn't cover every Medicare
beneficiary. But it is--part of what it does do for the people
who are on drug coverage, as I stated briefly, that people who
are falling in that hole are not oftentimes continuing with
their medications.
So part of our job as an organization is to really get the
most relief in the quickest time on behalf of people who are
already in that conundrum. I mean, that even relates to people
who are becoming bankrupt as well. So that cost element is real
important.
I think what the draft does is importantly to continue to
build on that so that we have a more whole, seamless coverage
on behalf of people. So I do think that they can work--and we
are continuing to work with you on making sure that coverage
continues.
Mr. Pallone. And I appreciate that. I know you were part of
this deal. I don't know if that is the right word, or agreement
yesterday. But I also appreciate your working with us to try to
completely fill the doughnut hole.
Ms. Hansen. I just wanted it to be really clear, I think it
was Senator Baucus that really took the leadership role with
PhRMA. And I know that the President supported it. And we again
appreciated it because it makes such a big real difference in
people's pocketbooks.
Mr. Pallone. We try not to talk about the Senate here, but
there are occasions we have to acknowledge their existence.
The gentleman from Georgia, Mr. Gingrey.
Mr. Gingrey. Mr. Chairman, thank you. I want to ask Ms.
Shona Holmes. First of all, thank you for your testimony. We
really appreciate that. And I as a medical doctor, I mean, I
understand, I think, what you were describing to us. I guess a
benign pituitary tumor, the pituitary gland is about the size
of your little thumbnail in the normal circumstance. But when
it is growing so rapidly as in your case, it is right in front
of the optic nerve where it crosses over and as it compresses
on that optic nerve, as it gets larger, that is what would lead
to the blindness and I am assuming the doctors at the Mayo
Clinic in Arizona informed you of that and said that you really
need to get this surgery done within about 6 weeks.
Now you went back to Canada and I understand from your
testimony they said that there was no way they could do it in
the 6 weeks. Did they say why? Did they have a reason for that?
Ms. Robertson-Holmes. The biggest problem in Canada is that
the wait times even just to get in to specialists in order to
get diagnostic testing done. So when I returned to--in fact, I
had this false sense of security when I was in Arizona because
2 of my doctors were, in fact, Canadian. I have never
questioned the talent that comes out of the medical system in
Canada. They just don't have the resources. And so when I saw
these doctors, they said go home, you can get this done at home
and you have insurance, this is what you should do. Here is
your----
Mr. Gingrey. And you said it would probably have cost you
$100,000 to have it done in the United States.
Ms. Robertson-Holmes. In total, with all my expenses and
everything being away, and I had to return--I took 3 solid runs
at this particular situation. So this is not just that I fell
through a crack. And I had to go--I had to go originally for
diagnostic testing. I had to go back for surgery and I had to
return for follow-up because I couldn't get any of those things
done in Canada.
Mr. Gingrey. So there was a real problem with the rationing
basically, a long queue, and getting----
Ms. Robertson-Holmes. And at the time I was also diagnosed
with a potential tumor in my adrenal and it was recommended at
the Mayo Clinic at that time that I have that surgery and, you
know----
Mr. Gingrey. That additional surgery. And also that was
going to be delayed in Canada as well?
Ms. Robertson-Holmes. Three years to the date.
Mr. Gingrey. Time is running out. I want to ask you one
other thing. In your testimony you credit the United States
health care system for saving your life. You just said that.
You also mention your lack of rights as a patient in Canada.
Tell me, as someone who has seen health care from both sides of
the Canadian border, what advice can you give to American
patients who may be following this debate in Congress?
Now, keeping in mind what our chairman and I know in all
sincerity he mentioned that this is in his opinion not nor is
it designed to lead to a single-payer, U.K. or Canadian type
system. That is what Chairman Pallone said. You have some
concerns about that. I have some concerns about that with this
public option.
What would you say to the American people in regard to
this?
Ms. Robertson-Holmes. It is my understanding from--actually
all my family is in Great Britain and it actually is a 2-tiered
system. They actually have public and private, and they are
almost in worse condition than we are. What I am saying is I am
insured. I have insurance. But the money isn't there. It is
expensive. Health care is expensive anywhere. And I was
promised that I had insurance. But when it came to using the
services that I was supposed to be covered for, they weren't
there.
Mr. Gingrey. Yes. So having an insurance, a plastic card
doesn't guarantee you access, affordability, availability if
there are no physicians there to provide that care.
Great point. Thank you very much for your testimony and for
your response. I want to go now to Dr. Novack, Dr. Novack,
thank you. I know you practiced orthopedic surgery--is it in
Arizona, I think you mentioned to us. And you reference in your
testimony the study published I think May of 2009, the Journal
of Health Affairs, one in five Massachusetts adults were told
in this last year that a desired physician was not taking new
patients. Here again, they had insurance, they had coverage,
they just couldn't find a doctor. Do you know if the type of
insurance a person carried influenced their ability to see
their desired physician, whether it was the public plan option
or a private plan option? There was a delta in regard to who
can get----
Dr. Novack. I don't have an answer for you on that. What it
is illustrative of is the regular attempts to conflate health
insurance with health care. So here the 47 million number,
which is a bit inaccurate in and of itself, that don't have
health care, those are people who don't have health insurance.
And since 20 million of these people change every year because
of job changes, et cetera, about 10 million are in the country
illegally, about 10 million are between 18 and 30 and don't
think they will ever get sick. You are left with about, as I
mentioned, about 3 percent of the country that is chronically
uninsured. So just giving people health insurance, what we see
in the Massachusetts example, is no guarantee that you have
access to health care.
Mr. Gingrey. Mr. Chairman, if I might ask Dr. Novack to
submit a written answer to my question in regard to the
different discrepancies between or among the plans where there
were no doctor available, I would appreciate that. My time has
expired and I yield back.
Mrs. Capps [presiding]. Yes.
It is a pleasure now to yield 5 minutes to our chairman of
the full committee, former chairman, John Dingell.
Mr. Dingell. Thank you, Madam Chairman. I would like to
begin by welcoming our old friend and my very dear personal
friend, Marian Wright Edelman, to the committee. I am delighted
to see you here, Marian.
Ms. Edelman. Nice to see you.
Mr. Dingell. I want to get right down to the business at
hand here and to say to you, Ms. Holmes, welcome. Your comments
I found to be most interesting. Tell me, you are referring to a
single-payer system you have in Canada; is that right?
Ms. Robertson-Holmes. I am, yes.
Mr. Dingell. You are aware that the draft that is before us
is not a single-payer bill?
Ms. Robertson-Holmes. All I am aware of is I needed to tell
what my story was.
Mr. Dingell. So then help me. How would your concerns with
a single-payer system apply to the draft of the legislation we
are working on today?
Ms. Robertson-Holmes. My concerns are basically in order to
open up the communications so that people know the questions to
ask when a bill is passed so that they know what is safe to get
into----
Mr. Dingell. In other words, your comment is a warning
rather than a criticism?
Ms. Robertson-Holmes. Just my experience.
Mr. Dingell. Well, I think it is a very good criticism, and
I thank you for it, or rather a very good warning as opposed to
a criticism.
Now, Dr. Novack, I found your--you made a very frightening
comment here that I would like to address with you because if
your fears are correct, this is a very bad situation. And in
this--and I can tell you that I am going to stay up night and
day to get it out if there is anything like that in here. You
made this statement. You said no matter what name the
bureaucrats and politicians want to use, the plan being put
forth by the committee will mean Washington bureaucrats will
have the power to deny you care.
That is a very frightening statement, and I would
appreciate it if you can tell me where in this draft that there
is language that would authorize that so that I can get this
out? I will work with you to get it out. Tell me where it is.
Dr. Novack. I think the issue here is when you--what has
been very vague of course is exactly how the cost control is
going to happen.
Mr. Dingell. No, no, no, no. Where is the language? You
made a bold, flat statement, and frankly I am scared to death.
Now, I want you to tell me where it is in there so I can get it
out.
Dr. Novack. I don't have the exact line for you, sir. But I
can----
Mr. Dingell. But where is it, Doctor? I would probably be
unfair to you because you are a doctor and I am a lawyer, and I
would never presume to tell somebody how to take out an
appendix or to replace a knee, but I do know a little bit about
drafting law. I have been doing it for about 50 years and you
made a statement that scares the bejabers out of me, and I want
you to tell me where it is.
Dr. Novack. Again, I don't have the exact line numbers for
you, but I will get it for you.
Mr. Dingell. So you made the bold statement, though, which
you are not able at this time to tell us where the language is
in the bill that has caused you to make this statement, and I
will repeat it again because quite frankly it is a very serious
charge: No matter what name the bureaucrats or politicians want
to use, the plan being put forth by the committee will mean
Washington bureaucrats will have the power to deny you care.
And you capitalized ``deny you care.''
Dr. Novack. Again, the answer here is that we know that
care is going to be denied because you have to come up with a
package--the plan is to come up with a standard benefit package
and then to give some authority the ability to determine which
benefits are going to be accessible to--it will start with
seniors, I imagine, if we start applying this to patients in
Medicare first. If those benefits are different than the
benefits that people currently enjoy today, that will
potentially be care that will be either delayed or denied for
what they are getting right now.
Mr. Dingell. That is the basis for your statement, is it?
Dr. Novack. Yes.
Mr. Dingell. I find that to be interesting. It is kind of
like building a house of cards here or maybe setting up a straw
man. And that is a good thing to do because then you can knock
them down fairly easy. But I still want to hear you tell me
what is the precise thing.
Let us go to something. You have got Blue Cross and Blue
Shield. You have got Aetna. You have got all kinds of insurance
companies in this country. Do you remember when we had the big
fight over patient's bill of rights? Do you remember that?
Dr. Novack. Not entirely.
Mr. Dingell. The AMA was very, very interested in it, and
they were very helpful to me in my efforts to try to get that
legislation through. That was to stop a bunch of health
insurance bureaucrats, green eyeshade actuaries from telling
you as a doctor what you could do and telling me as a patient
what treatment I could get. And I find your same apprehensions
were joined in by my friends at AMA when we tried to correct
this iniquitous situation which we have now. And I am trying to
find out where the abuses that we complained about are to be
found in the legislation.
Dr. Novack. Sir, I think----
Mr. Dingell. And how this situation, even if it is as you
say, is true, would be worse than that which we have now where
we have 47 million Americans who haven't gotten any health care
and who haven't got anybody to tell them what they can have or
not have. The only thing they can say is you can't have
treatment because you can't pay your bill.
Dr. Novack. Well, I think the question is what kind of
tradeoff are we looking to make. It is true and I can tell you
both as a provider and as a patient and as a patient advocate
that there is often times no love loss between me and the bulk
of the private health insurance industry. The tradeoff that the
legislation appears to be making is to be moving away from
green eyeshade private health insurers towards green eyeshade
Washington bureaucrats. And I think at the end of the day when
we look at examples where there have been abuses in the private
health insurance industry, there is resource. When Blue Cross
did recisions in California and other companies did recisions
in California, there has been significant--but my concern is,
for example, in the VA system--there is no resource to the
10,000 people that are exposed to HIV----
Mr. Dingell. My time has expired. Thank you.
Mrs. Capps. Thank you, Mr. Dingell. And I yield now 5
minutes for questions to Mr. Whitfield.
Mr. Whitfield. Thank you, Madam Chairwoman. Let me ask you,
have any of you read this bill? Ms. Edelman, have you read this
legislation?
Ms. Edelman. I have read or my staff has read it multiple
times and we have struggled to make sure that I read the key
portions of this bill that relate to children.
Mr. Whitfield. When did you all receive it?
Ms. Edelman. We got it on Friday and it is over 800 pages
long, but we have done the best we could.
Mr. Whitfield. Well, I don't think any of you have read it.
Certainly I have not read it. Not many members up here have
read it. And one of the things we are concerned about, when you
have this sort of dramatic change in health care--and evidently
this bill, they are going to try to bring it to full committee
the first week of July or the second week of July. We don't
really have a lot of time here.
But let me just talk philosophically about a couple of
things and then I will get into some specific questions. I
would ask all of you, does the American taxpayer have the
responsibility to pay for nonemergency health care for illegal
immigrants? Ms. Edelman, what do you think?
Ms. Edelman. I think all children should be covered because
as a public issue if there are any children that are in our
country or in our schools--all children go to schools.
Mr. Whitfield. What about adults?
Ms. Edelman. I am here to talk about children. Our bill is
about all children being covered.
Mr. Whitfield. What about you, Ms. Hansen?
Ms. Hansen. We don't have a policy on immigration because
that is not part of our public policy covering our----
Mr. Whitfield. So you don't have a position? OK. Dr. Shern,
what about it.
Mr. Shern. Similarly we don't have a position on----
Mr. Whitfield. Dr. Novack.
Dr. Novack. I would just say currently as a provider--and I
take about 14 days of emergency room call every month, I take
care in the Phoenix area of a whole lot of people who are not
in the country legally and they get the same care, whether----
Mr. Whitfield. But I said nonemergency room care.
Dr. Novack. I think that given the tens of trillions of
dollars of unfunded liabilities, that we ought to be directing
the resources to people in the country legally first.
Mr. Whitfield. There has been a lot of discussion here
about there is not going to be any government payor plan or
government plan. And yet in section 203 of the bill, which very
few of us have read, it says the Commissioner that will be
established under this legislation shall specify the benefits
to be made available under Exchange, participating health
benefit plans during each plan year. And I have been told that
that applies not only under the government option but also the
private plans.
So do you think it is right that some government officer
will be dictating what benefits will be available under private
as well as the public option plan? Dr. Shern.
Mr. Shern. Well, I think that the intention, as I
understand it of that provision, is to provide a floor of
services that will be available for everyone upon which you can
build. And I also think that if----
Mr. Whitfield. That is your understanding. Do you know that
to be a fact?
Mr. Shern. No, I don't know that to be a fact.
Mr. Whitfield. What about you, Ms. Hansen?
Ms. Hansen. I can't answer it.
Mr. Whitfield. Have you read the bill?
Ms. Hansen. Not since Friday.
Mr. Whitfield. But you all have helped work on this
legislation. You have been a part of drafting this legislation;
is that correct, Ms. Hansen?
Ms. Hansen. We don't draft the legislation.
Mr. Whitfield. Did you have input into it?
Ms. Hansen. There have been conversations between our
staff.
Mr. Whitfield. Now, the CBO says that they estimate 15
million people will lose their present insurance, health
insurance coverage as a result of this legislation. So, Ms.
Hansen, what would you say to your members who will lose their
employer health coverage because of this bill?
Ms. Hansen. Well, we take the position that people--the
principle of choice--and we also support that people who have
insurance now can and want to keep that. And that is something
that we actually believe in the maintenance of a public and a
private----
Mr. Whitfield. Does this legislation give each individual
the right to keep their current insurance?
Ms. Hansen. Those are the principles that we are
supporting.
Mr. Whitfield. But do you know for a fact that it does it?
Do you know for a fact that it does it?
Ms. Hansen. I don't know for a fact personally, but the
principles I can ascribe to----
Mr. Whitfield. My understanding is that this legislation
also includes an employer mandate which will force businesses
to either provide health insurance to their employees, which is
fine, or pay a tax of 8 percent of wages paid. Now, that is
going to particularly hit hard small businesses. And there have
been estimates that there may be 4.7 million Americans that
would lose their jobs because of the additional tax that small
business men and women will have to pay.
Does that concern you all? Does that concern you at all,
Dr. Shern?
Mr. Shern. If those estimates are correct, that would be a
concern.
Mr. Whitfield. Ms. Hansen.
Ms. Hansen. Right. We feel that the ability to cover should
also be supplemented by understanding affordability and cost
for both employer, as well as the employee.
Mr. Whitfield. OK.
Ms. Edelman. But it is also my understanding that small
businesses can buy into a public plan, but everybody should be
contributing something.
Mr. Whitfield. Everyone.
Ms. Edelman. This should be a shared sacrifice.
Mr. Whitfield. Let me ask you a question. What do you think
if we just took the money that this plan is going to cost and
just put everyone under Medicaid? I mean, I know you are a
supporter of Medicaid. It is a good system. What do you think
about that?
Ms. Edelman. Well, I think that the committee can
deliberate. I don't care how we do it. We should thoughtfully
determine that we are going to get health coverage for
everyone. What they are trying to do here is to give people----
Mr. Whitfield. Would you be opposed to everyone being under
Medicaid?
Ms. Edelman. I would be not be opposed to all children
being under Medicaid. That is what I know about.
Mr. Whitfield. What about adults?
Ms. Edelman. But I think that the issue here is how we are
going to give everybody coverage and choice about a public or a
private----
Mr. Whitfield. And my question is would you object to
everyone being under Medicaid?
Ms. Edelman. I am here to talk about children today and to
say whatever plan we do, that we should absolutely make sure
that all children and pregnant women are covered, and I would
love it if Medicaid took them all up to 300 percent, all of the
children got the Medicaid benefits and the Medicaid
entitlement.
Mr. Whitfield. I think my time has expired.
Mrs. Capps. Thank you, Mr. Whitfield.
May I just make a correction to a statement that was made?
It is my impression or my understanding that CBO has not taken
a position on this bill and that actually a private-public
benefit advisory committee determines what the benefit is that
should be on the floor--or what is offered in coverage in the
new marketplace or sold in the new marketplace, and that is
just for the record.
And I now call upon or recognize our colleague from
Colorado, Ms. DeGette, for 5 minutes.
Ms. DeGette. Thank you, Madam Chair. And I want to add my
thank to Ms. Robertson-Holmes for coming today. It is always
important to hear the patient perspective. When you were
testifying about the great care that you got at the Mayo
Clinic, I was thinking about my next door neighbor when I was a
little girl, Randy West. I knew him since I was 6 years old.
And about 2 years ago, Randy was diagnosed with prostate cancer
and he was treated and the doctor said they thought he was
cured. And then the next spring when his private insurance plan
came up for renewal, his insurance company said they would
renew his insurance but that they would not insure him for any
future complications he might have gotten from the prostate
cancer. So he said, well, why should I get insurance then
because that is the thing that is the most likely to affect me.
So he didn't get the insurance renewal, and you know the rest
of the story. Last summer, his symptoms returned, he went back
to his old doctors, his old doctors would not now treat him
because he didn't have health insurance anymore and he spent
about 2 or 3 months trying to get on to Medicaid so he could
afford to go see the doctor and get treatment for his now
advanced prostate cancer. Last week, on Wednesday, was Randy's
57th birthday, and he died suddenly of a heart attack because
of the advanced prostate cancer that had riddled his body.
So there are problems with the single-payer system in
Canada, but there are real problems for 47 million Americans
like my friend Randy West who died because he didn't get the
insurance. And I don't even need a response to that. I just
want to say what we are trying to do is make it so insurance
companies don't deny people for those pre-existing conditions
and so that people who have diseases in this country can go to
the doctor.
And I just want to point out to you, Ms. Hansen, I want to
thank you for mentioning the Empowered at Home Act in your
written testimony because Chairman Pallone and I worked on this
bill a lot together, and what that does is it incentivizes
States to provide home and community-based services which
allows disabled individuals to stay in their homes. It is not
only about better health outcome, it is also more cost
effective. And so I want to thank you for that, and I think,
Madam Chair, that is an important component to keep in the bill
as we move along.
And finally, I have to thank my dear friend, Ms. Edelman,
all of our dear friends and a real icon for children in this
country for coming over today, and I want to ask you a couple
of questions about kids. As you know, I have worked for many
years on kids' health.
The first one is, do you think that as we design a program
to try to enroll all kids in this country in health insurance
or some kind of health coverage that we should look at their
unique needs and not just assume that the adult programs will
cover them?
Ms. Edelman. Yes, which is why we feel so strongly about
the Medicaid benefit package which has been thought through as
being the most child appropriate because it is targeted at
children and it is targeted at early diagnosis and early
treatment. So I don't think we need to reinvent anything, and I
hope you will not come up with a benefit package, whatever it
is, that takes away what children now have that works, and we
want you to extend that package to all children because that is
what we think they need.
Ms. DeGette. And that includes mental health and----
Ms. Edelman. Mental health. It is the comprehensive, all
medically necessary services. And we think that that should be
Medicaid children, CHIP children and any children regardless of
whether they are in an Exchange or not.
Ms. DeGette. And we talked earlier. I think you mentioned
in your testimony the early and periodic screening diagnosis
and treatment benefit. That is very expensive, though. And I am
wondering if you can opine as to whether you think that
additional cost is worthwhile and might even save money in the
long run for kids and, if so, why.
Ms. Edelman. I think it would save money and when we had
Lewin & Associates do cost estimates for extending coverage to
all children and giving them the Medicaid benefit packets, they
said that you could extend the EPST benefit packets to all 9
million uninsured children--this was a 2-year ago study--and
for about 12 percent added cost.
So I think that the cost effectiveness of this in the long
run is going to pay itself back. So we think it is not a big
huge add-on.
Ms. DeGette. Part of the draft legislation, and part which
I am sure you have read because it applies to children, is the
part that if children come in at birth and their parents don't
have insurance would automatically enroll them in Medicaid for
the first year.
Do you think that is a good step in the legislation?
Ms. Edelman. I think that is terrific. And we would like to
have automatic enrollment when they go to preschool or if they
are in any WIC program or early Head Start program. You want to
get children in because they are prevention. You want to
prevent them----
Ms. DeGette. And preventive care for children actually
saves----
Ms. Edelman. Many, many dollars on the other end. And we
can give you added testimony that shows you the cost of doing
that.
Ms. DeGette. I would appreciate it if you would supplement
your testimony in that direction. Thank you very much, Madam
Chair.
Mrs. Capps. Thank you, Ms. DeGette. And now I am pleased to
recognize for 5 minutes Dr. Burgess from Texas.
Mr. Burgess. Thank you, Madam Chair. Ms. Wright Edelman,
let me just ask you a question. Last fall, in the interest of
full disclosure, I was a surrogate for the opposite side. I got
to know President Obama's proposals last fall pretty well
because I always had to prepare to argue against them. And one
of the overarching themes that was always put out there first
was that there was going to be a mandate to cover children
under President Obama.
Have you talked to him lately about what happened to that?
Ms. Edelman. No. But he certainly knows that I am expecting
him to keep his promise. And I know that he has expressed his
great interest in seeing that we take care of all of our
children, and I think that this is the time to do it and the
individual mandate----
Mr. Burgess. I don't mean to interrupt, but I always had
difficulty getting his surrogates to identify the definition of
a child. Sometimes it was age 19, sometimes it was age 25,
sometimes it was age 27. Do you have an opinion as to where
that limit should be set?
Ms. Edelman. Well, I certainly--we would take the
definition of a child that is under Medicaid or CHIP now, but I
think that we are talking about everybody getting coverage. And
we know that there are a lot of younger people in college----
Mr. Burgess. But in the interest of time, I have got to
interrupt you. What is the difficulty with a child on Medicaid
today? What is the difficulty with getting them in to see a
dentist if they have dental coverage under Medicaid?
Ms. Edelman. Well, the first part--Texas, since you have
the highest number of unenrolled children and we----
Mr. Burgess. Let us just focus on those enrolled.
Ms. Edelman. Well, may I provide reimbursement rates? We
all heard--and because children do still face bureaucracies.
But let us just take the child out in Prince George's County,
Deamonte Driver, who--Deamonte Driver died last year--tried to
get--25, 26 dentists his mother went to, couldn't get them to
take him because of the low Medicaid, low reimbursement rates,
and I know you are trying to do something about that in your
proposal. And the upshot was his tooth abscessed and infected
his brain and then he died. 250,000 emergency rooms have huge
bureaucratic barriers first to even enrolled children and not
enough providers, and in rural areas it is worse.
Mr. Burgess. But fundamentally the problem has been
reimbursement rates.
Now, Dr. Novack, you talk about 14 days out of every month
you cover the emergency room, and we have put a mandate on
providers. We may not have a mandate for kids, we may not have
a mandate on employers or a mandate on individuals, but you
have a mandate called EMTALA, which requires that within 30
minutes of somebody showing up at the door you have to see
them. Is that not correct?
Dr. Novack. That is correct. And the consequence, of
course, is that a very large majority of my colleagues just no
longer have any privileges at the hospital. So for sometimes
some complex things, where it might be nice to have a
particular person available and when someone comes into the
emergency room, you are no longer even able to get that
person's assistance on a difficult case because of the
regulations. People abandon their privileges completely.
Mr. Burgess. And this is an extremely--and both of these
issues are really getting to the same problem. And I recall
back in--I practiced obstetrics back in Texas for 25 years, and
we made an agreement amongst ourselves that our individual
practices would each take a certain number of Medicaid patients
every month into our obstetrics practice so no one would be
unduly burdened by a larger number of patients who reimbursed
at a lower rate. And that worked great until you had somebody
who had a complicating medical condition and they had to be
referred to a specialist. And it was virtually impossible to
find anyone because of just exactly what you described, those
very low reimbursement rates.
As we sit up here and plan a national program that may very
well be based on Medicaid, I just think we are obligated to
make the program that is already there work first and
demonstrate that it can work before we go extending it to
increasingly larger segments of the population.
Dr. Novack, do you have an opinion about that.
Dr. Novack. My sense is that it is no different than when I
do something in orthopedics, which is you are not going to
introduce a new procedure until there is some data in a small
group that it works. And what is being proposed here is to push
through massive legislation in an incredibly short order where
there has not been full time for people across the country to
look at it and examine the problems and try to get it passed
before people realize what has happened. And then all of us as
patients will live with the unintended consequences of those
actions.
Mr. Burgess. So we should have evidence-based policy as
well as evidence-based medicine?
Dr. Novack. I suspect the--as Shona has demonstrated, look,
there are good people in health care, whether they are
physicians, nurses, all through the system, top to bottom in
lots of places, not just the United States. But the system
within which you are allowed to provide care is as important to
the delivery as the people providing it. So if we are not
willing to put the same level of attention and same level of
attention to detail on the level of intellectual rigor into
designing the system, it is doomed to fail.
Mr. Burgess. Doomed to fail. Shona, let me just--I know I
have no time left, but I just wanted to let you know that my
grandfather was an academic OB at the Royal Victoria Hospital
in McGill and my dad also did his training at McGill Medical
School. He did a fellowship at Mayo Clinic back in the 1950s,
when there was only the one in Rochester, and never went back
to Canada. And I am so grateful you are here today, and thank
you for sharing your story with us.
Ms. Robertson-Holmes. I don't want to pull down any doctors
or anything from either side of the border. It is just what
they are able to do.
Mr. Burgess. The doctors and nurses are all good people.
The systems they are having to work under are where we are
encountering the stress. Again, thank you for sharing your
story with us today.
Mrs. Capps. Thank you, Dr. Burgess. And now I would
recognize myself for 5 minutes.
I want to just point out that this legislation is not
coming out of nothing, that there are--I will just mention
three examples of best practices or good care, medical home, if
you want to call them that. Cleveland Clinic is one, Mayo
Clinic is another. John Hopkins. All have been very
participatory. And many of our hearings have been focused on
areas where practices have worked and where we see examples in
small communities.
I want to start with you, Dr. Shern. Mental health and
substance abuse are some of the most chronic and disabling of
conditions. Treatment often does not begin until as long as 10
years after diagnosis. And diagnosis, we all know, oftentimes
happens much after the symptoms begin. This increases the risk
of developing a very costly disability. Mental health and
substance abuse conditions often also go hand in hand with
other costly chronic conditions like diabetes and heart
disease.
Can you comment--and I want to turn to children as well as
a former school nurse. We must address that. But I want you to
comment briefly on how we might be able to improve the
provisions of the draft bill to better guarantee earlier access
to mental health treatment. We tried to take as many steps as
we could, but this is a single--with all the stigmas and stuff
still around, please address this for us.
Mr. Shern. First of all, I would say that we are lucky to
have the Institute of Medicine report on prevention in general,
and there are many things we can do universally to drive down
the rates of mental illness over a long period of time.
So one thing we should think about--and I think that the
community task force that is anticipated in the bill is, in
fact, moving in the direction of the evidence about what is
effective in terms of prevention. I also think that the
inclusion of mental health screenings in adolescents, as
recommended by the Preventive Services Task Force and as
included in the bill, is a very important step forward.
It is ironic that we test eyes, we test hearing, we look to
see whether or not there is a scoliosis in the spine, but we
don't test kids for the things that they are most at risk for
routinely, and those are social and emotional problems. We have
data that indicates that when we do that with an appropriate
model, as the Preventive Services Task Force has recommended,
we can effectively identify and treat those conditions and that
will be beneficial in the long run. Anything we can do to
strengthen those provisions I think would be very helpful.
Mrs. Capps. And I am going to have to ask you to submit
this to the written record. If you have ideas about how we
could better integrate--support better integration of
behavioral health and medical care, as well as in a way of
maybe branching out. Hopefully this will be a beginning start
and then we can expand upon it.
You mentioned children naturally. Because when you talk
about health care and mental health, really, as you know, Dr.
Edelman, Marion Wright Edelman, that is when we should start
looking at screenings. I want you to focus on a different
topic. When you mentioned children, I always think of the
mother and I want to elaborate on the importance. I would like
to hear you elaborate on the importance of ensuring that women
receive adequate maternal care coverage and the effect of a
mother's health on the health of her children. It is so clear
to those who have studied it that if you have adequate prenatal
care, your chances of having a healthy baby are that much more
important.
Ms. Edelman. Well, a depressed mother is not going to be
the best mother for her child. So what is good for the mother
is always good for the child. So it is in all of our self-
interest to make sure that mothers do get prenatal care, that
any problems that they have are--substance abuse problems,
domestic problems, other things that may lead to them being
less able to do all they need to do for their children, those
can be detected early and treated early because the impact on
their children in the short and long term will be enormous, and
we also just know the cost effectiveness of prenatal care, if
they are having babies that are at low birth weight, are not
adequately nourished, and don't know how to take care of
themselves and their children. So you can't separate the two.
So I think going forward we should make sure that the mother is
in good shape and the children are in good shape.
And I am happy to submit additional evidence of the
effectiveness of prenatal care and the effectiveness of
maternal care and hope that there will be a full fledged
capacity to make sure that all children have mothers who get
full maternity care in this bill.
Mrs. Capps. Thank you very much. We have done a bit of work
in Congress recently to recognize the situation around maternal
mortality. But also the fact that--I don't think many Americans
realize that this country, the United States, has one of the
highest rates of infant mortality, 27th out of 30
industrialized countries. That is a red flag for starters.
And I want to thank each of you again for your testimony.
And now I will recognize Mrs. Christensen for 5 minutes for her
questions.
Mrs. Christensen. Thank you, Madam Chair, And I thank all
of you for your testimony. Ms. Chin Hansen, AARP has taken a
position back a few years ago in support of lifting the
Medicaid cap for the Territories. This bill does not go that
far.
Is it still the position of AARP that all of the Federal
programs should be equally accessible to all Americans
regardless of where they live?
Ms. Hansen. As you have in my written testimony, that it
does speak to really supporting that elevation. So it is
something that we continue to support.
Mrs. Christensen. Thank you. Dr. Shern, you talk about
providing mental health care and the savings that we would
realize from that and the reduction in the productivity losses
that we experience, and you give some pretty good figures to
back that up. But I wonder if just for the record you would
speak to the impact of treating mental health, mental illness,
and chronic disease and how that would also produce savings in
terms of chronic disease treatment.
Mr. Shern. Mrs. Christensen, as I said in my verbal
testimony today, mental health conditions are the most likely
co-occurring conditions with other chronic illnesses. And when
they occur, there is lots and lots of data that indicates that
the course of treatment is much rockier, costs are much higher
and outcomes are much poorer. We have a study of older adults
with diabetes, called the Prospect Study, who also had
depression, half of whom were randomly assigned to effective
depression treatment, the other half were assigned sort of a
watchful wait and counseling but to balance off the amount of
time that was spent. What we found was over a 2-year period,
those people who didn't have their depression effectively
treated died at twice the rate of the individuals who had their
depression effectively treated.
And in this study we found that in the first year there was
an overall cost increase for care, but in year two the overall
cost of care for those people declined and their clinical
status improved.
So we have lots of examples of what is called collaborative
care models in which the entire person's needs are addressed.
In this case we are talking about diabetes and depression.
Additionally and quickly, if you look at workplace
presenteeism and productivity, there is also ample data--and
this gets to your earlier point about thinking about costs more
broadly than simply the costs within health care sectors--there
is ample data that shows that these are very cost effective
programs that have effective return on investment.
Mrs. Christensen. Thank you. And, Ms. Edelman, I think most
of the questions that I wanted to ask you have already been
asked. But you know that I have always shared your passion and
your commitment to making sure that every child and pregnant
female has been covered.
We are expecting a PAYGO bill to come to the Congress
shortly. I think it is still coming and, cost being the major
barrier to achieving what we all know we need to achieve on
behalf of children and really all Americans, do you agree that
it is important enough to take this issue out of PAYGO if that
is where it needs to be?
Ms. Edelman. Well, I don't think we have a money problem in
the richest nation on Earth. I think we have a values and
priorities problems and that if we can find the money for all
the more powerful special interests, if we can continue without
having had a PAYGO for the tax cuts, many of which came through
the Bush administration, if we could find the money so quickly
for bailing out the banks and the others, if we can continue to
have these disparate things, I don't for a moment believe we
can't afford to take care of our children. It is really about
values. And if we are serious about cost containment and if we
are serious about prevention and if we are serious about
creating a level playing field for everybody and if we believe,
as we profess to believe and which is America's promise, that
every child's life is of equal value, then we will find the
money to do what is right and cost effective. So I hope we will
do it.
Mrs. Christensen. Dr. Novack, do you agree--I don't agree
with a lot--some parts of your testimony, but I agree with your
position on MedPAC, if I understand it correctly, and where you
say that using cost control as a driving force behind health
reform will turn every American from being a patient to an
expense.
Do you also agree that this ought to be done regardless of
cost because we cannot, as the President said, afford not to do
it?
Dr. Novack. No. I disagree. I think that if we look at
overall government spending, government should work the same as
families. And that at some point we have--look, we actually
have a health care bubble. It is like we had a housing bubble.
Our overall unfunded liabilities are massive in health care,
and that bill will come due some day no matter where people
want to stick it on the ledger. So given all the bailouts--and
I share the concerns with the other members of the panel about
some of the bailouts that have gone on since they seem to go
with whoever has the biggest megaphone. But that is not an
excuse to not use basic fiscal responsibility when we are
trying to reform health care.
Mrs. Christensen. But families do it in emergencies, borrow
to meet those emergencies and make sure that they are taken
care of.
Mrs. Capps. Now I recognize Mr. Green for 5 minutes.
Mr. Green. Thank you, Madam Chairman.
Dr. Shern, I am a cosponsor of H.R. 1708, the Ending
Medicare Disability Waiting Period Act, and it would actually
phase out the 24-month disability waiting period for disabled
individuals. And I want to thank you for being a member of the
coalition in the 2-year waiting period which has more than 120
members.
Can you speak on the importance of that elimination, that
24-month waiting period for individuals with mental
disabilities and illnesses, even with the creation of this
Exchange that is in the bill?
Mr. Shern. I think it is very important that we eliminate
that waiting period. It is such a counterintuitive thing. And
you know how difficult it is for someone to qualify for SSDI,
to make it through the disability process. And people with
mental health and substance use conditions have a particularly
difficult time making it through. And then once one finally
gets through to say, well, in 2 years--it was now agreed that
you have a chronic illness that needs to be treated and say,
well, the good news is you made it through the SSDI. The bad
news is we are not going to be able to provide you healthcare
coverage for 2 years. It makes no sense.
So I think that that repeal is really important. Anything
we could also do to expedite the elimination of the
discriminatory 50 percent copay in Medicare. We took care of
eliminating it over a 5-year period. We have good data to show
that that, in fact, drives cost on the inpatient side by
denying people or making it more expensive for them to get
ambulatory care.
So we are very enthusiastic about reducing that 2-year
waiting period, and anything we can do to drive down that copay
I think would also be very cost effective and beneficial.
Mr. Green. Dr. Edelman, in Texas we have the largest
uninsured in the United States and approximately 900,000
children uninsured. Approximately 600,000 of those children are
Medicaid eligible but unenrolled and the remainder are SCHIP
eligible but unenrolled. This can be attributed to times in the
past when Texas was facing budget issues and required parents
to reenroll their children in SCHIP every 6 months and the same
with 6-month re-enrollment for Medicaid. There are two pieces
of legislation. In fact, my colleague, Ms. Castor from Florida,
and I both are cosponsors of it.
In your testimony you mentioned 12-month continuous
eligibility for Medicaid as part of the solution to the problem
with the number of uninsured children in the U.S. Can you
explain why that is important also, the 12 months for the SCHIP
program?
Ms. Edelman. Well, I think that if you want to keep
children enrolled, and you should make the enrollment and re-
enrollment procedures as easy as you can possibly make it,
rather than as difficult as many States, including Texas, has
made it. And we lost a child last year to Bonnie Johnson whose
mother tried to do everything right but couldn't get her
paperwork sorted out in Texas, and this 14-year-old child died
from kidney cancer, which could have been allayed had he not
been dropped from coverage for 4 months.
And I have been so pleased that the business community in
Texas has come now and really understood the importance of
investing preventively and that Texas is losing millions of
dollars, in fact almost a billion dollars, by turning down a
Federal match and the local taxpayers are paying for it in
emergency care.
And so I just hope that we can--and we have submitted as a
part of our longer testimony all of the simplification things,
including the 12-month eligibility, presumptive eligibility,
express lane, and a number of things that can make it easy to
get children in for preventive care. And I would love, Mr.
Green--and thank you for your comments this morning--to submit
for the record the new study done by the Baker Institute that
talks about the cost effectiveness of investing in coverage for
all children in Texas and nationally, and lastly, some of the
studies the business community have done in Texas in support of
their reforms for 300 percent eligibility in Texas, as well as
for the 12-month continuous eligibility.
Mr. Green. And we know that the numbers--you can actually
decide if you want to keep children off of CHIP or even
Medicaid, you know, if you make those parents go down and stand
in line every 6 months as compared to the year. Now, during
that year they can still be investigated. If somebody finds out
that family may not be qualified for Medicaid or even SCHIP,
they can go get that. I appreciate it.
Also, Congressman Doggett is working with the Ways and
Means Committee on the same issue for both SCHIP and Medicaid.
Hopefully we can at least get SCHIP. It is much smaller, but we
need to do that, look at the total goal for Medicaid also.
Dr. Novack, let me just ask questions about your
statements. Health care reform must be built on a foundation
consisting of the protection of the right of individuals to
control their own health and health care, not special interests
of government bureaucrats. I would submit right now I don't
know if it is controlled by government, but it is controlled by
somebody on special interests. If you are lucky enough to have
insurance and you get preapproval, I can tell you that it is
already going to be controlled by someone that is--whether it
is insurance companies or Medicaid officials or someone else.
So I agree with you. I want health care to be controlled by
individuals, but we all have to answer to someone. And I can't
just go to the doctor and get everything I want. They tell me
that is not part of the policy or you not treated for that.
Let me go next to your statement on the first preserving
the right to be able to spend their own money, and let me
understand. In Arizona, there is a constitutional amendment
that the goal is to preserve the right to always be able to
spend your own money for lawful health care services?
Dr. Novack. That will be on the ballot in 2010.
Mr. Green. Is there something in Arizona law that prohibits
people from spending their own money for their health care?
Dr. Novack. No, but it is in Federal law, from the 1997
Balanced Budget Act, that effectively prevents Medicare
beneficiaries from spending their own money. If you are a
patient on Medicare and you come to me as a Medicare provider--
and let me give you--if you bear with me, because it only takes
a moment to do an example. If you have had your hip replaced,
for example, two or three times and you need it done for the
fourth time, which happens, you want to go to somebody who
really knows what they are doing. Well, the physician you want
to go to who does a lot of replacements, what we are seeing
more and more frequently is that those people are no longer
doing what we call redo or revision operations. And the reason
is why for a primary or first-time uncomplicated hip
replacement, Medicare pays $1,400. But for a redo----
Mr. Green. I understand where you are coming from. Let me
give you another example, though.
Mr. Pallone [presiding]. Excuse me. You are over almost a
minute and a half. So I would like to end this if I could.
Mr. Green. Let me ask you just to compare to that. If
someone comes into you----
Mr. Pallone. Mr. Green, you can't ask an additional
question.
Mr. Green. We don't have time?
Mr. Pallone. If he wants to respond, fine.
Mr. Green. I just wanted to make the comparison, Mr.
Chairman.
Dr. Novack. The difference is a $250 difference for what
would be three times the work. So if you say I want Dr. Jones
to do the operation, I will pay you the difference out of
pocket because it is extra time, the only recourse a physician
has is to resign from Medicare and not see any Medicare
patients for 2 full years.
Mr. Pallone. If you want to respond to that, you can. But I
have got to move on.
Dr. Novack. It is technically an effective prohibition on
spending your own money on health care.
Mr. Pallone. If you want to respond to that.
Mr. Green. There are a number of members here who voted for
that Balanced Budget Act in 1997. There is a lot of things that
have happened since then that I disagree with. But I also know
one of the concerns is that in an area that I have that is not
a wealthy area, if we didn't have that, if we didn't have the
current provision in the 1997 act, we would not have people
being able to find a doctor to be treated under Medicare--
because they couldn't afford that extra money plus what they
are already spending on Medicare.
Thank you, Mr. Chairman.
Mr. Pallone. Thank you. The gentlewoman from Tennessee,
Mrs. Blackburn.
Mrs. Blackburn. Thank you, Mr. Chairman, and thank you all
for taking your time to be here.
Ms. Holmes, I wanted to talk with you for a few minutes. It
sounds like you had an incredible journey.
Ms. Robertson-Holmes. I did.
Mrs. Blackburn. And you were happy to be able--and grateful
and fortunate to be able to find health care. You were here
during the first panel and you have heard what I have had to
say about TennCare in the State of Tennessee and our concerns
there, because what you outline in your testimony is what I see
happening many times in our State. You had to fly 2,000 miles
to access health care. In rural west Tennessee, because of all
the cost shifting that has taken place, because people are not
able to access health care and many providers are no longer
taking TennCare, then they find that that health care is
available a long way away from them. And sometimes 30 miles
might as well be 3,000 miles if no one has the ability to take
you there. And I am just assuming, from what I read in your
testimony and listening to you, that your outcome had you had
to depend on a single-payer system that allows you no recourse,
that allows you no alternatives, which says take a number, get
in the queue and wait your turn, that your outcome would have
been very, very different.
Ms. Robertson-Holmes. Very, very different. And this is the
whole reason why I am here because I feel very--to stick my
nose in American business, but I was fortunate to be able to
come here. But not only did I have to just travel away from my
home, I had to travel outside my country. And when it gets like
that--because it is actually illegal for me to try and do what
I did in Canada. And that is what we have to be able to--to
open the doors of communication about and realize that you get
rationed care. It is one thing to not have insurance, and it is
another thing to have insurance and not have doctors.
Mrs. Blackburn. So basically your government provided
insurance. When you needed it, your government provided
insurance was worthless to you?
Ms. Robertson-Holmes. Exactly.
Mrs. Blackburn. So you mortgaged your home, put a second
mortgage on your home. Your husband picked up a second job.
Ms. Robertson-Holmes. That is right.
Mrs. Blackburn. And you got the money that was necessary,
the $100,000 to pay for that.
Ms. Robertson-Holmes. Yes.
Mrs. Blackburn. Now when you had flown back to Mayo and
then you went back to Canada with your test results, and you
said all right, here it is, I am going to be blind in 6 weeks,
did a bureaucrat make the decision or a physician make the
decision?
Ms. Robertson-Holmes. They wouldn't even look at my medical
reports. It was get back in line and wait.
Mrs. Blackburn. So the bureaucrat turned to a citizen and
said, you are out of luck, get in line?
Ms. Robertson-Holmes. Get in line.
Mrs. Blackburn. That is real compassion, isn't it.
Ms. Robertson-Holmes. No, absolutely zero compassion from a
country that is known to be compassionate. The same country
that will cover illegal immigrants the second they arrive in
our country.
Mrs. Blackburn. Thank you, ma'am.
Ms. Hansen, a quick question for you, and thank you for
being here and I know you all work hard for our Nation's
seniors. I have lots of seniors in my district and I had the
opportunity this weekend to visit with some of them. You know,
they are really very concerned about what they have been
hearing from the Obama plan, because they feel like they have
had money taken out of their paycheck every week and now they
get to near retirement or they get to retirement and they are
being told basically that that is worthless to them, that if
there is a nationalized plan that they are going to be treated
more like--they are feeling they are going to be treated more
like Medicaid than Medicare and they are very, very concerned
about losing Medicare Advantage, they are very concerned about
losing options, and concerned with losing their Part D
coverage.
What would you suggest that I tell these seniors that say I
have been putting money in, it is my money and came out of my
paycheck, I have been letting the government have first right
of refusal on that money all of these years, and now it is
basically people--everybody is going to have the same thing?
How do you respond to that? What should I tell the senior?
Ms. Hansen. Well, I think that what I think I have heard
that the President said if you have current insurance and it
works for you, you can keep it. So I don't know if in this
discussion whether it is that everything comes back into the
pot, and I don't think that the Medicare program is meant to be
structurally dismantled. So I think that my sense is that their
assurance of whether it is the Medicaid program that Dr.
Edelman has spoken about and Medicare. I mean, we have these
right now codified in law with each of these different parts.
So there is that.
I think one of the things that we want to do is to make
sure they get best value for their hard earned money, for what
they have spent. So in other words, we want to make sure they
get safe care, we want to get timely care. We want to make sure
when they need medications, and most older people have
medications, of the fact that it is affordable for them.
So these are the things that I know AARP really strongly
supports, and so I think the ability to really square as to
what is discussed about President Obama's plan and the
principles of maintaining choice, coverage, and private
options.
Mrs. Blackburn. Thank you, I yield back.
Mr. Pallone. Thank you.
Gentlewoman from Ohio, Ms. Sutton.
Ms. Sutton. Thank you very much, Mr. Chairman. Five minutes
isn't going to do it, but I am just going to request that Ms.
Wright Edelman and Ms. Chin Hansen and Dr. Shern, if I can
follow up with you outside the committee to talk about some
ideas of how we might strengthen some things and make this work
for our children and our seniors and those who have needs, Dr.
Shern, you have so eloquently identified.
I want to thank you very much, Ms. Robertson-Holmes, for
coming and testifying. Dr. Novack. And I want to address the
issue that I think you raise. And I think it is very important
as we have this discussion to talk about the reality that this
isn't just about getting people health care insurance. This is
about improving the delivery of health care to people when they
need it the most in a way that makes sense both for health
outcomes and economically. And so your point is well taken when
you talk about you paid for your insurance, right?
Ms. Robertson-Holmes. Oh, sure.
Ms. Sutton. And when you needed it, it wasn't there.
Ms. Robertson-Holmes. Right.
Ms. Sutton. I listen to you because I was so struck because
I was in the State legislature in Ohio and did a lot of work
related to the private insurance industry, and that very same
problem, people who paid for care and then when they needed it
and their doctor said they needed it, the insurer wouldn't pay
for the coverage that they had been paying for all this time.
And there is a person by the name of Linda Kerns, it is K-E-R-
N-S, Doctor. And Linda was a witness who came in to testify.
And Linda was a very special person and most people are, but
she was special because she was actually an HR person for an
insurance company. And Linda had a history in her family of
breast cancer, that was a very aggressive form of breast
cancer. And so her doctor when she went in for treatment, that
she was vulnerable for this potential for breast cancer, the
doctor wanted to treat her aggressively, and the insurance
company bureaucrats overruled the doctor and said no, I am
sorry, you have been paying for coverage but that care is not
going to be provided, we don't think you need it. So she didn't
get it. She didn't get that coverage.
Now what she did was what you did. She eventually over
time, with great delay, raised the money and went into debt to
get that surgery, but there was a delay. So we really never
know the value of that delay or the health outcome.
Ms. Robertson-Holmes. Irreversible tissue damage, no
question.
Ms. Sutton. And in this country, unfortunately, there was
no recourse for her even if there was a proven health
consequence to the unreasonable delay or denial of that
coverage, even though if a doctor had done it--if a doctor had
said we are not giving that to you and then he was found to
have unreasonably delayed or denied then, there would have been
a malpractice case against them. There was no accountability
for that private insurer to be held accountable for the health
outcome other than the cost of the procedure, not the loss of
life or health.
Ms. Robertson-Holmes. That is the exact same situation as
we have, and there is no accountability from the government.
Ms. Sutton. See, this is my point though, because you
experienced that under your system. We see people experience
that here under our system as well and people going into
bankruptcy because the costs are spiraling or they don't have
access to the care they need when they need it. The problem is
that I guess maybe what I would ask is that if you had--and you
talked about the need to have some competition for your
government-run plan, and that is exactly what we are offering
here. We are assuring that people have access to coverage in
this country, and right now the private insurers are the only
game in town. If they unreasonably delay or deny, no
accountability. If we have a public option that also allows
people to have the chance to purchase it, that that cannot only
drive down costs but I would argue can drive up the quality of
the delivery of care.
And so I just point that out, because I can't help but
think of Linda.
Ms. Robertson-Holmes. And I understand and the major
difference between the two of us is----
Mr. Pallone. Ms. Robertson, you have to turn that mike on,
because otherwise you won't be transcribed.
Ms. Robertson-Holmes. The major difference between her and
I is that what I did by coming to this country, mortgaging my
house, et cetera, et cetera, was illegal for me to do at home.
It is not an avenue for me to do at home. I cannot step out of
that. I am mandated to use that, and that is it.
Ms. Sutton. And you would have preferred to have the option
of buying private insurance and then you would be resolved?
Ms. Robertson-Holmes. Or if worse came to worse, the same
situation that happened to me here, I could have at least
stayed in my house, had my children with me, had my father, you
know months before he passed away still with me at my hospital
bed. Instead I was in Arizona 2,000 miles away alone.
Ms. Sutton. I understand, and I thank you very much for
your testimony.
I know I am out of time. So bureaucrats there, bureaucrats
here. Of course this bill I know you had the question, Dr.
Novack, from our chairman emeritus about the exact language
that you used in your testimony to describe the bureaucrats
that will in your opinion be performing the functions under
this bill, but it really does provide, the bill, if you find
the language, it provides for health care professionals to do
the analysis and of course what we must tell the American
people is that right now insurance companies are doing it.
So with all due respect, thank you.
Dr. Novack. My answer is----
Mr. Pallone. Listen, I am sorry. I don't think she was
addressing a question to you.
The next person is the gentlewoman from Florida, Ms.
Castor. I apologize that I passed over you by mistake.
Ms. Castor. Thank you, Mr. Chairman, and thank you to all
of the witnesses who are here.
To Dr. Shern, you were an outstanding director of the
Florida Mental Health Institute in Tampa at the University of
South Florida. They miss you there, we miss you. USF is doing
great things, as you know, in medical, in health care policy
and research.
Back in Tampa before I was elected to Congress, I served as
county commissioner and the county government there had the
responsibility for all health and social services, including
very fairly robust children's services, compared to many other
places across the country. But I was always floored by the
total lack of mental health care services. There is nothing,
there is nothing for these families that struggle day to day
with what is going on in their homes.
Now of course the county government also had responsibility
for law enforcement and the county jail, and the greatest
advocate for mental health care services was always the sheriff
and the folks that were running the county jail because they
understood the population in jail, and that is the most
expensive way to address mental health care in America.
So I am pleased that the discussion draft here in the House
takes the first few steps in providing that comprehensive early
integrated care, and there is no better place to start of
course than with children.
As a mother, what would I do if I didn't have the same
pediatrician that I have had for my daughter's 12 years of life
to be able to just make that phone call, to call a nurse in the
office. It is very cost effective rather than trying to chase
down and go to a clinic or go into an emergency room. We are
all paying for that very expensive model out there. If you have
health insurance and you think you are not paying for other
people's care right now, you are wrong, you are. That is one of
the reasons your health insurance bills and copays have been
increasing over time to such a great extent because of the
uninsured showing up in the ER.
But to promote this early integrated comprehensive care
reform that we have taken a stab at here early in our
discussion draft, I would like you to focus on a couple of
things. Workforce. We know we don't have those primary care
medical professionals, and I am not sure we have the mental
health professionals that we need. Are we doing enough in our
discussion draft to tackle that problem? I would also like you
to address the terrible bureaucratic red tape. Ms. Edelman has
emphasized that time and time again. You have some good
recommendations in here, but I don't think the discussion draft
goes far enough. In the State of Florida we have 800,000
children that do not have that easy access to the doctor's
office. The State of Florida even one time quit printing the
application form for SCHIP.
So what else can we be doing to knock down these crazy
bureaucratic barriers that make it difficult for a parent just
to walk into the doctor's office and make sure that their son
or daughter gets a checkup? So the workforce issue and this
terrible bureaucracy.
Mr. Shern. Workforce is a critically important component,
and I am heartened it is addressed in the bill, and of course
we would always like to be able to do more, because we have a
real pipeline problem in terms of people who were being trained
to deliver the services that we need across the spectrum.
You talked about primary care physicians. I think we
continue to rely more and more and more on primary care
physicians in the medical home. As we know, the current
incentive system isn't producing enough primary care physicians
and we are not reinforcing them or rewarding them to the degree
to which we can or should.
Additionally, I think we need to think about what we can do
to continue to improve practice of people who are in practice
now. We don't have very good models for doing that. We have
what has been characterized as the Nike model. We sort of train
them and say go out and just do it. We give them CME but we
know that the CME doesn't do what it needs to in terms of
improving skills.
And there are other models, some with the hope of HIT is
better support, and comparative effectiveness research is
better support for people to make better decisions.
And I think I will defer to my colleague, Ms. Wright
Edelman, to talk about bureaucracy.
Ms. Edelman. Well, I just think a single eligibility
standard for everybody, for all children, that is why we
suggest 300 percent will make it easier rather than have all
these different eligibility standards. A single set of benefits
that are child appropriate, it will make it a whole lot easier.
And secondly and third, we talk about all the
simplifications and we have it in legislative language, they
are all included in the All Healthy Children Act, would be
another terrific start. But getting rid of all the State
lottery and all the disparate things and the two child health
bureaucracies, whether the children are in Exchange or in EPS
or Medicaid or in CHIP, they should all get what they need with
a single eligibility standard, comprehensive benefits, and the
simple sort of measures that we all know how to do.
And I just hope that you will look at the specific
legislative language. We will be happy to submit it as part of
our testimony. And these are the true child health reforms we
need in order to make sure that all of our children get what
they need.
Mr. Pallone. Mr. Sarbanes.
Mr. Sarbanes. Thank you, Mr. Chairman. I want to thank the
panel. Mr. Chairman, I want to thank you and Chairman Waxman
and everyone who has been working on this issue for so long,
because this is it, this is not a dress rehearsal. These panels
that we are having probably are kicking themselves that they
are here to speak on an actual discussion draft that includes
these critical proposed changes to our health care system. I
just hope that Americans watching this realize that this is
exactly what they were pushing for in the last couple elections
where they were expressing their frustration with the current
health care system.
This is our chance to get this right. It doesn't have to be
perfect, but we have to get a new framework in place, one that
we can build on and one that answers the frustrations and the
feeling of helplessness that millions of Americans feel out
there.
I think the source of that is many fold, but I will point
to a couple things, that sense of helplessness that I am
describing. One is that you deal with an insurance industry
that appears to be primarily engaged in the exercise of denying
payment for the kinds of services that people need. And there
is a paper chase. You get these things in the mail that say we
will not pay, this is not a bill, this is your third notice,
this is your fourth notice. Many Americans just give up after a
certain point because they can't fight it.
So that is one source of the frustration. That is why I
think we need a public plan option to compete, and I am not
going to revisit that discussion. But as a train leaves the
station on health care, if public plan is not on the train, it
is a train to nowhere. It has got to be there.
The second source of frustration on the part of many people
is they know that there are certain kinds of things that if
that was reimbursed in the system it would be better for their
health, it would save the system money over the long term. They
can see it, it is right there, but the system doesn't cover it.
Elderly patients know that if they can spend another 20
minutes with their physician or half an hour, God forbid, that
in that time the physician could better understand their
situation and probably prescribe a regimen that would make a
lot more sense to that patient and save the system over the
long term. But physicians who do that are penalized by a system
that doesn't recognize that kind of primary and preventive
care.
So that is another thing that needs to be on the train as
it leaves the station, primary and preventive care. The other
one is investing in the workforce. Because if we have the
coverage, that is all very well, you show up with your
insurance card, but there is no providers to deliver the care.
So these are all things that are a part of this draft, this
is why people need to be incredibly excited that we are talking
about this right now. This is it, this is it. This is the
moment.
Now with that preface, let me go to health care delivery. I
wanted to ask you, Ms. Wright Edelman, because you talked a lot
about SCHIP and getting these services to children, but
continue to be frustrated on kind of the delivery system.
Congresswoman Capps and I have pushed to try to create more
school-based health centers and also allow for reimbursement of
services provided there if they would otherwise be reimbursed
if delivered in a physician's office setting.
Could you just speak briefly to this idea of capturing
people where they are, this concept of place-based health care,
go to where the children are, make it easier to access services
at that point on the front end? Ninety-eight percent of our
kids ages 5 to 16 are in one place 5 to 6 days a week.
Ms. Edelman. In school.
Mr. Sarbanes. For 6 or 7 hours. We ought to take advantage
of that. So if you could speak to that as part of this overall
perspective.
Ms. Edelman. I want to say amen. You go to where they are,
you make it as easy as you can. We need to expand the community
health centers, we need to expand school-based health centers.
And if the mother is in WIC and that is where kids are coming
in, you get them enrolled and you make sure that you are making
it available. And one of these days I look, as we talk about
health and school reform, is that we can really make the new
schools that we construct real community centers and collocate
services so that is easy rather than hard for people to get
their care.
So whatever we can to go where children and families are
and to make sure that it is accessible would be terrific. I
think none of this is rocket science. I think we know how to do
it.
And I just want to reemphasize what you have just said.
This is it. You have got all the skeletons for what you need to
get done in your plan. We just need to kind of finish it and
make sure that you have got the instructional forms there.
And I would like to say one little thing, because this is
not a dress rehearsal. This is a window of opportunity. If we
miss this opportunity, we are going to lose more generations of
children and see escalating costs.
I just was looking for a thing that is in the written
testimony about the President's statement. And I guess I think
it states what you have stated in strong terms. He says I
refuse to accept--when he was signing the CHIP bill--that
millions of our kids fail to meet their potential because we
failed to meet their basic needs.
In a decent society there are certain obligations that are
not subject to tradeoffs or negotiations. Health care for our
children is one of those obligations. This is the moment to
fulfill that obligation, for you to fulfill it you know how to
do it, you have got lots to build on. We have been working and
many of the leaders here on Medicaid for 42 years. We know from
the incremental problems how to make it simple, but we can
address the health infrastructure. You made such a good start.
I just hope you can just finish it and make sure that it is
transformational and true health reform for all of us.
Mr. Sarbanes. Thank you very much. I yield back.
Mr. Pallone. Thank you, and I think we are done with the
questions, but I want to thank all of you again. Obviously what
we are doing is crucial and we do plan to move ahead and meet
the President's deadline. Thank you very much. Again, you will
get written questions within the next 10 days and we would ask
you to respond to those.
Could I ask the next panel to come forward, please?
Could I ask those who were standing or talking to leave the
room so we can get on with our third panel?
Let me introduce our three witnesses here. Again starting
with my left is Dr. Jeffrey Levi, Executive Director for the
Trust for America's Health. Next is Dr. Brian Smedley, Vice
President and Director of the Health Policy Institute, Joint
Center for Political and Economic Studies. And then we have Dr.
Mark Kestner, Chief Medical Officer for--is it Alegent Health?
Dr. Kestner. Alegent.
Mr. Pallone. Alegent Health. And this panel is on
prevention and public health, certainly one of the more
important parts of what we are discussing in the discussion
draft. You heard me say before that we ask you to talk for
about 5 minutes and your written testimony, your complete
written testimony will become part of the record. And we will
have questions after for 5 minutes from the members, and we may
send you written questions afterwards which we would like you
to respond to as well.
I see we are joined by our ranking member, Mr. Deal. And we
will start with Dr. Levi. It is Levi?
Mr. Levi. Yes, it is.
STATEMENT OF JEFFREY LEVI, PH.D., EXECUTIVE DIRECTOR, TRUST FOR
AMERICA'S HEALTH; BRIAN D. SMEDLEY, PH.D., VICE PRESIDENT AND
DIRECTOR, HEALTH POLICY INSTITUTE, JOINT CENTER FOR POLITICAL
AND ECONOMIC STUDIES; AND MARK KESTNER, M.D., CHIEF MEDICAL
OFFICER, ALEGENT HEALTH
STATEMENT OF JEFFREY LEVI, PH.D.
Mr. Levi. Thank you, Mr. Chairman, and thank you for the
opportunity to testify on the House discussion draft of health
reform legislation.
Trust for America's Health and our colleagues throughout
the public health community are delighted that this legislation
recognizes that prevention, wellness, and a strong public
health system are central to health reform. We also support the
premise that without strong prevention programs and a
strengthened public health capacity surrounding and supporting
the clinical care system, health reform cannot succeed.
While my testimony will focus on the public health
provisions of the discussion draft, I must first say that
universal quality coverage and access to care are central to
health reform. We believe this bill can achieve this goal.
Inclusion of evidence-based clinical preventive services as
part of the core benefits package with no copayments also
assures cost effective health outcomes.
Trust for America's Health has worked with over 200
organizations to articulate the importance of prevention and
wellness to health reform. Our joint statement is attached to
my written testimony and I will briefly review its key
components.
First, we have urged that as part of a renewed focus on
public health Congress should mandate the creation of a
National Prevention Strategy. The discussion draft meets the
central criterion by requiring the Secretary to develop a
National Prevention and Wellness Strategy that clearly defines
prevention objectives and offers a plan for addressing those
priorities.
Second, the groups urged establishment of a trust fund that
would be financed through a mandatory appropriation to support
expansion of public health functions and services that
surround, support, and strengthen the health care delivery
system. We envision the trust fund supporting core governmental
public health functions, population level non-clinical
prevention and wellness programs, workforce training and
development, and public health research that improves the
science base of our prevention efforts.
We applaud the inclusion of the Public Health Investment
Fund, which will support through mandatory appropriations the
core elements of the public health title, including the
prevention and wellness trust. By including mandatory funding
for community health centers, the discussion draft also assures
a much closer link between the prevention and wellness
activities that happen in the doctor's office and those that
happen in the community.
Let me now review some of the key activities associated
with the investment fund and our rationale for supporting them.
On workforce, the focus on frontline prevention providers and
public health workforce places appropriate emphasis on where
the need is greatest in our health care system. Assuring the
development of a robust public health workforce through
creation of the public health workforce core, which will offer
loan and scholarship assistance, finally places public health
recruitment, training, and retention on par with the medical
profession.
Community prevention and wellness programs are also
critical. The expanded investment in these programs will be
important to the success of health reform. There are evidence-
based proven approaches that work in the community setting to
help Americans make healthier choices, by changing norms and
removing social policy and structural barriers to promoting
healthier choices. We know that targeted uses of these
interventions can reduce health care costs. We are particularly
pleased to see that this draft recommends establishing health
empowerment zones where multiple strategies can be used at one
time.
In terms of support for core public health functions, we
appreciate the recognition in this draft that the strength of
our Nation's State and local health departments will
significantly affect the success of health reform. Without the
capacity to monitor population health, respond to emergencies,
and implement key prevention initiatives, the health care
delivery system will always need to backfill for a diminished
public health capacity at a higher price in dollars and human
suffering.
Improving the research base and revealing the evidence is
also an important component of this legislation, and it makes a
crucial investment in both public health and prevention
research. While we have a strong base of prevention
interventions today, much more needs to be learned about non-
clinical preventive interventions, including how to best
translate science into practice and how to best structure
public health systems to achieve better health outcomes.
Dr. Smedley will address in more detail the issue of
inequities, but I want to note that we are pleased that this
draft focuses on disparities in access and health outcomes.
From better training to targeting resources in communities
where disparities are greatest, we harness what we already know
will work to reduce inequities. We must recognize that the goal
of health reform is not just creating equality of coverage and
uniform access. We need to assure equity in health outcomes,
too.
Mr. Chairman, there are few times that we have the
privilege of watching history being made. This may well be one
of them. If the public health provisions of this draft become
law, in the years ahead we will witness the transformation of
our health care system from a sick care system to one that
emphasizes prevention and wellness. This is what our Nation
needs and what the American people want.
Recently, Trust for America's Health released the results
of a national bipartisan opinion survey. Perhaps the most
impressive finding in that survey was that given a list of
current proposals considered as parts of health reform,
investing in prevention rated highest, even when compared to
concepts like prohibiting denial of coverage based on pre-
existing condition.
In short, by placing this emphasis on prevention and
wellness in the discussion draft, this committee is responding
to a compelling call from the American people.
On behalf of our partners in the public health community,
Trust for America's Health thanks you for your leadership and
looks forward to working with you to see these enacted into
law.
[The prepared statement of Mr. Levi follows:]
Mr. Pallone. Thank you.
Dr. Smedley.
STATEMENT OF BRIAN D. SMEDLEY, PH.D.
Mr. Smedley. Thank you, Mr. Chairman, for the opportunity
to provide testimony on the potential to address racial and
ethnic inequities in health and health care in the context of
the tri-committee health reform legislation.
For nearly 40 years the Joint Center for Political and
Economic Studies has served as one of the Nation's premier
think tanks on a broad range of public policy issues of concern
to African Americans and our communities of color. We therefore
welcome the opportunity to comment on this important
legislation.
Many racial and ethic minorities, particularly African
Americans, American Indians, and Alaskan Natives, native
Hawaiians and Pacific Islanders, experience poorer health
relative to national averages from birth to death. These
inequities take the form of higher infant mortality, higher
rates of disease, and disability and shortened life expectancy.
Health inequities carry a significant human and economic
toll, and therefore have important consequences for all
Americans. They impair the ability of minority Americans to
participate fully in the workforce, thereby hampering the
Nation's efforts to recover from the economic downturn and
compete internationally. They limit our ability to contain
health care costs and improve overall health care quality. And
given that half of all Americans will be people of color by the
year 2042, health inequities increasingly define the Nation's
health. It is therefore important that Congress view the goal
of achieving equity and health and health care not as a special
interest, but rather as an important central objective of any
health reform legislation.
To that end, the draft tri-committee legislation contains a
number of important provisions that will strengthen the Federal
effort to eliminate health and health care inequities.
Importantly, the legislation offers the kind of comprehensive
strategy of targeted investments that are likely to help
prevent illness in the first place, manage costs when illness
strikes, and improve health.
Over the long haul these provisions will result in a
healthier Nation with fewer health inequities, greater
workforce participation and productivity, and long-term cost
savings. These provisions do several things.
They emphasize and support disease prevention and health
promotion. For example, the legislation would require the CDC
Clinical Preventative Task Force and Community Preventative
Task Force to prioritize the elimination of health inequities.
In addition, the legislation would authorize health
empowerment zones, as Dr. Levi has emphasized, locally focused
initiatives that stimulate and seed coordinated, comprehensive
health promotion and community capacity building.
Provisions in this draft legislation would also improve the
diversity and distribution of the health professional
workforce; for example, by increasing funding for the
successful programs such as the National Health Service Corps
and Health Careers Opportunity Program, expanding scholarships
and loans for individuals in needed health professions in
shortage areas, particularly nursing, and encouraging the
training of primary care physicians. It will also strengthen
Medicaid by expanding eligibility and by increasing
reimbursement rates for primary care providers. And it will
improve access to language services; for example, by requiring
a Medicare study and demonstration on language access.
While the tri-committee draft bill addresses a number of
important needs to achieve health and health care equity, there
are several areas where the legislation could be strengthened
with evidence-based strategies that will improve the Federal
investment in health equity. These include encouraging the
adaptation of the Federal cultural and linguistic appropriate
services standards which would help improve access and quality
of care for diverse populations, expanding successful
community-based health programs such as the Centers for Disease
Control and Prevention's Racial and Ethic Approaches to
Community Health Program, addressing health and all policies by
funding and conducting health impact assessments to understand
how Federal policies and projects in a range of sectors
influence health.
Strengthening the Federal health research effort by
elevating the National Center on Minority Health and Health
Disparities to institute status. The national center has led an
impressive effort to improve research on health inequities at
NIH and needs the resources and influence associated with
institute status to continue this work.
Strengthening Federal data collection by establishing
standards for the collection of race, ethnicity, and primary
language data across all public and private health insurance
plans and health care settings, and insuring that immigrants
lawfully present in the United States face the same eligibility
rules as citizens for public programs, including Medicaid,
Medicare and CHIP.
Mr. Chairman, in conclusion, addressing health inequities
requires comprehensive strategies that span community-based
primary prevention to clinical services, a long-term commitment
and investment of resources and a focus on addressing equity in
all Federal programs in all elements of health reform
legislation. The failure to do so ignores the reality of
important demographic changes that are happening in the United
States and fails to appreciate the necessity of attending to
equity as an important step in our effort to achieve the goals
of expanding insurance coverage, improving the quality of
health care, and containing costs.
Encouragingly, the tri-committee draft bill recognizes the
importance of achieving equity in health and health care and
proposes a number of policy strategies to achieve this goal.
Thank you, Mr. Chairman, and we look forward to working
with you on this important legislation.
[The prepared statement of Mr. Smedley follows:]
Mr. Pallone. Thank you, Dr. Smedley.
Dr. Kestner.
STATEMENT OF MARK KESTNER, M.D.
Dr. Kestner. Good afternoon, Mr. Chairman and members of
the committee, and thank you for the opportunity to be with you
today. May name is Dr. Mark Kestner, and I am the Chief Medical
Officer for Alegent Health.
Today I want to give you a brief overview of Alegent
Health's experience with prevention and wellness. We are both
the large employer and a substantial provider of health care,
which gives us a unique perspective on these issues.
Alegent Health is a faith-based, not-for-profit healthcare
system that serves eastern Nebraska and western Iowa. We have
9,000 employees and 1,300 physicians that are proud of the care
we provide in our 10 hospitals and in our 100 sites of service.
Alegent is the largest nongovernmental employer in Nebraska,
and each year we serve more than 310,000 patients.
As a provider, we believe we are a model for post-reform
health care systems. We employ substantial health care
information technology to improve the quality and safety of the
care we provide. Through the dedication and commitment of our
physicians, a combination of both employed and independent
physicians, we have standardized care and implemented
evidenced-based care order sets across more than 60 major
diagnosis fees that are continually raising the bar on the
quality of care we provide.
Our CMS core measure and HCAP scores are consistently among
the highest in the Nation. In June of 2008, the Network for
Regional Health Care Improvement identified Alegent as having
the best combined health care quality scores in the Nation.
Through the implementation of health IT and adoption of
evidence-based care, Alegent is increasing the quality of care
we provide while simultaneously lowering the costs that we
provide. Last year we reduced our resource utilization, and the
cost of the care continues to decline.
We are proud to have shared these and other initiatives
with Health and Human Services Secretary Kathleen Sebelius 10
days ago when she paid a visit to us. And yet, Mr. Chairman and
members of the committee, in our estimation the efforts of
providers to raise quality and lower costs is only a small
portion of what we need to do. We adamantly believe that people
must be more accountable for their health. And in doing so, we
must incentivize them and give them good information.
We began our journey with greater consumer involvement in
health care 3 years ago when we made a commitment as an
organization to more fully engage our workforce and their
health. We spent a year designing a new benefit plan that
promoted health and wellness among our employees. In pioneering
the new benefit plan, we identified incentives to encourage
healthier behaviors and tools to provide meaningful costs and
quality information as areas where Alegent could foster
individual engagement in health care.
There are two important constructs to Alegent's employee
health benefit plan. First, preventive care is free. This
ranges from services like annual physicals and mammography to
childhood immunizations and colonoscopies. If it is
preventative, it is free. As a result, our workforce is
consuming more than two and a half times the preventive care
than the Nation at large. That is an investment we are willing
to make even without longitudinal studies to quantify the
financial benefit to our organization.
Second, through an innovation called Healthy Rewards
Program we pay people to make positive changes in their
lifestyle. If an employee quits smoking, loses weight, more
effectively manages their chronic diseases like diabetes, or
makes other positive changes that affect their lifestyle,
Alegent provides a cash reward. To encourage wellness and
prevention and help our employees get healthy, we offer a
variety of assistance programs free of charge, free weight loss
counseling, free smoking cessation, and chronic disease
management programs. For those who need a little bit of extra
help, we offer free personal health coaches.
Our objective was first and foremost to improve the health
of our workforce, and we believed by doing so our costs would
decline. And while we are still building data on the effects of
our efforts that had been on productivity and absenteeism and
organizational health care costs, I can report that a majority
of our employees take an annual health risk appraisal and today
have lost 15,000 pounds as a workforce, and more than 500 of
our employees have quit smoking.
Our approach has allowed us to substantially slow the
growth of our health care spending. Over the first 2 years our
cost increases were limited to an average of 5.1 percent
despite trends in the 8 to 10 percent range. As we approach a
new benefit plan year, we are carefully constructing a advanced
medical home pilot for our chronically ill employees and
several large employers in the community.
Key to our results was their use of the HSA and HRA
accounts, which give employees better control in their health
care dollars and allow us to directly reward people for
changing unhealthy behavior.
The data we examined developing our benefits plan suggests
to us that people would be more inclined to take advantage of
health and wellness programs, even free ones, if they were
incentivized to do so. For us the use of HSAs and HRAs
facilitates this process and provides employees an immediate
tangible benefit in the form of subsidized health care costs.
But to give our employees more control required us as providers
to make other dramatic changes. First and foremost, we created
tools to provide meaningful and relevant cost and quality
information. We have a quality Web site where we publicly
report our 40 quality measures, CMS 20, the 10 skip and the 10
stroke measures, and our compliance with these measures ranges
anywhere from 97 to 100 percent.
In January of 2007, we introduced a Web-based cost
estimating tool called MyCost, which is the first of its kind
in the country. By working with third-party payer insurance
database, MyCost was able to verify insurance policies and
deductibles in order to provide patients an extremely accurate
price estimate on more than 500 medical tests and procedures.
In a little over 2 years, 85,000 individuals, employees and
members of our community, have used it.
In summary, Alegent Health began our health care reform
several years ago when we made an organizational commitment to
dramatically improve quality, lower cost, and adopt health
information technology. We knew that this would help us become
more effective and efficient providers, and the data shows that
we are becoming successful in reducing our costs and our
resource utilization. And yet, Mr. Chairman and members of the
committee, that was simply not enough. Our challenge as a
country, as physicians, nurses, Members of Congress and
employers, individuals, and families is to find a way to help
people become more individually responsible for their health
care.
Thank you.
[The prepared statement of Dr. Kestner follows:]
Mr. Pallone. Thank you. Thank all of you, and we will now
take questions, and I will start with 5 minutes.
I wanted to really focus, if I could, on the questions to
Dr. Smedley, because of the disparities issue. All of you
talked about the importance of prevention and wellness, and
that is certainly what we hear in regard to health reform. And
specifically experts tell us we have to address prevention and
wellness at the community level if we want health reform to
lead to the best health outcomes for our constituents. That is
definitely the case for elimination of health disparities.
Disparities arise not just because of differences in medical
care, but also because there are factors that make it harder
for some people than others to make healthy choices.
Dr. Smedley, I have been most familiar with this with
Native Americans because I am a vice chair of the Native
American Caucus. I don't have any tribes in New Jersey, but
over the years being on the Resources Committee, I have paid
quite a bit of attention to the Native American issues. Best
example probably was with the Pima, the Tohono O'Odham, where
you saw that traditional diet, ranching, desert products were
lost and they using, eating processed foods, and it was hard to
go back to traditional diet because the ranches were gone and
the desert had changed and it just wasn't possible to do that.
So in the draft proposal we target funds to community based
interventions or services with the primary purpose of reducing
health disparities. Can you tell us how the recommendations
from the Community Prevention Task Force, that is housed at CDC
and whose work is strengthened in the draft proposal, can be
used to target health disparities? And anything else about
addressing health disparities within the context of prevention
and wellness. What do you see as some of the areas that require
new or additional research?
All in about a minute because I have a second question to
you.
Mr. Smedley. Sure, Mr. Chairman, I will try to be very
brief. As you pointed out, place matters for health. Where we
live, work, study and play is very important. Certainly it is
important that we all take responsibility for our individual
health choices, but sometimes those health choices are
constrained by the context in which we live, work, and play.
Since you pointed out in many communities of color we face a
number of health challenges, often the retail food environment
is poor in segregated communities of color. You have a relative
abundance of fast food outlets, poor sources of nutrition, a
relative lack of grocery stores where you can get fresh fruits
and vegetables. Similarly in many communities of color we lack
safe places to play, recreational facilities, places to
exercise. It is harder to encourage an active lifestyle under
those conditions. So the CDC Preventative Task Force is an
evidence-based process that tries to identify what are the
kinds of community-based prevention strategies that will help
to address these kinds of conditions. We think that is very
important. So I certainly applaud the provisions in the draft
bill that would strengthen that process.
Mr. Pallone. Now on the workforce, again I will use
American Indians because I am most familiar, I think there are
maybe, over 2 million Native Americans and last count less than
500 American Indian doctors, 400 something. They have an
organization. I went to speak to them once, and that is the
entire membership.
In the discussion draft there are a number of provisions
that will increase representation of racial and ethnic
minorities. We have additional investment in the National
Health Service Corps. Basically, how would these workforce
provisions help address health disparities? Why is increasing
the diversity of the workforce and not just its scale important
in reducing health disparities? You could argue why do you need
more Native American doctors, why can't other people take care
of Native Americans. But I know that there is an issue there,
and I would like to you discuss it.
Mr. Smedley. Absolutely. The research is very clear that
when we increase the diversity of the health provider workforce
all of us benefit. So for example, we know that providers of
color are more likely to want to work in medically underserved
communities. Their very presence increases patient choice. We
talk a lot about many patient choice. For many patients of
color it is often harder to bridge those cultural and
linguistic barriers without a provider of your own racial or
ethnic background.
It is also true that diversity in medical education and
other health professions education settings increases the
cultural competence of all providers. We need to be thinking
about ways to improve the cultural competence of all of our
health care systems, because as I mentioned in my testimony,
very soon, in shortly over 30 years, this is about to be a
Nation with no majority population. Our health systems need to
be prepared to manage that diversity. And so this is one of the
many reasons why diversity among health professions is
important, and the provisions in the draft bill such as
strengthening the title VII and VIII of the Health Professions
Act are a very important toward increasing the diversity and
distribution of providers.
Mr. Pallone. Thank you.
Mr. Deal.
Mr. Deal. Thank you, Mr. Chairman. This whole panel is
supposed to be dealing with prevention and public health, and I
appreciate all of you being here. But I have heard a lot of
words and I have heard little examples of specifics on this
thing. Because it seems to me if we talk about the words
``prevention'' and ``wellness,'' we are talking about changing
of lifestyles.
Now we heard Dr. Kestner talk about his company and the way
that they incentivized wellness was through financial type
rewards. We heard Dr. Smedley just a minute ago talk about
community-based strategies and the fact that you don't have
enough grocery stores in some communities to sell fresh fruits
and vegetables, don't have safe playgrounds that cause us not
to get enough exercise.
In a health bill, a health reform bill, what are the
specifics we can do to change people's lifestyles? Because you
don't think of that in the normal context of a health care
reform measure.
Now specifically, and I am going to use this is a specific
example of a question that I think we ought to address, in the
Food Stamp Program, for example, we are pouring millions and
hundreds of millions of dollars into it, and the recent
stimulus package has powered even more money into the Food
Stamp Program, but we don't have any guidelines like we have in
the WIC Program, as I understand it, to make sure that the
taxpayers dollars that are helping fund the purchasing of food
doesn't go to buy things that work at counter purposes with
what we are talking about here of wellness.
Dr. Levi, let me start with you and ask if you would just
comment on that.
Mr. Levi. I think your point is very well taken. If we
think of this as not a health care financing bill but a health
bill, then we need to be addressing all of the elements that
comprise helping people be healthier, and a lot of that is
about exercising personal responsibility but then creating the
environment where people can, not just through financial
incentives, but really we change the norms of our society so
people make healthier choices.
To that end, there is actually an experimental program now
that is getting underway within the Food Stamp Program, so that
people will be will in a sense get higher credit if they buy
healthier food. So that is one way of incentivizing people.
There are certainly other things that can be done within the
Food Stamp Program that would incentivize the purchase of
healthier foods.
But we also have to make sure those healthier foods are
available, which is not the case in all communities. We need to
make sure that people understand and know that the healthier
foods are indeed what they should be eating. And so what it
really takes is the kinds of community interventions that I
think are envisioned in this legislation that, particularly
under the concept of health empowerment zones, look at multiple
aspects of the community. Is healthy food accessible? Do people
know about the healthy foods? What is happening in the schools
in terms of educating kids and changing norms? How active are
kids able to be? How active are adults able to be? And taking
all of those elements and developing comprehensive strategies.
We have examples of successes like that. We have them in the
Steps Program funded by the CDC, in the Reach Program funded by
CDC, in the Pioneering Healthier Communities that are organized
by YMCAs and other national organizations to bring communities
together to identify what their communities need to make
healthier choices, easier choices for the average person.
That is what is going to change. You know, we are talking
about bending the cost curve. If we do that, we can have a
dramatic impact on people's health and what they will be
demanding of the health care system.
Mr. Deal. I think we all agree we want our children and
everybody to be healthier and exercise better choices in their
lifestyles.
Dr. Smedley, are we talking about subsidizing grocery
stores to come in to certain communities as a way of providing
these kind of choices? Is that what you are talking about?
Mr. Smedley. Well, Congressman, there actually are some
very interesting initiatives that have leveraged public
investment to stimulate private investment. For example, the
Commonwealth of Pennsylvania has the Fresh Food Financing
Initiative, which has provided that double bottom line of
benefits both to private investors as well as to government
investing in creating incentives so that we can create a
healthier retail food environment.
I think that many of the examples that Dr. Levi just
mentioned are important examples of comprehensive strategies,
because often we find that there is not just one issue that is
a problem in the community. It is not just a problem of food
resources and food options, but there are many multiple and
systemic problems. Addressing those comprehensively as the
Reach Program does and other programs is the way to go.
Mr. Deal. I think in our educational activities maybe we
should teach people how to turn the television set off a little
bit.
Mr. Levi. Absolutely.
Mr. Deal. Thank you.
Mr. Pallone. Chairman Dingell, is he here? I am sorry, our
Vice Chair, Mrs. Capps.
Mrs. Capps. Thank you, Mr. Chairman.
I would like to say, as someone who spent my life in the
last couple of decades in public health as a school nurse, this
is a panel that I really appreciate, the testimony of each of
you, and I also look forward to this 5 minutes being just
dedicated to proving the worth of prevention, in other words,
my frustration with CBO for not being able or not scoring this
topic.
And Dr. Levi, I will start with you, but I hope I give a
chance for each of you to comment.
Your testimony mentions a report from Trust of America's
Health released last year showing the return on investment from
proven community level prevention. Can you explain briefly the
methodology of this report if you think this could help me or
help us all in our case towards scoring savings? We have to
learn how to do this as government as well; otherwise, we are
not going to be able to counter some of the front costs that
are entailed here.
Mr. Levi. I agree, and you know, I think making the case to
the Congressional Budget Office is going to be critical at some
point. I would preface my explanation of our report in our work
by saying, whether or not CBO is convinced should not stop us
from investing in prevention because whether we meet the narrow
criteria that CBO is forced, in some respects, by law to
address shouldn't mean that we don't see this as a worthwhile
investment in improving the Nation's health.
We worked with the New York Academy of Medicine, Prevention
Institute and, above all, the Urban Institute economists to
develop a model that looked at successful community level
prevention efforts, in other words, efforts that took place
outside of the doctor's office, to see whether, through
education, through changing the environment, changing policies,
we could see improved health outcomes.
We focused ultimately on smoking cessation, physical
activity, and nutrition, which are the drivers of some of the
most expensive health care costs that we see today. And what we
found was that there are, indeed, successful examples of those
interventions. What we found also is that we probably can
implement those at probably less than $10 per person, and even
if we saw only a 5 percent impact of those interventions, which
is very much on the conservative side in terms of what the
evidence shows, we could see a $5.60 return for every dollar we
invested.
The challenge here is that the winners in this, if you want
to call it the winners, the people who save, are better care,
the private insurers, and to some degree also, Medicaid. In the
CBO scoring system, a discretionary investment that has pay off
on the entitlement side can't be scored in anyone's favor, and
that is actually a congressional rule. But just as importantly,
I think what we need to think about is that those who benefit
are not necessarily contributing, and so we need to think of
this as a public investment that will ultimately reduce overall
health care.
Mrs. Capps. My question to you now is very pragmatic, and I
am going to expand it to all three of you, and time is of the
essence. I mean, this is really an obstacle, in my opinion, to
the pushback against the huge cost, as it is portrayed, of this
health care legislation. Can you give us some advice, what can
Congress do to facilitate the process of enabling CBO, or
whatever term you want to use, to be able or have that
capability of scoring prevention?
And you know, you are not even talking about quality of
life for consumers of health. We will take that off the table,
because that is probably hard to measure, or longevity, that
has been held up by some to be a deterrent because as people
live longer, they are going to get more chronic diseases over
the course of their lifetime. You know, what should we do on
this committee to begin that process? I will start with you
briefly.
Mr. Levi. Two very quick comments. One is, Congress can
remove this firewall between discretionary investment and
entitlement savings.
I think the second is to start a dialogue with the
economics community and the Congressional Budget Office,
because not everyone agrees with this notion that you just
mentioned that if we reduce these chronic diseases, then people
are going to live longer, and they are ultimately going to cost
more. There is this whole concept we call compression of
morbidity which suggests that if we actually reduce obesity,
and there are a number of models from a number of different
economists now that tend to show, for example, if you reduce
obesity, you are not necessarily prolonging life, but you are
improving the quality of life and reducing health care costs
because the chronic diseases are additive. They don't
necessarily shorten life, and so I think those are two
examples. Start that dialogue and remove some barriers.
Mrs. Capps. Thank you. I know I have used my time. I don't
know if there is a way for a quick response from the other two
if they want to.
Mr. Pallone. Go ahead, sure.
Mr. Smedley. I would just add, I think that Dr. Levi
answered that quite well. We also need to consider the next
generation is likely to be less healthy than the current adult
population.
Mrs. Capps. Why is that?
Mr. Smedley. Because they are more obese. They are at risk
for more chronic diseases. So we need to be considering the
fact that this is the generation that will support my
colleagues and I in our old age. So hopefully we will be
forward thinking.
Mrs. Capps. Is that documented that they are less healthy?
Mr. Smedley. Yes.
Mrs. Capps. Any further point from you?
Mr. Smedley. Be happy to provide reference.
Mrs. Capps. Please do.
Dr. Kestner. I would just comment that we have senior
experience in showing that preventative care decreases our
expenses.
Mrs. Capps. So there is data out there? Any of you want to
supply any information, I would appreciate it very much.
Mr. Pallone. Sure. Any follow-up in writing is appreciated.
Thank you.
Gentleman from Texas, Mr. Burgess.
Mr. Burgess. Thank you, Mr. Chairman.
Dr. Smedley, I am very interested in some of the things to
which you testified and may be beyond the scope of what we are
doing and dealing with in these hearings, but I have similar
neighborhoods in my district, and there is not a grocery store
from one end of the community to the other. Plenty of places to
buy alcohol, typically in 40-ounce containers, and plenty of
places to buy fast food, and of course, cigarettes are
available on every street corner.
This just points to one of the difficulties that we have,
and we had worked with a group Social Compact. They are so far
away from our last Census in 2000, it is very difficult to get
private grocery stores interested in moving back to the area
because they say, well, the demographics just won't support a
grocery store, but in fact, the demographics have changed and
the purchasing patterns have changed, and again, we are still
far away from the Census. Social Compact was able to put out
some data that showed perhaps this is worthwhile of a Wal-Mart
Supercenter, for example, locating in the area. We are actively
trying to push that, but it is just extremely difficult to get
those things accomplished. No problem at all getting another
liquor store to move in. It is really hard to keep them out in
fact.
I just wonder if we shouldn't allow a little more
flexibility in some of our Federal food stamp programs. You
can't buy alcohol; that is correct. Can't buy cigarettes; that
is correct. Can't buy hot food, but there are some hot foods
like a rotisserie chicken, for example, that may serve a
family's nutritional needs very well. And the fact that that
activity is restricted may be putting an undue burden on people
who are willing to move into the community.
And I don't purport to have any of the answers. I have
worked with some of the people at Robert Wood Johnson in trying
to craft language that we might put in a bill, but it is
extremely difficult. But I appreciate what you are doing, what
you are trying to do because I think that gets to the root of a
lot of the problems that I know I see it at home. And you are
correct; the next generation is only going to be successively
less healthy because some of the learned behaviors that are
going on today.
I want to talk about Alegent for just a moment because you
are a success story, and we heard from a previous panel that
maybe we should be pursuing evidence-based policy, and your
policies at Alegent are clearly something that are worthy of
not just our attention and study but perhaps our emulation. And
you have showed rather dramatically, I think, you and Wayne
Sensor have shown, you can't just make things free; you have
got to make them important, and the way we make things
important is attach money to them.
So I hope that this committee will look seriously at what
you have done with your health reimbursement accounts and your
health savings accounts and your ability to bring people in not
just to affect things on a small scale but to affect things on
a large scale. And the impressive thing is you did it with your
9,000 workforce first before you went forward and began to sell
it to the rest of the community.
So, again, I hope we will look seriously at what you have
done and what you have been able to accomplish. My
understanding--and tell me if I am correct, Dr. Kestner--on the
consumer based health plan, if you look at high-option at PPO
plans, they are going at about a 7.5 percent year rate of
growth as far as costs; Medicare and Medicaid, 7.3, 7.8
percent, depending upon who you want to read; but consumer
directed health plans are growing at about 2, 2.25 percent a
year. Has that been your experience as well?
Dr. Kestner. Our cumulative 2-year experience is 1.5.
Mr. Burgess. 1.5?
Dr. Kestner. Excuse me, I am sorry, 5.1. And I think we
recognize that the impact going forward will be on preventative
measures. We still have patients that have problems with
obesity, with smoking, and those are things that we are going
to have to--that are going to be expensive for us in the long
run. So, on the short term, we have already seen a benefit in
implementing a strategy, and on the long term, we anticipate
seeing an increasing decrease in our health care expenses.
Mr. Burgess. Now, I don't know if you have had a chance to
read the draft that is before us today for discussion, but as
far as you are aware does the draft that has been proposed by
the majority, does it increase or decrease your ability to do
what you want to do particularly with health savings accounts?
Dr. Kestner. Right. I think any strategy needs to engage
the patient in the dialogue, empower them in economic decisions
regarding access, but allowing open access. And I think the
most important thing from my perspective is the ability to
engage the dialogue when they are well. All too often we access
health care at a point of sickness, and really preventative
care is engaging people and starting the dialogue when they are
well. So any strategies that focus on prevention and begins
that dialogue early I think are benefits to the population at
large.
Mr. Burgess. Just one more brief question. Do you allow for
partnering with your physicians and your facility at all? Are
there like inventory service centers where there is physician
ownership involved in any of Alegent's facilities?
Dr. Kestner. Yes. We have joint ventures in ambulatory
service centers.
Mr. Burgess. Are you aware that the draft under discussion
today would prohibit such activities in the future?
Dr. Kestner. I am superficially aware of discussions that
are going on.
Mr. Burgess. Do you believe in the pride of ownership? I
mean, when a physician has an ownership position in an entity,
my feeling is it makes it run better.
Dr. Kestner. I believe with the dialogue that we have had
in our health system our physicians feel pride of ownership,
whether they have an investment interest or not. I think that
has been part of our culture of giving physicians decision
making and the ability to drive health care through evidence-
based care and empowering them to make decisions for our health
care delivery model. So, whether they have an investment
interest or not, I think we have tried to make sure they have a
pride of ownership in our system.
Mr. Burgess. Do you think this bill before us today fosters
that empowerment?
Dr. Kestner. The one that is up for discussion at this
point in time?
Mr. Burgess. Yes.
Dr. Kestner. Yes.
Mr. Burgess. Thank you.
Mr. Pallone. Thank you. Gentlewoman from the Virgin
Islands, Mrs. Christensen.
Mrs. Christensen. Thank you, Mr. Chairman, and thank you
for being here to all of the panelists.
Dr. Levi, we have really appreciated the work from the
Trust for America's Health, and we appreciate also your support
of the health empowerment zones.
One of the basic services that is not covered for adults is
dental care. How important do you think that it is that it be
included in terms of prevention or its impact on chronic
diseases and other health care problems?
Mr. Levi. We believe access to dental care is a vital
component to keeping people healthy and keeping people
functioning and economically productive. There is growing
evidence, especially on preventive care, of links of good
dental health with even heart disease. And so there is, indeed,
a correlation with some chronic diseases, but just as
importantly, I think, you know, good oral health keeps people
healthier, keeps people functioning, keeps people out of pain
and, therefore, probably more employable. So it is both a
health benefit and an economic benefit.
Mrs. Christensen. Thank you.
Dr. Smedley, welcome back.
Mr. Smedley. Thank you.
Mrs. Christensen. The Iowa Medical Treatment Report on
equal treatment of which you are the lead author and editor was
a landmark document, and the recommendations from that report
have been held up as the standard for eliminating health
disparities. You mentioned a few areas, but if there are any
others, to what extent does this draft legislation meet and
address those recommendations? And where are we falling short?
Mr. Smedley. Sure, yes, thank you.
There are a number of provisions within this draft bill
that address some of the provisions or the recommendations of
the Iowa Medical Treatment Report. As I mentioned in my oral
testimony, there are some areas where we can go further in
terms of adopting the Federal Cultural and Linguistic
Appropriate Services Standards, ensuring that we strengthen our
Federal health research.
Data collection is also one of those areas where I think it
is clear that we are going to have to have a much more robust
systematized system of collecting data on race, ethnicity,
primary language and probably other demographic variables in
order to understand when and under what circumstances we see
inequality in both access to and the quality of care as well as
outcomes.
I will even go a step further and suggest that we ought to
publicly report these data because that will give us a level of
accountability both for consumers, for providers and health
systems, as well as government. One of the responsibilities of
government, of course, is to ensure that there is not unlawful
discrimination in the provision of care, and until we publicly
report and more carefully collect this data, we will not know
when that occurs.
Mrs. Christensen. Thank you.
Dr. Kestner, I really applaud the fact that in the absence
of the longitudinal data showing what that investment might pay
back from providing that free preventative care, you did
provide it for all employees. And you have talked about some of
the shelter and benefits that you have already seen.
But in looking at the public plan that we are proposing,
and the possibility that it would allow for innovation, you are
a not-for-profit. Is there something in your experience that
can inform and maybe support what we are trying to do in a
public plan and its ability to do the kind of innovation that
we see that you are doing at Alegent?
Dr. Kestner. I would hate to see any plan be nothing more
than a reproduction of what we already have, which is people
seeking care when they hurt; people being given a pill and not
understanding the cost of that pill; and then not returning
unless they have been noncompliant or haven't gotten better.
And so I think that any plan that engages the consumer in
the dialogue about not only the consequences of their health
care decisions but the cost of their health care decisions is
going to be important.
Mrs. Christensen. Thank you.
And Dr. Smedley, in my last couple of minutes, we talked
about diversity in the health care workforce. You weren't just
talking about doctors and nurses, were you?
Mr. Smedley. Yes. We need diversity in all of our health
professions. Allied health professions, mental health fields,
dentistry.
Mrs. Christensen. What about some of those commissions and
councils and tasks forces?
Mr. Smedley. The CBC task forces--yes, absolutely, we need
diversity on all of the policy-making bodies that are outlined
either in this draft legislation, as well as existing bodies
because, again, with the changing demographic of this Nation,
with the importance of addressing demographic and equity
issues, we need to put these issues front and center in all of
our conversations around health policy. So I would strongly
encourage diversity in all of its forms to be represented on
these task forces and panels.
Mrs. Christensen. Thank you.
Thank you, Mr. Chairman.
Mr. Pallone. Thank you.
Gentleman from Georgia, Mr. Gingrey.
Mr. Gingrey. Thank you, Mr. Chairman.
Dr. Smedley, in your testimony you talked about racial and
ethnic minorities and disparity in care. You state, a
potentially significant source of racial and ethnic health care
disparities among insured populations lies in the fact that
minorities are likely to be disproportionately enrolled, and I
think we will quote, lower tier health insurance plans. There
are large access problems in the Medicaid program where many
beneficiaries are unable to find a doctor that accepts Medicaid
because of inadequate reimbursement and high administrative
burdens. Do you believe the government-run Medicaid program and
how it is administered exacerbates health disparities?
Mr. Smedley. Well, Congressman, I think that, in the case
of Medicaid, you are absolutely right, that low reimbursement
rates simply make it prohibitive for providers to accept, in
some cases, Medicaid patients.
But this draft bill would increase reimbursement rates in
ways that I think will hopefully encourage take up of Medicaid
patients. Unfortunately, we have associated stigma with
Medicaid, despite the fact that it is a very comprehensive
benefit plan. As Ms. Wright Edelman pointed out earlier, it
offers a number of very, very important benefits particularly
for children who are at risk for poor health outcomes.
So I think we can build on the Medicaid program, improve
it, and ensure that patients who have Medicaid coverage are
actually able to get the care that they need.
Mr. Gingrey. Thank you for that response, and of course,
you mentioned that there would be improved reimbursement. That
is true for primary care physicians and medical home managers,
but certainly, the reimbursement is likely to be less for
specialists, general surgeons, OB/GYN doctors, et cetera. So
you think if Medicaid beneficiaries had an opportunity, and we
have suggested that from this side, our ranking member has
suggested a number of times, if Medicaid beneficiaries had the
opportunity to opt into a private policy with government
assistance, so-called premium support, do you believe they
would find it easier to find a doctor that would take them?
Mr. Smedley. Congressman, I am not aware of any data that
you would inform an answer. I know that some of the proposals
that were offered in terms of tax credits and so forth were
insufficient to cover the cost of private health insurance. I
believe the cost estimates now for a family is about $12,000.
So, clearly, we would need a sizeable tax credit for a low-
income family to afford a private plan like that.
Unfortunately, I have no data.
Mr. Gingrey. Well, reclaiming my time, certainly, it would
remove the stigma, and when you are talking about let's say the
CHIP program, rather than having the child or children running
all across town trying to find a doctor that would accept CHIP,
it would be wonderful if they could, with premium support, be
enrolled in a family policy so everybody could kind of go to
the same medical clinic.
Let me switch over to Dr. Kestner for just a second because
you were talking about HSAs. I think, Dr. Kestner, in your
testimony, you credited HSAs and HRA's as keys to disease
management lifestyle changes.
Earlier, I don't know if you heard on the first panel, Dr.
Parente of the Medical Leadership Institute, he suggested that
rather than what is recommended in this 800-page draft document
from the tri-committees that would require everybody to have
first dollar health insurance and also for employers to provide
it; his suggestion was, if there is going to be a requirement
on the part of the so-called patient, maybe it should be a
requirement for catastrophic coverage and not first dollar. The
catastrophic coverage, of course, would prevent all these
bankruptcies, these three out of five bankruptcies that people
talk about that are brought about by basically serious medical
illnesses that folks can't pay for. What do you think about
that suggestion?
Dr. Kestner. Well, our strategy has been to be transparent
with costs so that consumers can make educated decisions. So,
if I have a condition that requires immediate care, I have an
option of going to an urgent care center, see my primary care
doctor or an emergency department, and each of those costs
something different.
Part of my decision-making will be, what is coming out of
my pocket as far as the first dollars, and certainly, it is a
more cost-effective strategy to go to a primary care physician,
if I know I am paying $10 for that visit, as compared to an
emergency department, where I potentially would be paying far
more.
And so I think it is important for us to have a strategy
that engages the consumer in the day-to-day decision-making
that they have with regards to that.
Mr. Gingrey. Let me reclaim my time in the 1 second that I
have got left, Mr. Chairman, if you will bear with me.
You know, it is estimated that of the 47 million or 50
million people that don't have health insurance in this
country, that maybe 18 million of them are folks that make at
least $50,000 a year, and I would suggest to you that a lot of
them are going bare, opting out of getting health insurance
because they feel like they don't really need it. They are 10
feet tall and bulletproof, and they are kind of wasting their
money. And they know, at the end of the day, if they pay over a
period of 15 or 20 years with an employer-based system, and
then all of the sudden they get sick and they lose their job,
that the insurance company is going to either say, you are not
insurable, we are not going to cover you, or if we do, we are
going to charge you 300 percent of standard rates.
Maybe, you know, there is a place here for insurance reform
in regard to people like that who have done the right thing and
have credible service, and therefore, they shouldn't have to
pay these exorbitant rates or even get in a high-risk pool
because they have done the right thing.
Mr. Chairman, I know I have exhausted my time. There is
probably not time for a response unless you want to allow----
Mr. Pallone. If you would like to respond, go ahead.
Dr. Kestner. No, thank you.
Mr. Levi. Mr. Chairman, if I can make one very short point.
The question was about first dollar coverage, but as I
understand Alegent's program, there is first dollar coverage
for preventive services, and since this is a panel about
prevention and public health, I think it is really important to
keep in mind that the things that are going to save people's
lives and ultimately save health care costs are the things that
really need to have first dollar coverage without copayments
because that is what is going to incentivize better.
Mr. Gingrey. Certainly with the preventive care I would
agree with that.
Mr. Pallone. Thank you.
Gentlewoman from Illinois, Ms. Schakowsky.
Ms. Schakowsky. Thank you, Mr. Chairman.
I wanted to ask Mr. Kestner a question. Your Web site says,
``we are proud to offer a generous financial assistance
program.'' But then it goes on to say, ``medical bills are
limited to 20 percent of a total household family income.''
So a family of four making $55,000 a year, with a $200,000
medical bill, my staff--they are always right--calculated that
the family would have to pay $11,000. So as we are sitting here
talking about affordability, do you think a family of four
making $55,000 should be paying $11,000 in medical bills?
Dr. Kestner. I believe we do have a very generous
commitment to our community with regards to indigent care. We
have contributed $60 million----
Ms. Schakowsky. But indigent--$55,000 is probably not
indigent. So the statement that you have--I guess really what I
am getting at, even with your program, which may be more
generous than most, we are still talking about really
significant out-of-pocket costs that could be overly burdensome
for a family, right?
Dr. Kestner. That could be, yes.
Ms. Schakowsky. Here is one of the things I want to get at.
This issue of the necessity of patients to really understand
the cost of health care presumes that medical decisions are
mostly patient-driven, and I just--I unfortunately didn't hear
your testimony. I was with a doctor. I just fractured my foot,
and you know, I didn't go in there and say, give me some X-rays
and I think I need a boot, which I now have, and you know, I
mean these are things that the doctors tell us.
And when we looked at that article about McAllen, Texas,
versus El Paso, probably everybody's read it in the New Yorker,
about the amount of difference in Medicaid payments per
patient, wouldn't you all agree that this is by and large
overwhelmingly provider-driven as opposed to consumer-driven?
Dr. Kestner. I will just comment on our experience. Since
engaging our physician workforce in the discussion of evidence-
based care and standardizing our processes and having a
transparent, quality Web site, we have been able to demonstrate
a decrease in our cost of care. I think that is where the
discussion begins is when we have to engage people in the
discussion about what the evidence shows, what is necessary,
and have that healthy dialogue that we all loved in medical
school, as compared to being driven by the decisions that are
made today which may be fear of malpractice----
Ms. Schakowsky. May be self-referral and profit.
Dr. Kestner. I think by and large most physicians want to
do the right thing, but I think we have put them in a system
where doing the right thing may not be evidence-based and, at
times, may not be the best for the patient.
Ms. Schakowsky. So, Dr. Smedley, would you agree that
mostly patients don't decide about their health care?
Mr. Smedley. I think that is absolutely right. Patient
decisions are often shaped by the options presented by doctors.
In the cases of patients of color, which is my concern, there
is some evidence that patients of color are not provided with
the same range of options as the majority group patients. So if
that is the case, then I think we need to be very concerned
that these are not truly consumer-informed decisions.
Ms. Schakowsky. Also, one of the things that this article,
if you handle it right, the way I read it, at McAllen, Texas,
is that the doctors actually were not directing people to
preventive care, that a decision had been made in certain
places and I guess other places around the country, too, not to
engage in preventive care. And again, I am assuming your
testimony was even cost-wise, aside from health-wise, this is a
bad decision.
Mr. Smedley. That is correct.
Ms. Schakowsky. OK. Thank you.
Mr. Pallone. Thank you.
Mr. Green.
Mr. Green. Thank you, Mr. Chairman. And I would like to
thank our panel for being here, the last panel.
We know that diabetes and obesity sometimes are economic-
related, but we know in the minority community, whether it is
African American, Hispanic, Asian American, it is almost an
epidemic. And one of the best ways you deal with that is
through prevention. Don't wait for that diabetic to know they
are diabetic. Maybe it is pre-diabetes, and they have a
diabetic episode before they go into an emergency room. That is
what is so important about the prevention.
On our committee, I get frustrated because literally 2
years ago with our current OMB director, we were on a health
care panel for U.S. News and World Report, like most Members of
Congress get frustrated because we try and get a score on
prevention, and he told me in front of all the other folks,
this is not your--he was former CBO, Congressional Budget
Office, director--he said, this is not your father's CBO. Send
us those, and we will score them better.
We are not seeing any changes. Granted he is at OMB now,
and I don't know if OMB has changed, but I would sure like it.
And that is our frustration, and Dr. Levi, you talked about
it.
There are so many things we need to do for health care in
our country that needs to push the envelope further back
instead of waiting till someone finds out that they have these
chronic illnesses.
Dr. Levi, as you know, school-aged children is the
population group that is most responsible for transmission of
contagious respiratory viruses like influenza. Just recently, I
introduced a bill, H.R. 2596, the No Child Left Unimmunized
Act, which would authorize HHS to conduct a school-based
influenza vaccination program project to test the feasibility
of using our Nation's schools as vaccination centers. And what
are your thoughts on making it school-based vaccinations,
especially for some of the influenza virus vaccines? We already
use, in our district, and I know a lot of school districts use
their schools for vaccinations for the mandatory vaccination
programs throughout the school. But what do you think about
making them for other vaccines, including influenza?
Mr. Levi. I think it is a very good idea, and I think we
need to be as creative as possible to make sure that as many
people as possible are immunized. I think, in reality, that as
we are facing this pandemic of H1N1 influenza and seeing that
young people may be among the most vulnerable, they may be
highly prioritized for a pandemic vaccine come the fall, and
using our schools may be one of the most effective ways of
doing that, and that could be a wonderful proof of concept for
your legislation.
Mr. Green. Any other from anyone else on the panel?
If not, thank you, Mr. Chairman.
Ms. Schakowsky. Will the gentleman yield?
Mr. Green. I would be glad to yield to my colleague from
Chicago.
Ms. Schakowsky. This business of how we score is a really
troublesome thing. I am just wondering, is there the kind of
research conducted, not just on health outcomes where we
concede prevention pays and it really works, but how it
actually saves dollars? You know, I really think when we are
talking about 10 years, you know, we are looking out into the
future when we talk even about the costs, then we ought to have
something. Is there some research that can help us quantify
that?
Mr. Levi. Well, ironically, the wider the net you cast, the
more research there is, certainly in terms of productivity, in
terms of contributing to a tax base, in terms of not requiring
disability payments, all those kinds of things. You know, you
can't mix and match those things in the scoring process, and I
think I want to come back to----
Ms. Schakowsky. Did you say we cannot mix and match? Why
not? I think we need some advocacy help here from those who
believe that prevention is the key to help us do that.
Mr. Levi. But some of these rules have been set and can be
changed by Congress, and that is what--that may indeed be what
it takes.
I think it is also important to think about sort of the
evidence standard, and you know, we look for, you know, there
are different levels of evidence that you may need to make it
move forward with a decision. But I think when you have so many
businesses voting with their feet around prevention programs,
whether it is clinical preventive services or even nonclinical
preventive services----
Ms. Schakowsky. By that you mean buying them?
Mr. Levi. By buying it, investing in it, and saying they
have the evidence for their stockholders that this saves them
money. It seems odd that the private sector can be ahead of the
public sector in recognizing the value.
Ms. Schakowsky. That is a really good point. Maybe we ought
to enlist some of those findings. I know my nephew does
preventing back injury at a lot of factories, and it works.
Anyway, thanks.
Mr. Green. Mr. Chairman, I know I am out of time, but I
would hope we would push back just what this panel is about and
look at prevention and as best we can to fund that and use our
own examples maybe over the next 10 years and show we can
reduce obesity, we can reduce diabetes, and some of things that
we are going to pay a lot of money for if we don't in some type
of national plan.
Mr. Levi. And that is certainly part of the goal through
the Recovery Act in terms of the community-based prevention
programs that are being funded there, and that I know that HHS
is working very hard to make sure that the evaluation system
that is developed for that investment will be able to help us
answer these questions.
Mr. Pallone. Thank you.
Gentlewoman from Tennessee, Mrs. Blackburn.
Mrs. Blackburn. Thank you, Mr. Chairman.
You all must feel like you are batting cleanup. You have
been here all day I bet listening to all of these, and I
appreciate the focus that you have on prevention and wellness
programs. I think many times we look at medical care, but we
don't look at health care and don't look at health, and it is
frustrating for us.
And so many times I have said I thought one of the greatest
disservices that we have done to children is they no longer
have physical education, and they don't take life--when they
are all through school, they don't have physical education
classes that they are attending, and then secondly when they
get into high school, they don't have life skills classes, so
they don't understand the impact of what they eat, of the
different food groups or the food pyramid and how that affects
their lives, the importance of the interface between exercise
and also what they eat and how that weighs in on some of the
health issues, as we have read in testimony that has been given
to us today and heard from some of our witnesses.
Obesity, diabetes, chronic heart disease, if you address
those, you would move a long way toward addressing some of our
Nation's health care woes. And many times people say, well,
change how you are looking at this; look at it as health, as
opposed to looking at it with medical care delivery. And of
course, having been--as someone who served in a State
legislative body and looking at these issues and bringing that
to bear here at the Federal level, sometimes, you know, you do
stop and think a little bit about that.
What I would like to hear from each of you in the 3 minutes
that I have, I want each of you to tell me if this 852-page
bill, if you think, at the end of the day, it is going to
provide a structure for Americans to be healthier and thereby
need to consume less medical care, because the quality of life
and the way this affects individuals should be a focus of the
policy that we decide what is going to happen as we look at
health reform. We all know that the system needs some reforms.
I am one of those that favors handling it through the private
sector so that it stays patient-centered and consumer-driven.
But I would like to hear from each of you, at the end of
the day, the draft before you, would it allow for greater
emphasis on wellness, for prevention, for healthier lifestyles,
and individuals to consume less medical care?
Dr. Levi, we will start with you.
Mr. Levi. Absolutely, on both the clinical side and the
community side, and I will make three very quick points.
First, solid coverage there are no copayments of the
evidence-based clinical prevention services I think is
critical. Whether it is a public program, a private insurance
plan, it has to be there.
Second, the investment in community prevention will get at
the very things that you are talking about. Some of the best
community-based prevention programs are the ones that target
kids, get them to change their lifestyles, and through the
kids, they educate their parents, because some of us are just
over the hill and uneducable unless we are reached through
kids. And we can make those permanent lifestyle changes, and
that is why the investment in community preventive programs is
going to be so important.
And third, and I think just as importantly is this
investment in the core public health capacity because if we
strengthen our State and local health departments then they
will be able to provide the services that surround the normal
health care delivery system.
Mrs. Blackburn. I need to move on. I am running out of
time.
Dr. Smedley.
Mr. Smedley. As you know, we spend less than 5 cents out of
every health care dollar on prevention. This draft bill takes a
step toward righting that equation.
It is also true that we have not paid enough attention to
the issues of achieving equity, ensuring that everybody has
access to primary care. These are all important elements that
are reflected in this draft bill which I think are going to
save costs.
Mrs. Blackburn. But should it be mandated or be personal
choice?
Mr. Smedley. I don't believe this bill creates that kind of
mandate. But what it does, through the investment in
prevention, is it creates healthier communities.
Mrs. Blackburn. OK.
Dr. Kestner.
Dr. Kestner. I think the bill addresses the access issue as
well as the investment in primary care and public health, and I
think that is where the first relationship should be
established with our citizenry is in a public health sector and
primary care, as compared to outside of care that we experience
today.
Mrs. Blackburn. Thank you very much.
I yield back.
Mr. Pallone. Thank you.
Gentlewoman from Wisconsin, Ms. Baldwin.
Ms. Baldwin. Thank you, Mr. Chairman.
I appreciate the fact that you have had this panel today
devoted to public health and prevention and health care
disparities.
I am introducing a bill today that is very relevant to this
topic. What the bill does is it takes the first steps in
identifying and addressing health care disparities faced by
lesbian, gay, bisexual and transgender Americans. The bill is
based in large part on the extraordinary work of the tri-
caucuses on racial and ethnic health care disparities; the
Congressional Black Caucus, the Congressional Hispanic Caucus,
and the Asian, Pacific Islander Caucus have done extraordinary
work teaming together to put together a bill that is called the
Health Equity and Accountability Act which I believe will also
be introduced this week.
We know that there are disparities in health care faced by
the LGBT community, but we know this largely based on anecdotal
information or some data derived from locally administered or
privately administered health surveys. And I can tell you that
it was, in some cases, quite challenging putting together this
legislation because of the lack of data and the lack of
evidence.
And so I want to just ask some very basic questions,
starting with you, Dr. Smedley. Having studied racial and
ethnic health care disparities, how important is data
collection to understanding and addressing health care
disparities?
Mr. Smedley. It is absolutely vital.
In the case of LGBT populations, as you pointed out,
lacking data, it is difficult to understand when and under what
circumstances these populations face both health status and
health care inequities. So it is very important to have that
data. Once we have that data, we not only raise public
awareness, but we can focus and target our intervention so we
are addressing the problem successfully.
Ms. Baldwin. The National Health Institute survey, which I
understand to be the Federal Government's most comprehensive
and influential survey, does not include any questions on
sexual orientation or gender identity. Do you think it should?
Mr. Smedley. Yes.
Ms. Baldwin. And to my knowledge, actually, no Federal
health survey at all includes any questions on sexual
orientation or gender identity. Do you think this would be
important as a routine inclusion in health surveys where we are
trying to collect information?
Mr. Smedley. Yes. I believe that, I may be mistaken about
this, but I believe that BRFS, the Behavioral Risk Factor
Study, may allow that as an option, but we should certainly
ensure that we are understanding all of our populations where
we see inequalities in health and health status.
Ms. Baldwin. I would ask you also, Dr. Smedley, how
important and relevant are goal setting and aspirational
documents like Healthy People 2010? I know there is an effort
under way to revise and update for Healthy People 2020
document. How important are these goal-setting documents to
reducing health care disparities?
Mr. Smedley. Again, vitally important. Some have criticized
Healthy People 2010 for having goals that are difficult to
attain, but unless we articulate what our vision is of a
healthy society, it is going to be very difficult to put in
place the policies and indeed to create the political to
achieve those goals. I believe it is very important that we
have strong aspirations for equity for millions of populations
that face inequity.
Mr. Levi. If I could just add one point here, I think one
of the criticisms in the past of the Healthy People process has
been we set goals, and we don't have the data sets to tell us
whether we are even achieving those goals, and part of what is
in this discussion draft is creating an assistant secretary for
health information, which would increase I think the
transparency of the data and create a process by which we would
do a better job of answering some of the questions that you
want to have answered.
Ms. Baldwin. I would note, from the Healthy People 2010
document, this is sort of a vicious cycle because it is silent
to LGBT health issues because the authors of that document
said, we don't have any data to point to any disparities, so we
can't talk about how we need to address those disparities.
Dr. Levi, I know your organization has done terrific work
on demonstrating that community-based prevention programs can
have a significant return on investment, and it is also my
understanding that different communities targeted often respond
differently to different interventions.
So tell me a little bit about targeting those
interventions, and how much do these programs need to be
targeted or tailored to do different cultural subgroups?
Mr. Levi. I guess I would answer it in two ways. One is we
have a lot of evidence that from some national programs like
the REACH program, Access program, or the Pioneering Healthier
Communities Program, where there is an overall goal of trying
to reduce the prevalence of certain conditions and a
recognition on a community basis what is happening in that
community. Some communities need more exercise promotion. Some
people need more nutrition promotion. Some people have higher
rates of smoking. Those kinds of particular issues need to be
addressed in the context of the community.
And then there is a second part, which is what sub
communities. That is thinking more geographically. And then
when you are thinking about racial and ethnic communities or
the LBGT communities, what particular issues do you also need
to think about?
And I think the LBGT community is a perfect example. If we
had thought about community prevention at the very beginning of
the HIV epidemic, we would have been addressing what Ron Stall
from, formally at CDC, talks about syndemics, which is, the
risk for the disease you are wanting to prevent, in this case
HIV, is related to other factors, such as experience of
domestic violence, mental health issues, alcohol issues. It can
be smoking, depending on what aspect you are looking at. That
all needs to be addressed together.
And when you are thinking about community prevention, that
is what you want to do; you want to bring all of these pieces
together. But coming back to the beginning, you can't do it
without data.
Ms. Baldwin. Thank you.
Mr. Pallone. Thank you.
Gentlewoman from Florida, Ms. Castor.
Ms. Castor. Thank you, Mr. Chairman. Thank you all for your
testimony.
I am fortunate that back in my hometown I have a great
College of Public Health, and the dean there is Dr. Donna
Peterson. I have been keeping her informed all the way along
during the health care reform discussion dialogue from the
outline now and into the discussion draft.
And her initial comments were, boy, you all are on the
right track when it comes to community health centers, and
there is certainly a consensus in the Congress, many of them
rooted on issues of Chairman Waxman, Chairman Pallone, Mr.
Clyburn, the Whip. We are on track with workforce issues.
Everyone, there is great consensus around improving the primary
care of the workforce, and the SGR, how we are going to
compensate those folks.
She expressed some concern on whether or not we are really
doing enough for community's public health initiative. We see
the initial draft here, the discussion draft, and I thought
that Ranking Member Deal raised a good point, too, about
personal responsibility and how we get parents to turn off the
TV and encourage their kids to exercise. And it can't just be
that we hope that people see President Obama and the First Lady
work out in the morning, and that is going to be a great
inspiration. We need a Surgeon General, I think, that is going
to be very proactive. And we don't have that yet. We need the
CDC to take an even more proactive role.
We know back home, our local governments and school
districts and States, many are in severe budget crises, and
oftentimes, the first things to go are the sidewalks, the
other--the parks initiatives, summer programming for kids.
Tell me, what is out there right now, what do local
communities depend on right now from the Federal Government on
those community public health and investing in infrastructure
initiatives? What grants are there now? And then we can talk
about what is in the discussion draft and where we need to go.
Mr. Levi. There certainly are Federal programs that will
support this kind of community prevention, but we are talking a
fraction of the level of investment that is in the discussion.
Ms. Castor. And it is out of which--is it out of HHS?
Mr. Levi. Mostly out of HHS and mostly out of CDC, but the
budgets for those programs have either been relatively flat or
declining over the last 5 years. Our entire effort around
chronic disease prevention has been declining over the last 5
or 6 years. Obesity is a perfect example where we recognize
that this is a huge public problem, and we haven't even found
the resources to fund every State to have an obesity program,
and particularly now, in a time of economic crisis, it is not
like State and local governments have the resources to
backfill. And in an economic recession, it becomes even more
important for us to be thinking about those issues because it
is harder to eat healthier----
Ms. Castor. I have a limited time. Is there another Federal
pot of money or initiative you identified besides this CDC?
Mr. Levi. The other pot of money, the big pot of money is
the $650 million in community prevention that is in the
Recovery Act and that will be released shortly.
Mr. Smedley. If I could add, not only are those funds from
the prevention and wellness also good, I think the entire
stimulus package can be looked at as a public health
intervention because of the many provisions around housing,
transportation, early education. We know that early start,
healthy start programs work. They save money, as Dr. Levi
indicated.
So if we can think about the stimulus dollars as a public
health intervention and ensure that those dollars are going to
communities to create safe public transportation to stimulate
healthy lifestyles, then this can meet multiple purposes.
Ms. Castor. And in your health reform bill, we need to
build upon those historic investments that come out of the
Recover Act. I mean, Donna Christensen has a great empowerment
zone initiative, but it seems like our local communities need a
new healthy communities block grant initiative that is
consistent over time that maybe doesn't compete with the
other--if there is anyone from the Association of Counties Or
League of Cities that you all work with, I would like to
investigate that.
Thank you, Mr. Chairman.
Mr. Pallone. Thank you, and I think we are done for today.
I want to thank all of you, and again, as I mentioned, you
will probably get some written questions that we would like you
to get back to us as soon as you can, but again, this is a very
important part of what we are doing, the prevention and the
public health provisions. So thank you as we proceed.
And let me remind Members we are going to recess because we
will be reconvening tomorrow as well as Thursday. Tomorrow, at
9:30, the full committee will meet to hear from Secretary
Sebelius, but after that is done, we will reconvene as a
subcommittee and have a number of panels to continue with the
subcommittees activities.
So, without objection, this subcommittee will recess and
reconvene tomorrow following the conclusion of the full
committee hearing that begins at 9:30 a.m.
[Whereupon, at 3:25 p.m., the subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
COMPREHENSIVE HEALTH CARE REFORM DISCUSSION DRAFT--DAY 2, PART 1
----------
TUESDAY, JUNE 24, 2009
House of Representatives,
Subcommittee on Health,
Committee on Energy and Commerce,
Washington, DC.
The committee met, pursuant to call, at 9:41 a.m., in Room
2123, Rayburn House Office Building, Hon. Henry A. Waxman
[chairman of the committee] presiding.
Present: Representatives Waxman, Dingell, Markey, Rush,
Eshoo, Engel, Green, DeGette, Capps, Harman, Schakowsky,
Gonzalez, Inslee, Baldwin, Matheson, Melancon, Barrow, Hill,
Matsui, Christensen, Sarbanes, Murphy of Connecticut, Sutton,
Braley, Welch, Barton, Hall, Upton, Stearns, Deal, Whitfield,
Shimkus, Buyer, Pitts, Walden, Terry, Murphy of Pennsylvania,
Burgess, Blackburn, Gingrey, and Scalise.
Staff Present: Karen Nelson, Deputy Committee Staff
Director for Health; Andy Schneider, Chief Health Counsel;
Purvee Kempf, Counsel; Sarah Despres, Counsel; Jack Ebeler,
Senior Advisor on Health Policy; Robert Clark, Policy Advisor;
Tim Gronniger, Professional Staff Member; Stephen Cha,
Professional Staff Member; Allison Corr, Special Assistant;
Alvin Banks, Special Assistant; Jon Donenberg, Fellow; Camille
Sealy, Fellow; Karen Lightfoot, Communications Director/Senior
Policy Advisor; Caren Auchman, Communications Associate;
Lindsay Vidal, Special Assistant; Earley Green, Chief Clerk;
Jen Berenholz, Deputy Clerk; Mitchell Smiley, Special
Assistant; Miriam Edelman, Special Assistant; Ryan Long,
Minority Chief Health Counsel; Brandon Clark, Minority
Professional Staff Member; and Chad Grant, Minority Legislative
Analyst.
OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Mr. Waxman. In February, President Obama called upon the
Congress to enact legislation to reform America's health care
system. In April, Governor Kathleen Sebelius was sworn in as
Secretary of Health and Human Services. Her Department has the
lead responsibility for improving the health of the American
people.
Last Friday, I joined with Chairman Rangel and Chairman
Miller and Chairman Emeritus Dingell to propose a discussion
draft on health reform. This morning, we have the honor of
hearing Secretary Sebelius present the administration's views
on the discussion draft.
Based on her contributions today and on what we will hear
and learn from the 50 stakeholders appearing before the Health
Subcommittee this week and on the input from the Members, we
will revise the discussion draft and introduce a bill for
consideration by the three committees.
Our legislation will reduce health care costs. It will
cover all Americans. It will improve the quality of care. And
it will be fully paid for. The lead author will be John
Dingell, chairman emeritus of this committee, who has
faithfully carried on his father's legacy as an undisputed
leader in the struggle for health reform.
I want to emphasize a few important points about the
discussion draft. First, it is just that, a draft for
discussion for the legislation. We are seeking input from the
administration and others because we want to improve the draft
before introducing legislation.
Second, the draft builds on what works in our uniquely
American system. It builds on the employer-based system for
providing health coverage to workers and their dependents. It
relies on and improves Medicare as a source of health coverage
for the elderly and the disabled. It builds upon Medicaid to
extend coverage to low-income Americans.
Third, the draft fixes what is broken. It fixes the broken
individual health insurance market by creating a new insurance
exchange through which uninsured Americans can enroll in their
choice of health care plan. Those who cannot afford to purchase
the coverage available in the exchange will receive assistance.
A public option will be available within the insurance
exchange to give consumers an alternative to private health
insurers for their health care coverage. This public option
will be self-supporting, will not receive ongoing subsidies
from the Federal Government. The public option will compete. No
one is obligated to sign up for the public option. No provider
is obligated to provide medical services under the public
option. But the public option will provide competition so that
we can make the market work and keep everybody honest.
The draft contains provisions to reduce rural, racial, and
ethnic disparities in disease incident and treatment. The draft
fixes a broken Medicare physician payment system and prevents
the irrational cuts that are scheduled under current law from
going into effect.
The draft takes the steps necessary to fix the shortage of
primary care practitioners and nurses and other providers. And,
finally, the draft ensures that people have a choice: choice of
doctors, choice of benefits packages, and choice among
insurance plans.
This approach builds on what works and fixes what is broken
and makes sure that people have choices. It is pragmatic, and
it will produce the results the Nation's health care system so
desperately needs: lower costs, broader coverage, and better
quality.
Today we will continue on a journey that began over a
hundred years ago to provide health insurance for all
Americans. Some of our greatest Presidents of the 20th
century--Teddy Roosevelt, Franklin Roosevelt, and Harry
Truman--were advocates for health insurance for all Americans.
President Clinton fought hard for his administration's
proposal. Those initiatives may have failed, but the hope that
inspired them was never defeated. The time has finally come to
redeem that hope and to deliver true health reform.
In my conversations with colleagues and constituents, I am
getting the clear sense that there is now a willingness to
tackle this issue and to resolve the problems and bring forward
a much better health care system for all Americans. With
President Obama in the White House, we now have the best
opportunity ever to enact health reform. I am determined that
we not let this opportunity slip from our grasp.
I look forward to this morning's testimony and continue
with urgent pragmatism to send health reform legislation to the
President for his signature this year.
I want to recognize for an opening statement the ranking
Republican member of the committee, Mr. Barton.
[The prepared statement of Mr. Waxman follows:]
OPENING STATEMENT OF HON. JOE BARTON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF TEXAS
Mr. Barton. Thank you, Mr. Chairman.
You and I, earlier this year, attended several White House
health care summits. At those summits, both in the large
meetings and in the working group meetings, I said that the
Republicans in the House and the Republicans on this committee
were very ready and very willing to work with the President,
with you and Mr. Pallone and other members of the majority to
create a new health care system for America.
There is no Member of Congress on either side of the aisle
that is opposed to improvements and reforms in our current
health care system. So we were ready to work. You told me
repeatedly that you were ready to work with myself and the
other Republicans.
Having said that, actions speak louder than words. While
you and I have held several meetings, personal meetings--and we
held one meeting with Chairman Pallone and Ranking Member Deal
of the subcommittee, we agreed to work together. The brown bag
lunch that was supposed to occur because of that was scheduled
and rescheduled. And, finally, last week, we were supposed to
have had it last Friday at noon. We were called the afternoon
before and told that that brown bag lunch on a bipartisan basis
could not be scheduled because you were attending a press
conference to unveil the Democratic health care bill.
That is not bipartisanship. That is not inclusiveness. It
sure made me feel like the young woman who was being wooed by a
young man and the young man kept promising to take her out on a
date, and he finally called her up and said, ``Well, I know we
had a date tomorrow, but I can't do it because I am getting
married to somebody else.'' I guess there are some people that
do both, but luckily you are not one of them and I am not
either.
But it is what it is. So we now have a bill. We have the
Secretary of Health and Human Services here to probably wax
eloquent in support of your bill. I haven't read her testimony,
but I bet it is going to be supportive.
The good news is we are going to have a series of hearings,
and we will, at some point in time, go to markup. Hope springs
eternal on our side that some of our ideas may yet be included.
The bill in its current form--I have not read all 805 pages
of it; I am not going to fib about that. But I have seen
summaries, and it is a massive government involvement in
Americans' health care. It is hugely expensive. I have seen
estimates as high as $3 trillion over 10 years. I am told that
the word ``shall'' is mentioned over 1,300 times. I am told
that there are 38 new mandates, that there are dozens of new
bureaucracies.
I listened to your opening statement, Mr. Chairman, and
heard you say that nobody has to take the government plan who
doesn't want it. That may well be true, technically, but if you
put so many mandates on private insurance that it becomes cost-
prohibitive, and if you raise the Medicaid eligibility to 400
percent, there are going to be millions of Americans that lose
their coverage because the private businesses that offer it
can't afford it, and then there are going to be millions of
Americans who say, why should I pay a monthly premium of X
dollars when I can go on Medicaid and pay little or nothing?
You know, the short of it is that, if your bill were to become
law, we wouldn't have much of a private health care system in
America within 10 to 20 years.
So put me down as undecided, Mr. Chairman. We will work
with you. We have a number of amendments. We have a Republican
alternative that is private-sector-based, lets the individuals
maintain their choice. We do some of the things that you do in
your bill. We do have a permanent physician reimbursement fix.
We do have a tax credit, reimbursable tax credit for low-income
Americans.
But the big difference between the Republican bill and the
Democratic proposal is that on the Republican side we still
believe in the marketplace, we don't have all the mandates, we
don't force Americans into a government plan that we think is
not very good for America.
With that, Mr. Chairman, I will submit the rest of my
statement for the record, and look forward to these hearings.
Mr. Waxman. Thank you, Mr. Barton. And I am sincere in
saying I want to work with you and share a brown bag lunch with
you. And this bill is a draft.
I want to recognize Mr. Dingell, the chairman emeritus of
the committee, the champion of health care reform, and the man
who will be the first name on the legislation that will produce
health care reform.
Mr. Dingell.
OPENING STATEMENT OF HON. JOHN D. DINGELL, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF MICHIGAN
Mr. Dingell. Mr. Chairman, first, thank you for holding
this important hearing. And thank you for your remarkable
leadership on moving forward towards resolution of the health
care problems we have in this country.
I want you to know that I am grateful and proud, and I am
particularly appreciative of the kind words you said about my
dad. And on behalf of my dad and I, I want to thank you for
your kind words and thank you for your friendship.
I also want to do something of a personal character here,
and that is to welcome Secretary Sebelius to the committee.
Your father was a valuable member of this committee and sat
in this room for a number of years, and we were always proud to
have him here. And your father-in-law was a valuable Member of
the House, as you will recall, and was a man who was much
respected. So your coming is like coming home, and we hope you
feel that way, Madam Secretary.
This week marks the beginning of a truly historic process,
an opportunity to fulfill our moral and economic obligations to
provide quality, affordable health care coverage for all
Americans.
The current system is not working. When my dad started on
this years ago, it was a matter of humanitarian concern.
Americans were dying for want of health care, and health care
was not available to most Americans. Today, that still is true
to one degree or another, but it is now an economic necessity,
something which must be done to enable the United States to
continue to compete in the world marketplace. And our
industries are being killed by the lack of this kind of support
in a fiercely competitive world economy.
Forty-seven million Americans are currently without health
care, and upwards of 86 million will be without health care at
some point during this year. More and more Americans are being
forced to make decisions they never should be forced to make:
Do they pay their monthly health insurance premium, if they can
get a health insurance policy, or do they pay the utility
bills, the mortgage, or do they buy food for the family?
American business owners are facing a tough decision as to
whether to meet the monthly payroll or to pay health insurance
contributions for their employees. And if you look at the
American automobile, it has $750 worth of steel in it and
$1,600 worth of health care. Foreign competitors don't confront
that problem.
The Federal budget can no longer sustain our current health
care spending. If health care costs grow unabated, the costs to
the country will be more than 20 percent of its gross domestic
product on health by 2018.
The discussion draft--and I stress the words ``discussion
draft''--we are considering is a uniquely American solution to
this crisis.
It has been a privilege for me to work with you, Mr.
Chairman, with Chairman Rangel and Chairman Miller on putting
this draft together. And I want to commend all of those,
including the subcommittee chairmen of the three committees,
who have worked so hard to bring about unprecedented
coordination that went into producing this single discussion
draft for the three committees of jurisdiction.
And I want to make some things clear. The discussion draft
will not create a single-payer system. It will not ration care.
It will not attempt to destroy the private-market system or the
system of employer-sponsored health care many Americans enjoy
today. And anybody who says otherwise simply hasn't read the
bill or is not being truthful either with himself or anybody
else.
That being said, each of us in this room has our own vision
of what ideal health care reform looks like. While the
specifics may be different, we all share some common goals.
First, we must pass legislation that reduces the cost of health
care for families, businesses, and government. Second, we must
pass legislation that makes quality, affordable health care
available to all Americans. And we must pay for this
legislation, and we must pass the legislation now.
The choices we make over the coming months are going to be
historically significant, and they will rank with the passage
of Social Security and Medicare. If we are courageous and enact
comprehensive health care reform, our product will meet the
test of history and, I would note, will rank, as I mentioned,
with Medicare and with Social Security.
Medicare was mentioned on the editorial page on Sunday of
the New York Times. It is only short of the flag in its
popularity. If we are not courageous, we will have failed this
generation and generations to come, and the country will suffer
for it.
I am certain this year that we will pass comprehensive
health care reform that will build on the existing system and
keep intact that which is working in our system, and give
people the piece of mind that, no matter what life changes they
face, they will always have access to health insurance. The
American people deserve nothing less.
Thank you, Mr. Chairman.
Mr. Waxman. Thank you very much, Mr. Dingell.
I now want to recognize Mr. Deal. Mr. Pallone, as the
chairman of the subcommittee, gave his opening statement
yesterday. Mr. Deal did not have that opportunity. And I want,
by unanimous consent, that all members have an opportunity to
submit a written statement, opening statement for the record.
Mr. Deal, for the last opening statement.
OPENING STATEMENT OF HON. NATHAN DEAL, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF GEORGIA
Mr. Deal. Thank you, Mr. Chairman. And thank you for
holding this hearing, a series of panels today and tomorrow.
I want to welcome all of the witnesses who are joining us.
Especially express my appreciation and welcome to Dr. Todd
Williamson, who is the president of the Georgia Medical
Association. Certainly, as we consider this draft this week,
hearing from these witnesses is important.
Mr. Chairman, I think we have reached consensus that
appropriate reforms are necessary, but we differ with respect
to the right methods of reform which will yield cost and
higher-quality savings and the decisions that should be left to
doctors and patients and not Federal bureaucrats as they make
choices about health care for our people. More government, in
my opinion, is simply not the answer, but the draft before us
seems to think that that is the answer.
As far as the Republican views are concerned, we have seen
thus far an attempt to approach health care reform in a
bipartisan fashion that has resulted in what we consider to be
a partisan proposal which refuses to address the concerns of
Members on our side of the aisle. Last Friday, we received an
852-page reform draft. That is merely 1 legislative day before
the committee began its hearings.
We are concerned about the cost. The Congressional Budget
Office has yet to weigh in on those costs. Early analysis by
Mr. Steve Parente, who testified before our Health Subcommittee
yesterday, scores the legislation at a whopping $3.5 trillion
over the next decade. We need to come up with real solutions to
improve health care that American families can afford.
The promise of the Obama administration and the leadership
here on the Hill has been that if you like what you have, then
you can keep it. I believe that is simply a play on words,
because if this draft does what I think it will do, it will
destroy that private health insurance market and will
ultimately lead to what I consider a one-size-fits-all
government plan.
If we focus on reforming the health care delivery system
with the benefit of the American people in mind, then we should
not focus our efforts on things that will destroy the private
insurance market. I believe we should be encouraging physicians
to enter into the field of medicine as the demand for health-
care-related services will continue to grow.
But with the proposal before us today, which benchmarks
public plan reimbursements to Medicare, that in itself
continues to drive providers out of the system. And I believe
we will fall short of the objective that all of us share: of
having a system that encourages doctors to enter, it promotes
physician-patient-driven decisions, and allows everyone to gain
access to health care coverage.
Mr. Chairman, we all agree that changes to our health care
delivery system have the potential to yield significant savings
and improvements in the efficiency of delivery of care, but we
must ensure that reforms that we put into place promote
competition and transparency.
As we move forward, I hope we will get that CBO score. I
think it is important to the deliberations that lie before us.
And, Mr. Chairman, I want to reiterate again that those of
us on our side of the aisle look forward to being able to work
in a bipartisan fashion as we consider the potential for
amendments that will obviously be suggested.
Thanks again to our witness, our Secretary, and thanks to
all the witnesses who will make up the panels that will follow.
With that, I yield back.
Mr. Waxman. Thank you very much, Mr. Deal.
Well, it is my pleasure to welcome Kathleen Sebelius to our
committee for the first time as our Nation's Secretary of
Health and Human Services. And it is highly appropriate that
your first testimony is on the reforming of the Nation's health
care system. That is the President's highest priority and is a
subject on which the Secretary brings a unique breadth of
experience, most recently as a two-term Governor of Kansas,
service for 8 years as Kansas State Insurance Commissioner--
exceptionally valuable experience as we proceed with enacting
and implementing health care reform--and, before that, 8 years
in the Kansas House of Representatives.
Madam Secretary, I want to welcome you. We look forward to
working with you and to your testimony today. Your full
prepared statement will be in the record, and we would like to
recognize you to proceed as you see fit.
STATEMENT OF THE HON. KATHLEEN SEBELIUS, SECRETARY, DEPARTMENT
OF HEALTH AND HUMAN SERVICES
Secretary Sebelius. Thank you, Chairman Waxman, Chairman
Emeritus Dingell, Ranking Member Barton, Chairman Pallone,
Ranking Member Deal. Thank you for this opportunity to join you
for a critical conversation about health reform in America.
As the chairman emeritus has already recognized, my father
did serve on this committee, and he was here when Medicare was
passed. So I feel privileged to be part of this historic
conversation and delighted to have the chance to work with you
on this critical issue.
No question that your release of a discussion draft last
week with your colleagues from Education and Labor and the Ways
and Means Committees represents an historic moment in this
debate. We not only appreciate the hard work you have already
done but are grateful for all the work that you are about to do
as we work together to, at long last, enact reform.
Health reform constitutes one of our most important
domestic priorities, and we know the cost of doing nothing is
simply too high. As the President has said, unless we fix what
is broken in our current system, everyone's health care is in
jeopardy. Reform is not a luxury, it is a necessity.
Today in America we have, by far, the most expensive health
system in the world. We spend 50 percent more per person than
the average developed country, spending more on health care
than housing or food. Health insurance premiums have doubled
since 2000, and the high cost of care is crippling businesses
who are struggling to provide care to their employees and stay
competitive in this global world.
Small businesses and their workers, the backbone of the
American economy, are clearly suffering. As recently as 16
years ago, 61 percent of small businesses offered health care
to their employees. Today, only 38 percent do.
Last week, I was in Congressman Pallone's district with
business owners in New Jersey who met with me about the
sacrifices they have to make in their companies in order to
provide health benefits to their employees. Even then, some of
their employees can't afford the care they need.
We spend more on health care than any other Nation but
aren't any healthier. Only three developed countries have
higher infant mortality rates. Our Nation ranks 24th in life
expectancy among developed countries. More than one-third of
our citizens are obese. And we know that 75 percent of our
health costs are spent on chronic disease.
Without reform, these problems only get worse. In 2008, we
spent an estimated $2.4 trillion on health care. If we do
nothing, by 2018 we will spend $4.4 trillion. Today, we spend
about 18 percent of our GDP on health costs. Doing nothing,
those costs reach 34 percent of GDP by 2040, and 72 million
Americans will be uninsured. The CBO has recently estimated
that, by 2025, 25 percent of America's economic output will be
tied up in the health system, limiting all our other
investments and priorities.
So there are many problems with our health system today,
but there is also a reason for optimism. Across this country
there are lots of examples of hospitals and providers who are
using new technology, cutting costs, and improving the quality
of care.
Two weeks ago, I was in Omaha, Nebraska, at Lakeside
Hospital, an Alegent health care system, one of the Nation's
first fully digital hospitals, and saw firsthand how health
information technology can help doctors and patients. Health
care providers like the Kaiser system in California, the Mayo
Clinic, Geisinger, Intermountain Health Care, have lowered
costs but, more importantly, have improved outcomes for their
patients. I have spoken to community health center providers
from Ohio, Tennessee, and Pennsylvania who have helped outline
how health information technologies helped them save resources
and provide better care. Our challenge is how to take the best
practices and spread them across the entire country.
I have every confidence we can meet the challenge and
achieve the goals of achieving of reducing costs for families,
businesses, and government, protecting people's choices of
doctors, hospitals, and health plans, and, at long last,
assuring affordable, quality health care for all Americans. And
we can do it without adding to the deficit.
Now, the President is open to good ideas about how we
finance health reform, but we are not open to deficit-spending.
Health reform will be paid for, and it will be deficit-neutral
over 10 years.
The President has already introduced his proposals that
provide about $950 billion over the next decade to finance
health reform. Many of the resources come from wringing waste
out of the current system and aggressively prosecuting fraud
and abuse. We are currently paying for strategies which don't
work or overpaying for medicines and equipment. It is time to
make a better use of these dollars.
We know that reform can reduce costs for families,
businesses, and government, protect people's choice, and assure
affordable health care. As we move forward, we will be guided
by simple principles: protect what works about health care, and
fix what is broken.
We have reviewed the key features of the tri-committee
draft proposal, Mr. Chairman, from you and your House
colleagues, and it is clear that you and your committee have
embraced these principles.
By creating a health exchange that will ensure numerous
private insurance plan options along with the public insurance
option, the plan promotes choice and competition. By lowering
health costs and providing premium credits, the plan makes
health care affordable for all Americans. By investing in
prevention and wellness initiatives, we help to prevent disease
and illness and allow Americans to live longer, healthier
lives. And with meaningful delivery system reforms, your
policies offer lower-cost yet higher-quality health care.
Under the plan you have proposed, Americans will no longer
have to worry about being denied care because of a pre-existing
condition. They will have easier access to tools that can help
them prevent disease and stay healthy. Investments in primary
care and underserved areas will improve all Americans' access
to care. And the Medicaid reforms proposed in this bill have
taken important steps to improve the critical safety net
program, making it an income-based program and improving
reimbursement for primary care.
This discussion draft represents an historic step forward.
And while we are still examining all the details, I agree with
the President, who said this proposal represents a major step
toward our goal of fixing what is broken about health care and
building on what works.
So, Mr. Chairman, I am eager to work with this committee
and your colleagues in the House and colleagues across the
aisle in the Senate to deliver the reform we so desperately
need. And I appreciate the opportunity to engage in this
discussion, and look forward to your questions.
[The prepared statement of Secretary Sebelius follows:]
Mr. Waxman. Thank you very much, Secretary Sebelius, for
your testimony.
I want to start off the questions period myself.
This issue of health care reform was part of the campaign
President Obama waged in order to be elected President. And if
there is any issue for which he has a clear mandate, it is to
work on this very issue. And he has made this his number-one
domestic priority. And I want to underscore, in questioning
you, some of the aspects of what he hopes to accomplish and
what he wants us to do in this effort.
Based on the President's approach, our draft--and it is
just a draft--sets out a comprehensive approach to reform. It
addresses prevention and wellness; the health care workforce;
quality of care; broad-based, shared responsibility in dealing
with the costs; and coverage through insurance reforms; a new
exchange for people to go to get their insurance; affordability
credits; improvements in Medicaid; substantial savings and
improvements in Medicare.
Is this what the administration is committed to, or should
we approach this in a more compartmentalized manner? Should we
approach this in a comprehensive way?
Secretary Sebelius. Well, Mr. Chairman, as you said, this
was one of the key priorities of then-Senator Obama and now-
President Obama, and he believes strongly that we can't fix the
economy without fixing health care. And so a comprehensive
approach to a reform of the system is what is required and, I
think, is what this legislation addresses in many of its
components.
There is no question that you can't do just one thing at a
time in order to have the system work for all Americans and
fundamentally lower costs. There is no question that we can't
continue on the cost curve that we are on right now. It is
unsustainable and will not serve anyone well. Those who have
health insurance now are a month, a year, 2 years away from not
being able to afford the coverage they have. Those who don't
have coverage can't access some of the best technology and the
best medical care in the world.
So we need a comprehensive approach, and we need to
essentially shift the system toward wellness and prevention and
away from the sickness system that we have. So I think the
elements that you have put forward in the discussion draft do
just that.
Mr. Waxman. Undertaking this kind of comprehensive reform
is pretty complicated, and it is going to require an enormous
amount of effort from Members of Congress, some of whom will
say, ``Well, maybe we should delay, maybe we should go slower,
maybe we should do it next year or the year after.''
What is the administration's view of the timetable for
action and the need for action?
Secretary Sebelius. Well, I think the President feels
strongly that there is an enormous urgency about this issue
which has directly to do with our economic well-being as a
Nation and our competitiveness in a global society; that our
workers are less competitive with their colleagues across the
world because of the increasing costs of health care borne by
individual business owners.
Small-business owners, the engine of our economy in States
across this country, the fastest growing segment of our
economy, are often less competitive to have high-quality
workers, talented workers because they seek to have health care
provided along with their wages, and too many small employers
can't any longer do that.
Our focus on prevention and wellness needs to be
dramatically increased so we not only have a healthier society
and lower costs, but have a society where our children are not
facing the prospect, which currently American children face,
where we are seeing the first generation who may live shorter
lives than their parents based on the rise in diabetes.
So we have some challenges, Mr. Chairman, that cause us to
enact legislation this year, to urge the action of both the
House and the Senate on this important issue. It is difficult,
it is complicated. If it were easy, as the President likes to
say, it probably would have been done a long time ago.
Mr. Waxman. Let me ask you one last question, because my
time is almost out. We have businesses who pay too much; we
have government that is paying too much. We have small
businesses who can't afford it at all for their employees. And,
of course, if you are without insurance and you have to go pay
for your health care bill, it is impossible. So a lot of people
go without the needed services.
Do you think we need a shared responsibility for every
sector--individuals, employers, providers, and government--to
move forward together and that everyone has to share in the
cost? No particular sector says somebody else will pay for me,
but we all have to be in there and share in the costs? And,
collectively, we are all better off as a society.
Secretary Sebelius. Well, I don't think there is any
question that, if you build on the current system, which is
absolutely what the President wants to do and what the
discussion draft proposes, then there is a shared
responsibility.
Over 99 percent of large employers provide health care
coverage. A lot of small employers already do, but some don't.
We have situations where some Americans opt in and some opt out
of the insurance market. We need more personal responsibility,
certainly, in the life choices we make, which can help lower
health costs. We need parents to get involved and informed. We
need more preventive care.
So there is certainly a sense that we are in this together.
This is a fundamental issue. It is probably the most personal
issue to every American, what happens to their health care,
their family's health care. And I think there is no question
that it needs to be comprehensive and it needs to involve
everyone.
Mr. Waxman. Thank you very much.
Mr. Barton?
Mr. Barton. Thank you, Mr. Chairman.
Thank you, Madam Secretary, for being here.
You said in your opening statement that there would be no
deficit-financing as a result of this health care reform
package if it became law. Is that literally true?
Secretary Sebelius. Mr. Chairman, I was quoting the
President. The President has said consistently that he will not
sign a bill unless it is paid for.
Mr. Barton. So, we just want it established on the record
right off the bat that there will be no increase in the deficit
as a result of a comprehensive health care package if it does
become law? That is just, I mean, plain language.
Secretary Sebelius. That is what the President has stated
as one of his top priorities: It will be paid for within the
period.
Mr. Barton. OK.
Let me walk through just one part of your program. Creates
a new category of coverage under Medicaid at 133 percent of
poverty, which will be 100 percent paid for by the Federal
Government, no State match, for childless adults between the
ages of 19 and 64. This one provision, if I understand it
correctly, could add as many as 20 million Americans to the
Medicaid program.
Now, I don't know what the cost number is for coverage per
person under Medicaid, so I just picked a number. And if my
number is wrong, correct me. But I said $6,000 a year for
insurance. That may be too high. But if you cover 20 million
people at $6,000 per year, that is $120 billion right there per
year.
How do you pay for that? What are some of your pay-fors?
Because, in the bill, they are to be determined later. So give
me an example of a pay-for that is $120 billion a year.
Secretary Sebelius. Congressman Barton, the President has
proposed about $660 billion in savings from the current
Medicare and Medicaid program. In addition, he has proposed
revenue enhancers of about----
Mr. Barton. That is over a 10-year period.
Secretary Sebelius. Yes, sir. And I think your figure is--
--
Mr. Barton. Per year. $120 billion per year.
Secretary Sebelius. Well, I would start with the premise
that, first of all, I don't know the numbers accurately, and I
assume that your $20 million is within the ballpark.
I just can tell you that, whatever the proposal that comes
forward, the President has insisted that the bill will be paid
for. The measures that are proposed will be paid for.
Mr. Barton. You are a former Governor, I believe. Isn't
that correct?
Secretary Sebelius. Yes, sir, two-term.
Mr. Barton. I believe of Kansas, is that----
Secretary Sebelius. Kansas is the State.
Mr. Barton. Governor of Kansas. Does Kansas have a balanced
budget requirement for its State budget?
Secretary Sebelius. Yes, sir.
Mr. Barton. It does. OK. When you were Governor of Kansas,
by law, you had to submit pay-fors when you submitted a budget
that spent money. Isn't that correct?
Secretary Sebelius. Well, we spent money within the
revenues we had.
Mr. Barton. Yes, ma'am. Now, again, my numbers may not be
the number, but they are definitely in the ballpark. If I give
the President the benefit of the doubt that there are out there
$600 billion over 10 years in savings, $60 billion a year, this
one expansion in Medicaid is still $60 billion a year short.
You are the Secretary of Health and Human Services. I
assume you have had some interaction with Chairman Waxman and
Chairman Rangel, Chairman Miller in providing this draft bill.
You have to have some idea of how you are going to pay for it.
And, again, I am giving you the benefit. If the President
says he can save $60 billion a year, I will stipulate, for
purposes of this hearing, he saves 60. But I think you need to
put $60 billion more in savings or in tax increases on the
table.
Secretary Sebelius. Well, Mr. Barton----
Mr. Barton. You had to do it when you were Governor.
Secretary Sebelius. That is true, sir. And this is a
discussion draft. What I can assure you is, at the end of the
day, the bill that passes will be paid for. We will work
closely with the chairman here in the House and the Senators on
the other side to come up with strategies to do just that.
Mr. Barton. Well, shouldn't we tell them upfront?
Secretary Sebelius. We don't have a CBO score yet for this
bill nor a score for the various proposals that are in this
bill. But I can----
Mr. Barton. But at least you have to put on the table where
you are going to get the money.
Secretary Sebelius. I understand.
Mr. Barton. It is not a box of chocolates, you don't know
what you are going to get, and you just pull it out, ``Oh,
there is $60 billion.'' Whatever.
Well, Mr. Chairman, my time has expired. But I think we
have established a basic point. I mean, it is a good thing if
you are going to have no deficit-financing. I commend the
President for that. But it is a bad thing if you don't shoot
straight with the American people where you are going to get
the money.
And nobody says that we are going to be able to save money
to pay for these huge expansions, totally by savings pay for
these huge expansions. I just pointed out one part of the bill,
and already we are at least, in my numbers, $60 billion per
year short.
Thank you, Mr. Chairman.
Mr. Waxman. Thank you, Mr. Barton.
Mr. Dingell.
Mr. Dingell. Mr. Chairman, I thank you.
Madam Secretary, again, welcome. My questions will, I hope,
evoke a yes or no answer.
Would it be appropriate to state that the tri-committee
discussion draft that was released last week aligns with the
health reform principles the President has outlined earlier
this year? Yes or no?
Secretary Sebelius. Yes, sir.
Mr. Dingell. Now, Madam Secretary, there has been quite a
bit of discussion about the inclusion of a public health
insurance option in the reform legislation. Does President
Obama support the inclusion of a public health option in the
reform legislation?
Secretary Sebelius. Yes, he does.
Mr. Dingell. Madam Secretary, hospitals and doctors are not
required to participate in the public option. Is that correct?
Secretary Sebelius. That is correct.
Mr. Dingell. Premiums and co-payments under that part of
the proposal will cover the claims, will they not?
Secretary Sebelius. I am sorry, sir?
Mr. Dingell. I said, premiums and co-payments under the
public option will cover the costs.
Secretary Sebelius. That is my understanding.
Mr. Dingell. The public option must adhere to the same
rules and regulations as all other plans.
Secretary Sebelius. That is correct.
Mr. Dingell. The public option will be administered by a
separate agency from the one that runs the exchange.
Secretary Sebelius. That is the way the draft is written,
yes, sir.
Mr. Dingell. The public option will offer the same minimum
benefit design as all other plans in the exchange.
Secretary Sebelius. Yes, a level playing field.
Mr. Dingell. Individuals and families will be permitted to
apply subsidies towards both public and private plans in equal
fashion.
Secretary Sebelius. Yes, sir.
Mr. Dingell. And I apologize, too, Madam Secretary, but we
have a lot of business to do here, and I hope I am not being
discourteous.
Madam Secretary, there has been justified concern over the
consolidation of the health insurance market and the impact it
has on health insurance claims. According to the American
Medical Association, 94 percent of the insurance markets in the
United States are now highly concentrated. This has decreased
the amount of competition, and this is a major cause of
spiraling health concerns. Yes or no?
Secretary Sebelius. There is a monopoly in much of the
country in the private insurance market, yes.
Mr. Dingell. Now, this is a serious concern then. How does
the public plan address this concern? And this is not yes or
no.
Secretary Sebelius. I appreciate that.
I think what the public option within the marketplace,
within the new health exchange, does is use market principles--
competition and choice--to lower costs and provide consumers a
choice of plans.
So I think that the public option--absent a public option,
in many areas in the country, two-thirds of my State, for
instance, and States around this country, there would be only
one choice, which is not terribly effective in terms of holding
costs down and certainly does not provide consumer choice of a
side-by-side plan, which is why States in State employee plans
create public options standing side by side with private, why
many States have done that in the children's insurance program,
side-by-side options, to give choice and provide some
competition.
Mr. Dingell. Now, Madam Secretary, as a former Governor and
a former insurance commissioner, you are able to speak to this
question. State insurance regulators are not able to regulate
except as regards solvency of the insurance companies. Is that
not correct?
Secretary Sebelius. Sir, they can regulate solvency and
also have some cost regulation, but, frequently, if there is no
choice in the market, cost regulation is almost irrelevant.
Mr. Dingell. So competition being put into the market would
be the one thing that would make this system work by having the
public option there. Is that correct?
Secretary Sebelius. Well, again, it is a marketplace
strategy that competition is often much more effective than
heavy-handed regulation.
Mr. Dingell. Now, Madam Secretary, there are questions
about whether the tri-committee proposal is a complex concept.
It includes exchanges, a public health option, subsidies,
Medicare and Medicaid improvements, responsibilities for
individual employers.
Will the administration be able to fully implement and
administer this proposal?
Mr. Waxman. Thank you, Mr. Dingell.
Secretary Sebelius. Yes.
Mr. Waxman. Your time has expired, but we do want the to
get the answer.
What is the answer?
Secretary Sebelius. Yes, sir.
Mr. Waxman. That is it?
Mr. Dingell. That is why I asked it that way, Mr. Chairman.
Mr. Waxman. Thank you, Mr. Dingell.
The gentleman from Georgia.
Mr. Deal. Thank you, Mr. Chairman.
Madam Secretary, our esteemed chairman made a comment back
during the markup of the American Recovery and Reinvestment
Act, which said, ``I think it is highly unlikely that you are
going to find millionaires who would like to go on Medicaid.''
One of the concerns that this bill arises in the minds of
many of us is whether or not we are treating low-income
citizens as second-class citizens by automatically enrolling
them in Medicaid.
So my question would be this: Why do you believe that a
family making $29,000 a year is not as able to make choices as
a family making $30,000 a year? And why would it be better to
simply automatically enroll them, with no choice, in Medicaid,
as opposed to giving them a subsidy to allow them to go into
the private insurance market?
Secretary Sebelius. Well, Congressman, some of those
families, a limited number, are in jobs right now where they
have employer-provided coverage, and they certainly would not
shift that coverage.
But a large number, particularly of, not families, but
single adults who are at 100 percent or below the poverty line,
who are making often a very small amount of money, have no
coverage at all. They are uninsured and find themselves not in
an ownership capacity.
So I think the committee's look at expanding Medicaid to
133 percent also follows the experience of many States that
have already done that and found that the most effective
strategy to expand coverage. It is a larger market. It often
provides a benefit package that is cost-effective and, frankly,
is often far less expensive than the private options that
exist, which is why States who have expanded coverage have
chosen the Medicaid route instead of the private insurance
route.
Mr. Deal. As I understand the draft, it would propose that
everyone under the age of 65 who is under the 133 percent of
the Federal poverty level would be enrolled in Medicaid.
Can you give us, first of all, how many people do you think
that that encompasses? And how many of those people currently
have private health insurance?
Secretary Sebelius. Sir, I don't want to cite numbers off
the top of my head. And I can easily return to you with those
numbers. I apologize.
I know that there are a fairly significant number of the
so-called childless adults, not parents, typically because a
number of States, again, have taken steps for parents whose
children are eligible for the CHIP program to actually provide
expanded family coverage, because they found that a very
effective strategy when enrolling children.
But I think we are talking primarily about childless adults
often below that--I think they make less than $6,600 a year if
you are at 133 percent of poverty. And I can get back to you
with those specific numbers. I apologize.
Mr. Deal. Would you please do that?
Secretary Sebelius. Yes.
Mr. Deal. On page 73 of the bill, there is a provision that
provides for automatic enrollment----
[Interruption in hearing room for medical emergency. Brief
recess.]
Mr. Waxman. The committee will come back to order.
A young woman who is an intern here on the Capitol got
dizzy, fell down, and hit her head. And she was attended to by
a number of members and staff who are medical people, doctors,
and the emergency assistance at the Capitol. So hopefully she
will be fine, God willing, and there will be no consequences as
a result of it.
But I do want to make that comment. And as we get any
further reports, I will inform everybody of the situation. We
are distressed about this incident, but with good medical care
and the resilience of youth, even the President's health care
bill will not scare her from recovery. Maybe the hope of it
will spur her on.
Mr. Deal, you were in the middle of your questions, and I
want to recognize you for 2 minutes.
Mr. Deal. Thank you, Mr. Chairman.
Madam Secretary, on page 73 of the bill, it provides for
the automatic enrollment of individuals into the Medicaid
program.
I want to just ask you if the citizenship and identity
verification requirements that are in the current law will
still appertain into the automatic enrollment processes.
And will you assure us that individuals who are illegally
in our country or otherwise ineligible for taxpayer-supported
Medicaid will not be enrolled under this provision of this bill
while you serve as our Secretary?
Secretary Sebelius. Mr. Deal, I can assure you that States
now, because of the various Federal rules requiring
verification of identity, have those systems in place and
really have, I think, developed systems to verify identity not
only of existing clientele but of enrolling clientele. And that
would certainly be in place as we move forward.
Mr. Deal. So it would not be your intention or something
that you would not allow to happen that the automatic
enrollment process would not overlook or override those current
verification requirements.
Secretary Sebelius. That is correct.
Mr. Deal. Thank you, Madam Secretary.
And I yield back my time, Mr. Chairman.
Mr. Waxman. Thank you, Mr. Deal.
Mr. Pallone, the chairman of the subcommittee.
Mr. Pallone. Thank you, Mr. Chairman.
And thank you, Secretary, for being with us today.
I wanted to take my time just to ask about Medicare and
Medicaid. I think there is a certain amount of confusion
because, obviously, in this discussion draft, and the President
has stressed, that we can save money that would be used to pay
for this plan through savings in Medicare and Medicaid. But, at
the same time, there are major enhancements and improvements in
both programs that are in the discussion draft. And I think
there is a certain amount of confusion about that.
Overall, I think that if you view the combination of the
Medicare and Medicaid savings and the benefit enhancements,
overall there is a marked improvement in both Medicare and
Medicaid. But I wanted to just ask you questions about that.
In other words, the draft proposes to begin filling in the
donut hole in the Medicare prescription drug benefit, to
eliminate cost-sharing on preventive services, to expand the
eligibility and accessibility of Medicare subsidies for low-
income enrollees.
Taken as a whole, how do you view the combination of these
Medicare savings proposals and the benefit enhancements as an
improvement in the Medicare program?
Secretary Sebelius. Well, Congressman, I think that there
is no question right now that there are areas where we are
spending money that don't result in higher-quality care or
better results for patients. I think what this discussion draft
puts forward is a way, as you have suggested, to enhance the
current program, to put dollars into areas where we think there
will be much better results for patients.
Hospital re-admissions is a category that is targeted for
some focused attention. One out of every five patients leaving
the hospital is re-admitted within a series of weeks. That is
not good for the patient, and it certainly costs a lot of money
to the system. So, coordinating post-release care, actually
providing incentives for follow-up care is a significant
improvement that will not only lower cost for re-admissions but
actually provide a lot better care for the patients.
And those, I think, are the kinds of examples that the
discussion draft incorporates. Better quality in the long run,
following what we know are best practices that are in some
parts of the system but not appearing throughout the system,
and, frankly, not continuing to overpay for services that have
no shown benefit or result.
Mr. Pallone. Did you want to talk about filling the donut
hole in this context? Because I know that is very much on the
minds of the seniors, and we do propose to do that in this
discussion draft.
Secretary Sebelius. Well, I think that is a huge step
forward. As you saw, the chairman of AARP recently endorsed the
strategy that is appearing in both the House and the Senate to
fill the donut hole.
It is a huge issue. I can tell you, as an insurance
commissioner, we used to face this situation with citizens who
had no idea or really hadn't counted on the fact that their
benefits would suddenly cease and their premiums would continue
on. They hadn't saved appropriately for it. And often they were
the--I mean, the first people to hit the donut hole were the
folks who had the highest cost in prescription drugs. And it
was not only a huge shock but something that forced a lot of
people to stop buying their medications, to stop following the
doctor's prescriptions, to end up in the hospital again without
the care to keep them well.
So this is a huge issue for seniors across this country who
have benefitted greatly from lower-cost drugs but, when they
hit the barrier, are really in worse shape than they were in
the beginning because they are still paying premiums and they
have no health prescription benefit.
Mr. Pallone. Now, what about Medicaid? There is a major
expansion here in terms of increased reimbursement rate,
covering people in many States that, you know, that are below
the 100 percent or the 133 percent with Federal dollars. Would
you want to comment on that?
Because I just want to stress how, even though we are
having savings from Medicare and Medicaid, we are really
improving the programs significantly.
Secretary Sebelius. Well, there, again, a lot of the
conversation with providers, at least in my home State, was not
really focused on Medicare, which is often a very popular
program, but on Medicaid, which often under-reimburses doctors
and particularly primary care and family providers. So,
enhanced reimbursement for primary care, I think, is a huge
step forward.
And, frankly, having a situation where, if you are an adult
or a family below 133 percent of poverty, wherever you go, you
would have the same benefits. If you move across the State
line, if you need to travel with your family elsewhere, you
would have similar benefits, the kind of portability that
currently is not available to a lot of people because the
benefits change each State at a time. So that is a significant
step forward.
Mr. Pallone, while you are discussing Medicaid, I just
wanted to share with the committee that at least my staff has
told me that the number, at least that we have been given by
CBO, for childless adults, non-disabled childless adults who
are in Medicaid is really a $3,000-a-person average cost, not
$6,000 as was suggested.
Mr. Pallone. Thank you very much.
Mr. Waxman. Thank you, Mr. Pallone.
I want to now recognize Mr. Whitfield.
But I do want to announce to members there is pending on
the House floor a Republican motion to adjourn. We are going to
continue the hearing, so those who want to respond to that vote
should do so and then come back. But we will proceed.
Mr. Whitfield.
Mr. Whitfield. Mr. Chairman, thank you very much.
And, Madam Secretary, we are pleased that you are with us
here today.
You know, the question about the prescription drug benefit
reminds me that, of course, before we passed the prescription
drug benefit, most citizens on Medicare did not receive that
benefit, and so they were paying for those medicines. And now
we are trying to fill the donut hole so they don't have to pay
for that either.
So, as politicians, you know, we like to expand coverage
and give coverage and make it--it sounds like that we don't
want anyone to pay for anything. And yet, I know your father
was involved with Medicare, according to your testimony, and I
was looking at some of the debate about Medicare when it was
adopted in 1965, and they were making some of the same
arguments that you were making, really, in your testimony. And
in 1965 they projected that, by 1990, the cost of Medicare
would be $9 billion. As it turned out, it is almost $200
billion.
And so, we all like to--we know that our health care needs
to be reformed. And then when you talk about it being paid for,
it is going to be budget-neutral, and then when they talk
about, well, we are going to get a lot of money out of
increasing efficiencies, wringing waste out of the current
system, and being more aggressive to stop fraud, you know, it
is so nebulous.
And you are a very practical person. You have had
experience as a governor. Do you honestly think that we can
reform this system and actually save money and yet provide
better quality health care?
Secretary Sebelius. Congressman, I do. And I do so not
based on some hypothetical situation, but based on visiting
health systems throughout this country, in the middle of the
country, on the coasts, that do just that: who have higher-
quality outcomes time-in and time-out for their patients, who
have used technology and the provider protocol provided to make
sure that the results are better each and every time, and who
lower cost.
I have seen it in systems around the country, and I am
absolutely confident that we can do it throughout the United
States.
Mr. Whitfield. Well, I am glad you are confident, but, you
know, I really am skeptical about it. But I hope you are right.
But when we talk about being budget-neutral, that is good
for the government, and, of course, the taxpayers pay for the
government. But then this bill has a pay-or-play mandate on
employers, requiring them to provide a minimum benefit, as
established by the Health Benefits Advisory Council, of 8
percent of wages paid. So there is a mandate there for small-
business people to pay 8 percent of wages to provide a benefit
defined by a commission that is established in this bill. So,
for these small-business people, I mean, if someone has wages
they are paying $500,000 a year, that is going to cost them
$40,000.
Now, are you concerned about the ability of small
businesses to be able to continue to be competitive and provide
jobs for the employees and pay this, as well?
Secretary Sebelius. Well, absolutely, I am concerned about
the competitiveness of our small-business owners. And I think
health care costs are one of the areas that is a huge challenge
for every small-business owner I talk to. They can't get great
employees without offering health benefits. They are priced out
of the market.
So, several things in this bill. First of all, the
discussion draft makes it clear that there will be a specific
small-business exemption from the pay-or-play. It is my
understanding that the committees are still working on the
language. So that will occur. It is in the Massachusetts----
Mr. Whitfield. No, I know that there is an exemption, but
there are going to be some people that will be hit by this.
Secretary Sebelius. And the----
Mr. Whitfield. And that is OK.
Secretary Sebelius. --creation, though, in the marketplace,
I would suggest, actually gives them a cost advantage that they
don't have now, pooling larger risk, giving affordable
coverage.
Mr. Whitfield. Let me ask you just one other question,
because my time is about expire. One of the criticisms we
always hear about a one-payer, single-payer system and
universal health coverage in other countries is that it
rationalizes health care. And, in America, our most expensive
part of health care deals with end-of-life care. That is a big
percentage of the way we spend money.
And I am not saying there is anything wrong with
rationalizing health care. But, to really get big savings, do
you think that we should be rationalizing health care in the
U.S.? Many countries do because that is the way they control
their costs. I mean, do you think that we should be doing that?
Secretary Sebelius. Absolutely not. I think that, again,
the creation of a health exchange marketplace is not a single-
payer system. And I think you will hear today from some
proponents who will strongly suggest that we should be looking
at a single-payer system, but that is not what the President,
that is not what the chairman have put forward. They have put
forward a plan that builds on the current system.
Rationing care, frankly, is something that happens each and
every day under our current system, and it is often done by
private insurers who get between a doctor and their patient and
decide which practices can be met, which procedures can be paid
for, what prescriptions.
I think this is an opportunity, really, to make sure we
have more patient-centered care, that we follow the protocols
that work.
Mr. Whitfield. Thank you, Mr. Chairman.
Mr. Waxman. Thank you, Mr. Whitfield.
Mr. Markey.
Mr. Markey. Thank you, Mr. Chairman, very much.
Last year, Madam Secretary, I introduced legislation with
then-Congressman Rahm Emanuel and Congressman Chris Smith from
New Jersey called the ``Independence at Home Act.'' And the
bill created a Medicare pilot project focused on improving the
coordination of care and reducing costs for the most vulnerable
Medicare beneficiaries, those with multiple severe, chronic
conditions, such as Alzheimer's, ALS, Parkinson's, and other
complex, debilitating diseases, who also need help with two or
more activities of daily living, such as dressing, feeding, et
cetera.
CBO has reported that 5 percent of Medicare beneficiaries
account for 43 percent of overall Medicare spending. And CMS
has noted that approximately 20 percent of Medicare
beneficiaries with five or more chronic conditions, account for
66 percent of program spending.
Could you talk a little bit about how we can focus on those
Medicare beneficiaries with multiple chronic diseases and how
perhaps a program like that, focusing on home and better
coordination, can help to reduce the costs?
Secretary Sebelius. Well, we have not only the
demonstration that you are responsible for but, I think, a
number of projects under way looking at coordinating care,
particularly for the vulnerable, high-cost individuals. And,
certainly, having an opportunity to do that in a home base
instead of a hospital-based service is not only better for the
patient but may provide some enhanced cost savings.
So we are eager to work with you, Mr. Markey, to continue
to figure out better ways to not only coordinate care for
individuals who suffer from various chronic diseases and have
ongoing underlying conditions, but also to make it a more
patient-centered system, which would lead us to more home care
delivery.
Mr. Markey. OK. So, in terms of home-based programs for the
beneficiary population, do you see a shifting in that direction
to make sure that, you know, we try to reduce costs by trying
to stabilize these people at home?
Secretary Sebelius. Well, as you know, there is a lot of
effort under way, and a lot of it has been at the State basis,
and I am hoping that with health reform we can have a real
collaborative partnership on rebalancing care, both not only
trying to prevent hospitalizations before they occur and
provide care at home but also the nursing home. A number of the
patients that you are describing often end up in a nursing home
setting because they don't have access to the wrap-around
services that they need.
So we would like to enhance that sort of home-based care,
the care that really allows people to not only be more
independent but also at a lower cost than in a hospital or a
nursing home.
Mr. Markey. Our bill also would enable teams of primary
care doctors, NPs, pharmacists, and other care providers to
form an organization to contract with HHS to provide services
to these chronically ill beneficiaries in their homes as part
of a 3-year demonstration.
The organizations would be required to achieve savings of
at least 5 percent compared to what these beneficiaries would
cost if they were served by these coordinated care
organizations. If they don't, they must repay Medicare. If they
achieve more than 5 percent, they can keep 80 percent of these
savings, with 20 percent of the savings returned to Medicare.
Do you think that makes any sense, to have cost-savings
sharing as a system that we could construct in the country?
Secretary Sebelius. Well, I certainly support the notion of
beginning to pay for outcomes and not for contact. Too much of
the Medicare system is driven right now by the number of times
a provider touches a patient, not necessarily what happens at
the end of the day.
So the system you describe, which not only would provide
for a coordinated strategy, which is really what we need to
occur throughout the country, but also save money, it makes
sense to provide those incentives to providers.
Mr. Markey. Great.
Thank you for your service. Thank you for being here.
Mr. Waxman. Thank you, Mr. Markey.
Mrs. Christensen.
Mrs. Christensen. Thank you, Mr. Chairman.
And I guess there is some benefit, I guess, at least in
this instance, to being a delegate and not having to go to
vote.
Welcome, Madam Secretary. It is good to see you.
Last week, we had some very good conversations on health
disparities, but I note that, at least in reading your
testimony, because I had to step out, both in the Senate and
here, there was very little, if any, reference made to this
very important issue that, by itself, results in close to
100,000 premature, preventable deaths every year.
So I hope that you will work to ensure that your entire
Department is very sensitive to this critical issue and that
the Office of Minority Health and, in particular, the National
Center for Minority and Health Disparity Research will be
elevated to an entity that is very critical to achieving the
goals of eliminating health disparities.
The bill directs that a national prevention and wellness
strategy initiative be in place, and you will be responsible
for identifying the key health and health care disparities.
Could you discuss briefly how you plan to fulfill this
requirement and ensure that all areas of concern be identified?
And how will the Agency for Healthcare Quality and Research
be involved, since they have been doing national health
disparity reports for the last 5 years?
Secretary Sebelius. Well, as I shared with you,
Congresswoman, last week, I am, as the new Secretary, concerned
that we make sure we do a lot more than publish the yearly
reports, which have alarming statistics about health
disparities. And, frankly, they are not getting any better; the
gap is, in fact, widening.
Health reform is a piece of the puzzle. I don't think there
is any question that having access for everyone to higher-
quality preventable care, a health home, is a step in the right
direction.
But I had a recent very productive meeting with
stakeholders representing a lot of the groups who are often
underserved and assured them that we not only wanted a one-time
meeting but I want an ongoing strategy.
I have met with our team at our Center for Research and
Quality about how it is that we are going to actually begin to
close this gap, because just providing reform and continuing
the gap doesn't work.
So we are aggressively taking on not only what has been
already reported as effective strategies, but want the new team
to be particularly focused on the issue of great concern to you
and to me.
Mrs. Christensen. I have another issue of great concern
that really relates to territories. In your testimony, you said
that reform is not a luxury, it is a necessity, and I
definitely agree with that. And, because it is a necessity, I
think that certain issues, like equitable coverage for all
Americans, should not really be held hostage to cost. And we
discussed that a lot at the hearing yesterday.
That said, I am interested in hearing your thoughts about
the treatment of the U.S. territories in the current draft. We
have been working for years to remove the Medicaid cap. The
bill, while it does provide additional funding to the
territories, does not move us in that direction at all. And we
are not eligible for subsidies.
So, to me, it makes it far less possible for men and women,
American citizens, legal residents living in the territories to
achieve the benefits that this bill will provide for the rest
of Americans. So I would like to hear your thoughts on that.
Secretary Sebelius. Well, Congresswoman, I would like to
provide an opportunity for you to have that discussion with me
and our staff and really would like to work with you as this
process--this is a work in progress, and it is a discussion
draft. And I would just like to work with you to see how we can
help enhance the areas that you have identified as problematic.
Mrs. Christensen. Thank you.
Thank you, Mr. Chairman.
Mr. Waxman. Thank you very much, Mrs. Christensen.
Mr. Stearns.
Mr. Stearns. Thank you, Mr. Chairman.
Madam Secretary, I note that you earlier said that, with
the donut hole, that the benefits stop and the payment
continues. But, of course, you understand that is for a small
amount of time until they get above a certain amount, and then
almost 100 percent of their benefits are paid for.
I think you understand that. So it is not proper to say
that their benefits stop, because their benefits----
Secretary Sebelius. Well, they stop for a substantial
period of time, depending on how fast----
Mr. Stearns. Yes, yes, but--anyway, I have two questions,
Madam Secretary.
The President has indicated that if you--he said, quote,
``If you like your health care plan, you will be able to keep
your health care plan, period. No one will take it away from
you, no matter what.''
I have here--The Lewin Group has done a study, and it is a
bipartisan study, which found that 120 million people, nearly
67 percent of non-Medicare Americans, would lose their current
coverage and be forced into a government-run insurance if a
government plan was included.
Do you have any evidence that, if a government plan is
offered, that 120 million people will be able to keep their
current insurance?
Secretary Sebelius. Well, Congressman, it is my
understanding that that Lewin study has been updated or at
least disputed by a number of people, that those numbers were
significantly higher than folks----
Mr. Stearns. So your answer is that you dispute the Lewin
plan.
Secretary Sebelius. I do.
Mr. Stearns. OK.
The next question is then, I have here a study by the HSI
Network, LLC, June 24, 2009. Their study said that the bill we
are discussing today would cost an astounding $3.5 trillion. Do
you dispute that fact?
Secretary Sebelius. Sir, I am waiting to see what the CBO
score says. I don't know the figures that you have just quoted.
I don't know who the group is.
Mr. Stearns. Have you seen this report?
Secretary Sebelius. No, I have not.
Mr. Stearns. OK.
Now, the President has indicated that if any bill arrives
from Congress that is not controlling cost, that is a bill he
can't support.
So the first question is, you don't agree this report; you
don't know about it. They say it is going to cost $3.5
trillion. Where, if it is not 3.5 or 3.2 or, let's say, 2.8,
where are you going to get the money to pay for this bill?
Secretary Sebelius. Again, Congressman, I think that once
the bill is scored and once the proposals are put forward, I am
eager to work with the committees in the House and the
committees in the Senate to identify the cost savings.
The President has proposed about a billion dollars' worth
of revenue enhancements and cost savings that he feels are
appropriate to spend on this. There are other ideas that are
being proposed by Members of the Senate and Members of the
House, and we are eager to work on paying for the bill.
Mr. Stearns. Well, of course, $1 billion is not going to
approach $3.5 trillion.
Secretary Sebelius. But, sir, I----
Mr. Stearns. So $1 billion is just a pittance compared to
the 3.5 that this report shows it is going to cost.
Another question is that you really don't have any idea
where you are going to get the money to pay for this. Do you
have any evidence that shows if the government spends $3.5
trillion that it will save money? Let's not take the $3.5
trillion, let's just ask you, if we spend all this money, where
are you going to save it?
Secretary Sebelius. Sir, I think you start from the premise
that we can't afford what we are doing. So not doing anything
is not an option. $2 trillion-plus a year is being spent, and
Americans are less healthy than they were years ago. So we have
to change what currently is happening.
And I think there is every evidence that the combination of
health technology, driving quality, and actually beginning to
pay for prevention and wellness, promoting primary care instead
of disease care, is a huge cost-saver over time. It is
effective to have Americans in healthier conditions. It is good
for our businesses, it is good for our workforce. So it will
save money.
Mr. Stearns. Well, I think all the things you suggested
both sides would agree on. What the question is is, how do we
do that? How do we reform the system so that there is universal
access, universal affordability, but at the same time, we don't
have a government program that is going to cost $3.5 trillion
that is not paid for, with no statistics to show that it is
going to save money?
There could be an alternative suggestion. And I just
suggest, Madam Secretary, that you read the HSI Network, LLC,
report that came out and go back with the latest report from
The Lewin Group. And I think certainly before you come up here,
you should have some answer how you are going to pay for this.
And, with that, I yield back.
Mr. Waxman. Thank you, Mr. Stearns.
Ms. DeGette.
Ms. DeGette. Thank you very much, Mr. Chairman.
Madam Secretary, one area that I have been working
extensively with Chairman Waxman and also Senators Rockefeller
and Whitehouse on is legislation that would strengthen the
Federal health care quality infrastructure in order to identify
and track key health indicators, as well as to develop and
implement new science across the States. What this bill does
that we introduced would establish national priorities for
health care quality, and it specifies that pediatric health
care quality is one of the first.
And a lot of this legislation has now been incorporated in
the discussion draft that we are talking about today. But the
draft bill also contains a provision that requires the director
of the Agency for Healthcare Research and Quality to work with
you, as Secretary, to develop quality measures for the delivery
of health care services in the United States.
And I think this is an important requirement, but I am
worried about the implications for pediatric health care
quality measures, because even though the discussion draft
requires the measures to be designed to assess the delivery of
health care services to individuals, regardless of age, the
section is funded with Medicare dollars. And so, under the
previous administration, HHS determined that Medicare dollars
could not be used for pediatric measures.
I am wondering if you can comment on this and what plans
the administration has to address pediatric health care quality
and what the view of the agency is going to be.
Secretary Sebelius. Well, Congresswoman, I think that we
are convinced that Medicare can be a leader in improving
quality of care for all Americans. And, certainly, the
development of quality standards, I think, is appropriately
done under that umbrella.
But all Americans definitely includes children, and that is
a huge priority of the country's moving forward. So there will
be a coordinated effort to make sure that the pediatric
standards are very much developed in terms of quality outcomes.
Ms. DeGette. And do you think that can be done with the
Medicare dollars? Or is that something we are going to have to
explore, as we move forward to the final legislation?
Secretary Sebelius. In the discussions with our current
leadership team at CMS, they are confident that we could
fulfill the mandate that is in the bill right now to develop
standards, including pediatric standards.
Ms. DeGette. OK. Because there is--I know you recognize,
the medical establishment, and, of course, our icon who was
here, Marian Wright Edelman, who was here yesterday: Children
are not just mini-adults. So we have to develop separate
standards.
Secretary Sebelius. That is right.
Ms. DeGette. I wonder if you could talk for a minute about
the administration's view on the title 7 health workforce
dollars that are included in the discussion draft.
Secretary Sebelius. Well, I think, as you look toward the
future of a reformed health system, workforce issues are hugely
important. And I think that a step was taken, a significant
step, in the stimulus act, beginning to fund the pipeline of
critical health care workers: doctors, mental health providers,
nurse practitioners, additional nursing staff.
And this discussion draft, I think, takes that to the next
chapter, which recognizes not only a shift in incentives for
doctors to focus on primary care, but also has enhanced
workforce capacity, again, with a whole series of initiatives
that would provide for more health care providers in more parts
of the country.
Ms. DeGette. Thank you.
One last question. One of the provisions I was really
pleased to have included in the discussion draft was the idea
of auto-enrollment at birth for children whose parents don't
have insurance plans, to put those babies in, and then 12-month
continuous eligibility for children.
I am wondering if you can comment on the administration's
position on that kind of auto-enrollment.
Secretary Sebelius. Well, I think it has been shown that
the enrollment efforts vary from State to State, often. And
some still require a face-to-face visit; others have various
complicated forms.
So what has been proven as best practices, I think, is an
easier presumptive enrollment when kids show up at the
hospital. Certainly, auto-enrollment at the time of birth would
facilitate including children in the system and make sure they
get a healthy start on life. So I think that is a big step
forward.
Ms. DeGette. Thank you.
Thank you very much, Mr. Chairman.
Mr. Waxman. Thank you, Ms. DeGette.
Mr. Buyer.
Mr. Buyer. Thank you very much.
Madam Secretary, what type of revenue enhancers have been
discussed?
Secretary Sebelius. Well, at this point, Congressman, the
President has proposed a return to the itemized deduction that
was present in the days of Ronald Reagan and feels that that
would be an appropriate way to raise additional revenues.
Mr. Buyer. How much? About how much revenue would that
raise?
Secretary Sebelius. $340 billion is my recollection.
Mr. Buyer. OK. What are some other ideas that have been
discussed?
Secretary Sebelius. That is the revenue enhancer that the
President has proposed.
Mr. Buyer. That is $340 billion. What else?
Secretary Sebelius. That is the revenue enhancer that the
President has discussed. He has also proposed over $660 billion
worth of saving. So we are at about just under a trillion
dollars.
Mr. Buyer. OK. And we are still looking for another $2
trillion?
Secretary Sebelius. Sir, I don't know--I have never had
anybody discuss a $3 trillion bill, so I am not really prepared
to talk about a $3 trillion bill. I don't think there is a
score on this bill. It is my understanding----
Mr. Buyer. Going to the itemized deduction, could you talk
about that just a little bit further? Who would that impact?
Secretary Sebelius. It would impact basically the
wealthiest Americans, who currently are paying a different
level of tax rate on their itemized deduction than middle-
income Americans. And it would, again, restore the rates----
Mr. Buyer. OK. At that would be set--at what adjusted gross
income level would that be set?
Secretary Sebelius. Pardon me?
Mr. Buyer. At what adjusted gross income level would that
be set? In other words, you are either going to deny additional
itemized deductions--is that what you are discussing?
Secretary Sebelius. It just readjusts the rate. They
continue to itemize deductions, the highest-income Americans--
--
Mr. Buyer. So if an American family making $80,000----
Secretary Sebelius. No, sir. It is my understanding that it
is over $200,000, the last time I saw the proposal, but that
could have changed.
Mr. Buyer. At $200,000. But then what happened to the
President's promise and assurance to the American people that
he would not increase taxes on anyone making below $250,000?
Aren't you going to set 250? Otherwise, he breaks his promise
to the American people.
Secretary Sebelius. Sir, he has put forward this proposal,
and he is eager for Congress to talk about it. He thinks this
is a way to raise additional revenue for----
Mr. Buyer. So it is OK for him to promise one thing to the
American people and do another, just like what George Bush did.
``I won't increase taxes,'' and he did it anyway. So that is
what your boss is proposing.
Did you say, to remind your boss, ``Wait a minute, I am
your Cabinet Secretary, I am responsible for this. Do you
realize you are about to break your promise to the American
people if you do this?''
Secretary Sebelius. I did not say that to the President.
Mr. Buyer. What did you say to the President? What did you
advise the President?
Secretary Sebelius. I told him I was eager to help him pass
health reform, and I was eager to help fulfill his commitment
that it would be paid for within the period of time that the
bill proposes, over a decade. I think that is a fair promise to
the American people, that it won't increase the deficit. And I
am eager to work with you, sir, to help get that done.
Mr. Buyer. Medicaid, when you were Governor and as a
commissioner of Medicaid, States get a grade with regard to the
administration of Medicaid by the States. What was your grade
when you were the commissioner and Governor with regard to the
administration of the Medicaid plan?
Secretary Sebelius. Grade by whom?
Mr. Buyer. Pardon?
Secretary Sebelius. Who is grading me? I don't know what
you are talking about. But, I mean, I guess the people of
Kansas thought I got a pretty good grade because I got re-
elected as insurance commissioner and as Governor.
Mr. Buyer. OK. Well, you got a D. Maybe you thought that
was good and that was acceptable. I am only concerned that, if
you think that a D is good and acceptable and you are glib
about it here today, Madam Secretary----
Mr. Waxman. Will the gentleman yield?
Secretary Sebelius. Sir, I don't know what you are talking
about.
Mr. Waxman. Will the gentleman yield? Who graded----
Mr. Buyer. No, I am not going to yield.
The question I have here is, if we are going to say unto
our States that we are going to--the Federal Government will
pick up additional cost on Medicaid, aren't we sending a signal
unto the States that if the Federal Government is going to pick
up additional costs, that they don't have to be as concerned
and cost-conscious? Should I worry about that?
Secretary Sebelius. Well, I would say that the bulk of the
Medicaid beneficiaries will still have a very significant State
share. And I don't know any Governor in the country who is not
concerned about the cost of Medicaid.
Mr. Buyer. One of the other things that does concern me,
though, is with regard to doctors, you say that everyone will
be guaranteed their choice of their doctor. Yet, when we are
going to have some shifting that, in fact, will occur--and
that, in fact, is recognized. So an individual who likes going
to their doctor, now all of a sudden, their plan may not be--
their doctor may say, ``I am not going to participate in the
government option.'' Then they lose their choice of doctor.
Would that be correct under this plan?
Mr. Waxman. The gentleman's time has expired.
Secretary Sebelius. Only if the individual chooses the
public option.
Mr. Buyer. Say again?
Secretary Sebelius. Only if the individual chooses the
public option.
Mr. Buyer. Right. Then they lose their choice of doctor if
the doctor does not participate.
Secretary Sebelius. Well, that is the individual's choice.
Doctors would not be mandated to be in the program, that is
correct.
Mr. Waxman. And that is true of private insurance, as well.
Secretary Sebelius. That is true.
Mr. Waxman. The gentleman's time has expired.
Mrs. Capps.
Mrs. Capps. Welcome, Madam Secretary. And thank you very
much for being here today and for your testimony.
I just want to make one brief comment about a population,
about a group of people being discussed earlier in the
conversation, those who will be covered, the childless adults
who would be covered under Medicaid in this legislation, with
the cost amount. You are being asked about it. It is not as
though these are folks that we are not paying for already and
the kind of health care they receive currently, which is most
often way expensive and inappropriate for their health needs--
no prevention and so forth. I think that needs to be part of
the discussion.
But my questions to you have to do with the part of the
country you come from, Kansas, as well as part of my district,
which is rural America, and some of the barriers to care there.
But, first, I want to take advantage of your expertise as
insurance commissioner for a State and have you share with us
briefly about some of the types of reforms that are needed to
improve our current insurance market, some of the common abuses
that you have seen, and how you believe this bill will
address--and that will actually be a big cost savings, as well.
Secretary Sebelius. Well, thank you, Congresswoman.
I think there is no question, particularly in the
individual market but also often in the small-business market,
there are constantly cherry-picking activities by private
insurers, which do one of two things and often both
simultaneously: Costs can be dramatically increased year after
year, driving people out of the marketplace. But also, in the
individual marketplace, the pre-existing condition barriers
often either make insurance impossible to obtain or totally
unaffordable to obtain.
So it is a huge barrier to Americans accessing quality
health care.
Mrs. Capps. And are there provisions specifically in this
legislation that you believe will address this?
Secretary Sebelius. Absolutely. Not only the kind of--you
have a couple of provisions. You have a loss ratio provision,
which would allow a different oversight to medical loss ratios,
helping to eliminate some of the overhead cost. There is a
provision that would exclude insurers any longer from denying
people coverage based on pre-existing conditions. And there is
a much more community-rated aspect to the health exchange,
which would, again, limit the kind of spikes in cost that
small-business owners often see driving them out of the
marketplace.
Mrs. Capps. Thank you.
Now, to a part of my district, I represent a county in
California, San Luis Obispo, in which one company, WellPoint,
has way more than 50 percent of the market. It is the only
private insurer. And the county also has a shortage of primary
physicians because of a locality or reimbursement issue that is
far different from what the cost of living in the area really
is. But this county also doesn't quite qualify for a health
professional shortage area. So there are these traps that many
of the folks feel like they are existing in.
Could you talk about your experience, maybe, that is
similar, but also how this legislation could improve the choice
of health plans for consumers in a county such as the one I
have described; and how, also, we really need to be able to
attract new physicians to certain areas like the one I
mentioned and many others in rural America, as well as some
underserved areas in metropolitan areas, as well?
Secretary Sebelius. There is no question, I think, that the
public option in the marketplace achieves the very goals that
you just described, where consumers would have choice and there
would also be cost competition--two principles, I think, that
the administration very much believes in.
In terms of the workforce issue, again, the initial
investment in the stimulus act began the pathway to enhancing
workforce, particularly in underserved areas, with a doubling
of the Commissioned Corps. But I think this bill takes an even
bigger step forward, recognizing that loan repayment is an
effective strategy. It attracts people to underserved areas.
I would say the implementation of health IT will be a
significant enhance factor for providers who often don't want
to be isolated but, with health IT, can be in frequent
consultation with specialists and with colleagues in various
parts of the country, in various parts of the State, so they
are not in isolated practices.
So there are a number of features that are not only in this
discussion draft but in the bills that you have previously
passed that I think really help to address the workforce issue.
Mrs. Capps. Thank you very much.
I yield back.
Mr. Waxman. Thank you, Mrs. Capps.
We now go to Mr. Burgess.
Mr. Burgess. Thanks, Mr. Chairman.
Madam Secretary, I am over here in the broom closest,
behind the kids' table, which is where they keep me on this
committee. And welcome to our committee this morning.
During your confirmation hearing before the Senate, I
believe the statement was made that you said, ``If confirmed, I
will not only be an eager partner to work with Congress, but
that I understand bipartisanship.'' Is that a reasonable
facsimile of the testimony that day?
Secretary Sebelius. Yes, sir.
Mr. Burgess. Now, I know that the Senate HELP Committee,
the ranking member has sent a letter, June 16th, in a follow-up
to a request submitted June 10th sent by the ranking member of
the Senate HELP Committee, where they note that despite
providing technical assistance to the majority regarding the
Affordable Health Choices Act, that same courtesy had not been
made available to the minority of the committee.
When can we tell the Senate to expect that you are going to
help them, the Republicans on the Senate HELP Committee, with
the same technical assistance that you have provided to the
majority on the Senate side?
Secretary Sebelius. Sir, it is my understanding that our
staff and Nancy-Ann DeParle, who is the White House head of the
Health Reform Office, have been in the House and in the Senate
on a daily basis, providing information and expertise,
modeling, a whole variety of situations.
I am not sure specifically what was requested that has not
been provided, but I know that they have been available,
accessible, and very present day-in and day-out.
Mr. Burgess. Well, Mr. Chairman, I would ask unanimous
consent to make the Senate letter part of the record.
And then, just a follow-up: For our committee here, on the
House side, will that same technical expertise be made
available to the minority in the House?
Secretary Sebelius. Sir, as much as we can provide
background information and assistance, we stand ready to do
that.
Mr. Burgess. And we stand ready to access that.
Let me ask you a question. In your prepared testimony this
morning, there is a discussion about the President has
introduced proposals that will provide nearly $950 billion over
10 years to finance reform. That is following the statement,
the President is open to good ideas on how we finance--will not
add to the deficit.
Now, in a world in which 96 percent of people have health
coverage, am I correct in presuming that the money that is
afforded for disproportionate-share hospitals and upper payment
limits, that those fund will no longer be necessary for our
safety net hospitals? And is that where a portion of this $950
billion is coming from?
Secretary Sebelius. There is a proposal as part of the
package that at least a reduction in the DSH payments be
anticipated as health reform is fully implemented.
I don't think anybody anticipates a world in which there
would be no additional help and assistance to those hospitals
that are providing the bulk of care to people who are
uninsured, but hopefully the uninsured will go down.
There are additional, I think, features about that--
cultural competency--a range of additional services that have
to be provided.
Mr. Burgess. And just to point out, in my home State of
Texas, a significant number of the uninsured are in the country
without benefit of a Social Security number. And until we
resolve that issue, the need for safety net hospitals is going
to continue, because I suspect that there will be some people
who are left out of the 96 percent who actually have health
coverage.
Now--and I was glad to hear you re-emphasize this morning
that the President wanted to protect what works and fix what is
broken. I am glad you went to Omaha. I went to Omaha earlier
this year. In fact, Alegent came here last year and did an
event with us. They are one of the forward-looking institutions
in this country, and there are many others.
But testimony at this committee yesterday really--without
the ability to have the health savings account and the health
reimbursement account to be able to provide the correct
incentives for their patients to access the preventive care
that we all want people to feel is important, without those
tools it would be very difficult for them to operate the kind
of facility that they have today.
Secretary Sebelius. I am sorry. Without the health
savings----
Mr. Burgess. Without the health savings accounts and the
money made available through health reimbursement accounts.
And I guess what I am getting at is, could we get this
morning a definitive answer? From my read of this bill that is
before us, it appears that health savings accounts are not
going to count as qualified coverage. Is that correct, from
your reading of the bill?
Secretary Sebelius. Sir, I can't--I will go back and make
absolutely sure. I don't--I know that there is no intent to
eliminate health savings accounts. How they are actually
defined I need to recheck. But health savings accounts would
still be available to Americans as they are today.
Mr. Burgess. I am not certain that that is correct under
the language of the bill. And I think the President could do a
good service by instructing us to help people avoid a penalty
for not having credible coverage or qualified coverage if they
choose to get their insurance through a health savings account
and, again, that have the----
Secretary Sebelius. You are saying a health savings account
absent another insurance policy.
Mr. Burgess. That is correct.
Mr. Waxman. Will the gentleman yield to me? Your time has
expired, but I did want to clarify----
Mr. Burgess. No, my time is just starting. It hasn't gone
green yet.
Mr. Waxman. Well, I don't want to dispute with on you that,
but----
Mr. Burgess. I will be happy to yield to the chairman.
Mr. Waxman [continuing]. I want to clarify that I do
believe that health savings accounts are not adversely affected
in the draft bill. That would be a ways and tax issue. But I
don't think that is the intention. And we will get a
clarification because you raise an important question.
Mr. Burgess. Just briefly reclaiming my time, if you look
at the rate of increase of all of the different products out
there--high option PPO, Medicare, Medicaid--all increase at a
rate of 7.5 percent a year. We heard testimony from the chief
medical officer at Alegent yesterday that their rate of
increase was about 5 percent a year.
So it seems to me that, if we want to figure out what
works, we would look at those types of programs, give people an
incentive to select healthy behaviors, make it important to
them, and I think we will find that people, by and large, will
do the right thing. It is not for everyone----
Mr. Waxman. Mr. Burgess, thank you very much. Other members
are waiting, and the Secretary is going to have to leave, so I
do----
Mr. Burgess. I yield back.
Mr. Waxman [continuing]. Want to get to some of the others.
Ms. Matsui.
Ms. Matsui. Thank you, Mr. Chairman.
And welcome, Madam Secretary. We are so happy to see you
here.
Secretary Sebelius. Thank you.
Ms. Matsui. I was pleased to see that components of
legislation that I authored in the Public Health Workforce
Investment Act were incorporated into the draft bill before us
today. The creation of a public health workforce corps is a
major step forward and will revolutionize public health
forever.
It is also, as you know, a necessary step because we are
staring a public health workforce crisis directly in the face.
In order to satisfy our future public health needs, we will
need to train three times as many public health workers as we
are today. Otherwise, the rates of obesity, diabetes, and other
chronic diseases will likely rise. And we need to reinvest in
this crucial part of our public health infrastructure so that
we can take community-based action to prevent a long-term
public health crisis.
Secretary Sebelius, you are head of what I figure is the
largest public health agency in the world. You probably know as
well as anyone that the public health workforce is rapidly
aging. By 2012, half of the public health workforce, in some
States, will be ready to retire.
In my opinion, our public health system did a good job in
managing the recent H1N1 flu outbreak, but this incident has
shown us how critical it is to not let our public health
workforce deteriorate any further. And I am pleased that my
piece of it was incorporated into the draft bill.
Madam Secretary, I want my colleagues to understand how
critical the public health workforce is. Will you please
outline for the benefit of this committee how your job is
dependent on having a robust public health workforce backing
you up?
Secretary Sebelius. Well, Congresswoman, first of all,
thank you for your leadership in this area and your
longstanding expertise and insistence that the public health
infrastructure has to be part of this dialogue and discussion.
And I think you appropriately identified the recent
situation, still with us, of the H1N1 virus and the
anticipation that we will need additional activity points to
the need for a robust infrastructure. And, as you correctly
point out, in many parts of the country, it is not robust
enough now, and we are facing a looming retirement of lots of
individuals.
So having not only the pipeline--you know, the Commissioned
Corps has doubled--there are efforts to enhance, again, through
the Recovery Act, the community health center aspect of the
public health backbone in this country. And I think that is an
important step forward.
No question that we need not only further attention to
workforce issues, but also further attention to quality
standards in public health agencies throughout the country. And
I can assure you that our new leadership of Dr. Tom Frieden at
the Centers for Disease Control is a huge believer that the
people health infrastructure needs to be enhanced and needs to
be improved and needs to be focused on. And he is coming to
this job as a new CDC leader with that agenda at the forefront
of his priorities, and it is one that I share.
Ms. Matsui. Well, why are we facing such a crisis in the
public health workforce today? I know part of it is that we
need more graduates from public health programs. But I think
the other part of it is that we may not have the right
incentives for the graduates we do have to enter public
service.
Secretary Sebelius. Well, I think the whole incentive
system in health care is one that is on the table for review as
we look at the reform agenda, how we not only attract more
students to medicine in the first place, but how we attract
more of those students to the appropriate shortages.
Ms. Matsui. But do you think that the scholarship and loan
repayment provisions in the draft bill will help incent public
health graduates to the public workforce?
Secretary Sebelius. I don't think there is any question
that those strategies have been proven to be enormously
effective.
Students, unfortunately, today are emerging with mountains
of debt, and often public health officials aren't paid as
handsomely as some in the private sector. So helping to retire
that debt, helping to erase that debt, is an enormous step to
allowing students to actually make choices that they might find
more rewarding but currently find financially out of reach.
Ms. Matsui. OK. I thank you very much.
I yield back the balance of my time.
Mr. Pallone [presiding]. Thank you.
The gentleman from Georgia, Mr. Gingrey.
Mr. Gingrey. Madam Secretary, thank you for being with us
this morning. You were asked a little bit earlier about your
grade as Governor. I would say that your grade so far this
morning has been pretty good. So hopefully you won't mind a
couple of tough questions from me.
Quoting in your testimony, ``Without reform, according to
the Medicare actuaries, we will spend about $4.4 trillion on
health care in 2018. And, by 2040, health care costs will reach
34 percent of GDP.''
Madam Secretary, these numbers are, indeed, staggering, and
I share your concerns. However, I have another concern; I need
to be reassured that you share that.
The Medicare trustees report that the Medicare program will
become insolvent by 2016. Roughly 45 percent of Americans
currently receive their health care from a government payer,
and yet your testimony focuses almost exclusively on the
private sector, private-sector health insurance companies, and
ways in which they should be reformed.
Since his inauguration, President Obama has spoken of the
need for entitlement reform. Certainly, President Bush did the
same. So, given that 45 percent of all Americans get their
health care from a government program and the fact that your
Department oversees the largest government program tasked with
insurance that quality health care for our seniors is available
both today and in the future, shouldn't entitlement reform be
an integral part of this legislation?
Secretary Sebelius. Yes, sir, I think it definitely should.
And that is why I am confident that not only a number the
proposals to enhance quality for seniors are important--and we
have talked a bit about closing the donut hole, which is a huge
issue--but also the savings that are proposed by the President
will enhance the lifetime of the Medicare program that you have
just cited and also lower premium rates, Part B premium rates,
for the seniors who are paying them.
So it is a win-win-win situation. It helps to pay for a
longer life, frankly, of the program that is so important to
millions of American seniors----
Mr. Gingrey. Well, Madam Secretary, reclaiming my time
since it is so limited, I would have to tell you that I think
that is nibbling around the edges when the latest Medicare
trustee report says that, by 2083, we will have $37.8 trillion
worth of unfunded liability in the Medicare program.
You state that, since 2000, the year 2000, private health
insurances premiums have almost doubled, growing three times
faster than wages. Madam Secretary, do you know what percentage
Medicare Part B premiums have increased since 2000? You just
referenced that just a second ago.
Let me just tell you if you don't have it on the tip of
your tongue, they have more than doubled since 2000; 11.7
percent. That is how much Medicare Part B premiums have gone up
since 2000. So I would suggest to you that the parity between
Medicare Part B premium increases and insurance, private
insurance premium increases suggest that high health care costs
are rampant, and they are integrated. So it is not just
private, but it is public as well. So we need both private
insurance reform and Medicare reform. Simply to turn the system
over to the government I think will not solve this problem and,
without addressing Medicare reform, will leave many seniors
without quality health care coverage.
Let me just real quickly, if I might, Mr. Chairman.
Secretary, you quote in your testimony that, reform will
guarantee choice of doctors and health plans. No American
should be forced to give up the doctor they trust or the plan
they like. If you like your current health care, indeed you can
keep it.
Do I take it from your testimony that you mean all
Americans will be able to keep the health plan that they like,
including the 11 million seniors who get their Medicare from
Medicare Advantage?
Secretary Sebelius. Well, sir, I certainly hope so.
The proposal to stop overpaying for Medicare Advantage is
one that is included in the President's cost savings. After
years of examination, there are no enhanced benefits, and they
are being paid at about a 14 percent higher rate than other
programs. As you know, the Center for Medicare Services has
proposed that there be fewer plans this year because of the
proliferation of plans and the fact that consumers often didn't
choose them. We have got a bunch of plans that have fewer than
a hundred people choosing them, and that is not a very cost-
effective way to run a system. So there will be a
consolidation. But, ideally, the doctors and the networks will
remain available.
Mr. Pallone. The gentleman's time has expired.
Mr. Gingrey. Mr. Chairman, I thank you for your patience.
Madam Secretary, I thank you for your response.
Mr. Pallone. Thank you.
Next we have the gentleman from Ohio, Mr. Space.
Mr. Space. Thank you, Mr. Chairman.
Thank you, Madam Secretary, for joining us today. And as a
native Ohioan, I want to welcome you as well.
There are so many different areas worthy of discussion that
it is difficult for me to define one to ask you about. But
given the rural nature of my district and Ohio generally, and
given the special challenges that those in rural America face
when accessing health care and the barriers that we have got,
and given that one of those challenges happens to be attracting
and retaining sufficient workforce, specifically primary care
doctors, specialists, some adolescent specialists, in
particular, what in your assessment does the President's
initiatives and what does this bill do with respect to
attracting and retaining quality workforce in rural areas where
that has historically been a problem?
Secretary Sebelius. Well, Congressman, I share your
concerns about rural access. It certainly is something I worked
on as Governor of a State like Kansas, where two-thirds of our
population is in very rural areas.
I think there is no question that the incentives for
enhanced workforce is a step in the right direction. I think
that telemedicine, which is on the horizon and certainly an
important component of health IT, is a huge step forward. A lot
of providers in Kansas, and I am sure in Ohio, are concerned
about their isolation and want to make sure they are able to
access colleagues and access consultation. And I think the
steps that are included in this legislation that pay for
student loans and encourage additional incentives for primary
care and family care doctors also enhance the workforce in
rural as well as urban areas.
Mr. Space. And I just have a couple more minutes, and I
want to just make a comment as a followup. You mentioned
telemedicine, and I guess I want to take this opportunity to
explain to you as a member of the administration just how
important it is to access broadband and high-speed Internet in
those areas that can benefit from telemedicine; that bridging
that digital divide is so very important in so many areas,
including accessing quality health care.
One other area I wanted to bring up has to do with some of
the geographic disparities pertaining to chronic disease. And
coming from Appalachia, one of the things we see, for example,
is a higher rate than average or normal in diabetes incidents.
How do we make wellness and prevention programs address these
specific regional disparities when it comes to chronic diseases
like diabetes?
Secretary Sebelius. Well, there is a new grant that we just
made available which actually focuses specifically on areas
with the highest rates of diabetes and chronic disease in terms
of providing incentives and providing additional resources, to
not only coordinate care but do much more effective monitoring
of conditions. I think that there is no question that
preventive care at a much earlier stage helps. But also what
helps to prevent hospitalizations, amputations, a variety of
things, is to make sure that those suffering from diabetes
actually are staying on an appropriate regime, and that
monitoring is what the grant is designed to do. I think we are
trying to follow some best practices which have proven to be
very effective. And my guess is that your area is likely to be,
unfortunately, rising high on the list of an area that is
likely to be one of the--I think there are 133 communities that
will have additional resources to focus just on this effort.
Mr. Space. Thank you, Madam Secretary.
And I yield back my time.
Mr. Pallone. Thank you.
Mr. Walden.
Mr. Walden. Thank you, Mr. Chairman.
Madam Secretary, thanks for being here today and the work
that you are doing. I have some questions.
I, like many of my colleagues, am just starting to look
through the discussion draft that is out. And I know that you
have undoubtedly played a role in working with some members of
the committee on this. So if you can help me on some of these
things.
Is it true that, under the bill, an employer could be
subject to an 8 percent tax even if they offer a worker an
employer-sponsored health care policy?
Secretary Sebelius. Yes, I think that is accurate; that
there are some ways, if it isn't determined to be credible
coverage, that you could have the pay-or-play provision.
Mr. Walden. And I think, if I am reading it correctly,
isn't it also true that if the employee decided to go through
their own plan, the employer could still end up having to pay,
if they went through the exchange, I guess it is? Tell me how
that process works. Because an employee could refuse the plan
from the employer. Correct?
Secretary Sebelius. I must confess, Congressman.
Mr. Walden. The people behind you are shaking their head
yes.
Secretary Sebelius. I am not familiar with that specific
provision. I would be glad to get back. If you want to give me
the questions, I will immediately respond. I am just not----
Mr. Walden. Well, my understanding is that an employer
could offer an employee--employer sponsored health coverage,
and then the worker could turn it down and enroll in an
exchange plan. The employer would still be liable for the 8
percent tax even though providing the employer-sponsored care
could be cheaper, is what I understand. So if you could take a
look at that.
Secretary Sebelius. I will definitely take a look at that.
Mr. Walden. And is it true that, in order for the employer
to avoid paying the 8 percent tax, the employer has to offer a
plan that the new commissioner deems to be a qualified health
benefit plan?
Secretary Sebelius. That is correct.
Mr. Walden. Can an employer require an employee to accept
the employer-provided health care coverage?
Secretary Sebelius. Can you require an employee to accept
it? I don't know again how the provisions are drafted. I am not
aware of any mandatory--in a private insurance market, how you
mandate that anyone accept a plan. But I haven't read the
outline of the bill. Sorry.
Mr. Walden. Do you know if, in these provisions, are States
and Federal Government considered employees under this draft?
Secretary Sebelius. States and Federal Government?
Mr. Walden. Considered employers.
Mr. Pallone. Mr. Walden, can I just--I am not trying to
stop you, but I mean, the draft--the discussion draft is put
together by the Members, and I don't know that she can
necessarily be the person to comment on what is in it. But if
you want to continue.
Mr. Walden. Well, we are on my time here.
Mr. Pallone. I am going to give you some extra time. But I
just want you to understand that we didn't ask her here to
comment on the provisions of the draft, per se.
Mr. Walden. Oh, I thought earlier she was indicating that
the administration supports this draft or concepts of this
draft. Is that not true?
Secretary Sebelius. Sir, I said that we support the
principles that prompted the draft. I am sorry, I am not--the
draft came out on Friday, and I didn't write the draft, and I
am not intimately familiar. But I would be happy to answer
questions if you have questions for me. I would be----
Mr. Pallone. I mean, I don't want to stop you.
Mr. Walden. Reclaiming my time, if I could. So you haven't
read this draft either then?
Secretary Sebelius. I have read it. I can't--I don't have
it memorized.
Mr. Walden. No, I appreciate that. You are ahead of me. I
haven't read it fully. But I also know the way this committee
has been operating of late, it moves rather rapidly. So I doubt
we will have a chance to ask you these questions before we
suddenly have to vote on this. So that is why--I don't mean to
be disrespectful. I know that others on the committee have
asked you a pretty specific set of yes-or-no questions.
Secretary Sebelius. Again, I am just trying to be honest
with you. If I don't know the answer, I will be happy to get it
for you.
Mr. Walden. Let me go to another point then, and that was a
comment you made about Medicare and Part D. And this I don't
think is necessarily in the draft. Do you know what the
Medicare Part B premium was in 2000? I am not going to play a
gotcha game here, but it was about $45.50. In 2008, it was
$96.40. Medicare Part D for 2009 was $29, which was 30 percent
lower than the original projected when we passed Medicare Part
D in 2003.
I understand you issued a report yesterday showing that
employer-sponsored premiums for health care doubled between I
think it is 2000 and 2008 for health insurance. Medicare Part B
premiums have more than doubled, 110 percent increase, in the
same time span.
I think what a lot of people are asking me about, when I
was home in Rufus and Arlington and Fossil out in my district,
they are saying, if Medicare is going broke by 2017 and we are
just going to expand and add all of these people into a
government-run system, but we can't get access to providers now
in the government-run system, which as you know is a big issue
in rural areas, getting access to a doctor if you are on
Medicare. They are saying, how is this new government-run plan
going to hold down costs? And how is it going to expand? How
are we going to pay for this, is the underlying issue here. And
the estimates, they are just saying, you know, you talked about
health insurance could cost us, or health coverage, $4 trillion
or something. This plan alone I think some estimates are that.
So people at home are really struggling with the dollar amounts
here.
Secretary Sebelius. Well, Congressman, the plan, again, at
least the payments the administration has put forward, not only
saves dollars in Medicare but helps to expand the life
expectancy of the Medicare trust fund, an important feature,
and lower overall costs in the Part B premium for the
beneficiaries who are currently paying, as you say, a higher
cost.
I am a believer that Medicare has to get at the front of
the lower-cost, higher-quality care for the beneficiaries of
the system, and that we can be not only innovative but help to
drive the best practices which exist now in various parts of
the country to scale. So that is really one of the intents of
the new program moving forward.
Mr. Walden. All right.
I appreciate that, and I will close with this, that I spent
5 years on a small community hospital board, and it seemed that
Medicare gave us the most headaches, not the least
reimbursement but second to least reimbursement, and there was
enormous cost shift going on when the Federal Government was
involved. And now you have got this access issue, trying to get
physicians that will even take Medicare patients.
I don't want us to just create a government-run system that
mirrors one that isn't sustainable right now. And you know as
well as I do that some of the goofy rules in Medicare that
drives seniors to the hospital to get an injection when they
should be able to get it at home. Telemedicine is a great
thing. But if you are a provider and you are on the other end
of the telemedicine, you don't get reimbursed for that
consultation under Medicare. So there is a disincentive to
doctors to participate.
There are some things, irrespective of this debate, we
could do to really improve Medicare, I think.
Mr. Chairman, thanks for your generosity on the time.
Mr. Pallone. Sure.
Now, let me just remind members--we mentioned this earlier,
but I want you to know that the Secretary has to leave at
12:00. Now, of course, we are going to have written questions
from many members, including those who have already spoken and
those who have not, to follow up, and she will get back to us.
Mr. Deal. Mr. Chairman.
Mr. Pallone. Yes.
Mr. Deal. Could we ask the Secretary if she could have the
answers back by July 6? I think that would give about a week.
Mr. Pallone. Normally we submit the questions within 10
days. So that would--I am trying to figure this out here. If
you all agree to send her the questions within 10 days, then I
think she has to have at least--I don't know. July 6 is kind of
early, isn't it?
Mrs. Blackburn. Mr. Chairman. Just as a form of suggestion
to this, maybe with the remaining time, those of us that do
have specific questions, if we can just address our question to
her and then not get a response but get the response in
writing.
Mr. Pallone. This is what I am going to do. She has about 5
minutes left or 10 minutes left. I have Mr. Engel is next, and
then I have you, the gentlewoman from Tennessee. I think that
is all we are going to be able to do. I am not going to put a
timetable on when you get back to us with the written responses
at this time.
Mr. Scalise. Mr. Chairman. I would like to be on that list,
too, for questions.
Mr. Pallone. All right. Let me explain again. Anyone can
submit written questions. Normally the committee asks----
Mr. Terry. I think, on something this important, I am just
really offended that we don't have the opportunity to ask
questions to her.
Mr. Pallone. I don't know what to tell you. I just don't
want to waste the time that we have remaining.
Mr. Terry. Other directors and Secretaries came in when we
were the majority, and you raised holy hell if they didn't stay
here for every question.
Mr. Pallone. Well, there is not much I can do about that
now.
I am going to ask Mr. Engel--you are next. Go ahead.
Mr. Engel. Thank you.
Thank you very much, Mr. Chairman.
Madam Secretary, first of all, welcome. I heard your
opening statement, and I was delighted when President Obama
selected you, and I think you are doing and will continue to do
a great job. So welcome.
I want to call two things to your attention, which are two
health priorities of mine.
Firstly, I was pleased to see that my legislation, the
Early Treatment for HIV Act, which I introduced with Speaker
Pelosi, was included in the House Tri-Health draft. We call the
bill ETHA. And ETHA, in conjunction with the House's proposal
to cover all low-income people under the Medicaid program up to
133 percent of the Federal poverty level, is a significant step
towards reducing the number of uninsured people with HIV in our
country.
As you know, ETHA, this bill, addresses a cruel irony in
the current Medicaid system. Under current Medicaid rules,
people must become disabled by AIDS before they can receive
access to Medicaid. This is care that could have prevented them
from becoming so ill in the first place. In other words,
Medicaid won't help you unless you have full blown AIDS. And as
you know, if someone tests positive for HIV, it could be a
number of years before they have full blown AIDS, so it makes
much more sense to help those people once they test positive,
to try to stave off the full blown AIDS. And it is an irony
that you couldn't do it.
So what ETHA does, it gives States the option to provide
people living with HIV access to Medicaid before they become
disabled by AIDS. President Obama repeatedly in his quest for
President said that he supports it; when he was in the Senate,
he cosponsored the bill. And I just want to ask you if I can
continue to count on the administration to continue to support
ETHA? And will you work with the States to take up this option
if it is included in the final reform package?
Secretary Sebelius. Yes.
Mr. Engel. Thank you. That is the answer I was looking for.
And secondly, the second priority is home infusion. And we
know that some delivery system changes need to be part of our
health reform package. And this legislation, the second piece,
addresses an anomaly in the Medicare program that forces
patients into hospitals and nursing homes to receive their
multi-week infusion therapy when the same care could be
delivered safely in the patient's home where the patient
prefers to be without standing, results in lower costs and
virtually no risk of health care acquired infections.
So I believe that it makes no sense that Medicare pay pays
for all costs associated with infusion therapy when it is
provided in far more costly hospital and nursing home settings
but will not pay for the cost of home infusion.
For decades, private health insurance has covered home
infusion therapy. It is used extensively by Medicare Advantage
plans. Medicaid programs cover it, but Medicare fee-for-service
stands alone in the failure to cover the services, equipment,
and supplies needed for home infusion therapy.
So my bill, which is the Medicare Home Infusion Therapy
Coverage Act, I have introduced with 92 Members of Congress, I
have introduced it with my Republican colleague Tim Murphy, and
20 members of the Energy and Commerce Committee are sponsors.
So I am going to ask you the same question: Can I have your
commitment that your staff will work with me and Chairman
Waxman's staff on meaningful legislation to close the Medicare
home infusion benefit gap?
Secretary Sebelius. We will certainly look forward to
working with you and seeing what can be done about this area.
Mr. Engel. I thank you, and returning back my time 1 minute
and 17 seconds, I want it duly noted, Mr. Chairman, to give
someone else a chance.
Mr. Pallone. It is duly noted.
The gentlewoman from Tennessee, Mrs. Blackburn.
Mrs. Blackburn. Thank you so much, Mr. Chairman.
And Madam Secretary, thank you very much for taking your
time to be here. I understand you have to go to the White House
for a taping. And I would hope that----
Secretary Sebelius. With the Attorney General, but----
Mrs. Blackburn. I am sorry then, I was misinformed.
But I would certainly hope that you will be able to return
and answer the questions that those on the committee have about
the health care plan. Could you give us a commitment to answer
these before the markup?
Mr. Pallone. Let me--Mrs. Blackburn, I am not going to take
away from your time; I will give you an extra minute or so. I
know that members are interested in getting timely responses,
but we are not--we don't have the opportunity at this point to
say that the Secretary is going to come back. So what I am
going to ask is that members submit their questions as quickly
as possible, and I would ask the Secretary to respond to those
questions as quickly as possible.
Mr. Terry. Will the gentleman yield?
Mr. Pallone. No. I want to get through this.
Mr. Terry. So are you telling the witness not to answer the
questions? Parliamentary inquiry, are you telling the witness
not to answer that question?
Mr. Pallone. No. I thought I said the opposite.
Mr. Terry. No, you didn't. You told her not to answer is
the way I interpret it.
Mr. Pallone. Let me start over again. Mrs. Blackburn has
the time. We are going to start again.
Mrs. Blackburn. I would like to reclaim my time, Mr.
Chairman, as soon as you finish your speech.
Mr. Pallone. What I am saying is we are not asking the
Secretary to come back at this time. We are asking----
Mr. Shadegg. Mr. Chairman, point of order.
Mr. Pallone. Yes.
Mr. Shadegg. The Secretary is here to speak on the single
most important piece of legislation, most far-reaching piece of
legislation in my 15 years in the United States Congress. There
are at least four members here, at least four, maybe five or
more, who have not had an opportunity to question her.
Mr. Terry. And have been here since the beginning.
Mr. Shadegg. And would like to be able to do so. We fully
understand her schedule. She has important things to do. That
is perfectly all right.
But I think it would be reasonable for this committee,
given the scope of the legislation that it is moving, to ask
the Secretary to come back sometime before this bill moves
through full committee.
Mr. Pallone. What I am saying to you, and I will repeat
again, is the following: The Secretary is here to give the
administration's response to the discussion draft. I am not
asking her to commit at this time to come back because, first
of all, I don't know her schedule and I don't know whether that
is possible.
Mrs. Blackburn can ask, but I don't want her to feel that
she has to commit to this at this time because I don't know her
schedule.
Mr. Walden. Point of order, Mr. Chairman.
Mr. Pallone. I will now ask Mrs. Blackburn to continue.
Mr. Shadegg. I think we are on my point of order.
Mr. Pallone. And when sheis done, we are going to have to
ask the Secretary to leave because she has to leave.
So I will go back to Mrs. Blackburn. We will start the
clock again. It is the gentlewoman's time.
Mrs. Blackburn. And thank you, Mr. Chairman.
And Madam Secretary, I hope that we will be able to resolve
this.
You know, when my constituents talk to me about this issue,
they are fearful of what may be included in this plan. And
coming from Tennessee, and you having been a Governor, I think
you can understand that.
And when they hear remarks about it being deficit-neutral,
not increasing the debt; you have made statements that it would
be paid for; you have talked about reducing the itemized
deductions, my constituents are very, very concerned about how
this would be paid for.
The other members of this committee have constituents who
are equally concerned about this. Of course, our concern in
Tennessee finds its nexus in the problems that existed with
TennCare. I know Governors have many times gone to school on
what happened with TennCare and used that as an example of what
they did not want to do.
I would like to have a response from you. You can submit it
to me in writing. You can begin the response here, because I do
have more questions, on what you would see as the lessons
learned and what you would not want to do that was from the
TennCare template. What were the lessons that you learned in
looking to that? Do you realize that you can't provide gold-
plated, all health care for free for everybody? Do you realize
that a public option which is government-run, government-
financed, does not work in competition with the private option?
That is one question I have to present to you.
The second one is Medicare Advantage. And I know you have a
heart for dealing with health care for seniors, and I
appreciate that. My constituents--I have 56,000 seniors in
Tennessee that are on Medicare Advantage. They very much want
to keep those options, and I would like to hear from you what
you envision a Medicare Advantage program looking like once the
Obama plan goes into place, how you see that being delivered,
what you think the options are going to be.
It is of concern that those options are going to be
restricted. And, again, when individuals--when members of this
committee sit here, when we hear from our constituents the
panic that they feel, especially from seniors who say, look, I
have got--I am seeing this being taken away.
Mr. Pallone. If the gentlewoman would hold for a second.
Mrs. Blackburn. My mike is not being touched.
Mr. Pallone. Now it is OK.
Mrs. Blackburn. But seniors are very fearful that they have
paid into a system; this was a part of their retirement
security, a part of their savings, if you will, because it was
money that the government took first right of refusal on their
paycheck, took that money out. Now you have got somebody in
their 70s; they have got their doctors set. They have got their
Medicare Advantage set. They have their system in place, and
they are seeing this savings devalued and finding out now it is
all going to be a one-size-fits-all program. And this causes
tremendous concern from them. So, your response as to what
Medicare Advantage would look like would be appreciated.
Secretary Sebelius. Congresswoman, I would be happy to
answer both of those questions. I can't do it now in person; as
you said earlier, you wanted to address the question and have
me respond, and I will do that promptly.
Mrs. Blackburn. Thank you. I appreciate that.
And at this time I will yield the balance of my time, if I
can, Mr. Chairman.
Mr. Pallone. I couldn't hear you. Who is she yielding to?
Mr. Pitts.
Mr. Pitts. Thank you, Madam Secretary.
Section 222 of the bill states that there is an amount that
is going to be appropriated to the Secretary for the purposes
of starting up the government plan. And that number is, quote,
to be supplied in the text of the bill.
Do you have any idea how much it will cost you to start up
this government-run plan?
Secretary Sebelius. No, sir, I do not.
Mr. Pitts. You mentioned the President's repeated promise
that the health reform bill will be deficit neutral. Are there
any other deal breakers for the administration? Does the
legislation have to include a government plan? Does it have to
include an individual mandate? Does it have to include an
employer mandate? Can it increase taxes on families making
under $250,000 per year, for example?
Secretary Sebelius. Sir, I think that the President's
principles are that the plan needs to lower costs for everyone,
needs to improve quality of care, needs to provide coverage for
all Americans. And around those principles, that he--and be
paid for within the period of time. Those are the fundamental
principles that he has articulated. And he has, during the
course of the discussion, had various proposals on some of
those areas.
I need to mention that I misspoke earlier to the
Congressman; proposal that he had for the itemized deduction
return is for families making 250 or more--$250,000 or more. I
was corrected, and I will be happy to provide that additional
information.
Mr. Pallone. The gentleman's time--or the gentlewoman's
time has expired.
Now, again, I am just going to repeat. I know you have to
leave. Members will get back to you as quickly as possible with
written questions, and we would ask, Madam Secretary, that you
try to respond to those as quickly as possible.
Secretary Sebelius. Very quickly.
Mr. Pallone. And thank you so much for being here today. We
appreciate your time. Thank you.
Now, let me explain. We are going to adjourn the full
committee, and then the subcommittee reconvenes, the Health
Subcommittee reconvenes at 1:00, and we have three panels for
the rest of the day.
Mr. Walden. Point of order.
Mr. Deal. Point of order.
Mr. Pallone. Mr. Deal.
Mr. Deal. Mr. Chairman, with all due respect to the
Secretary, this was billed as a legislative hearing on a draft.
Mr. Pallone. Yes.
Mr. Deal. We have heard the Secretary say that she did not
participate in that draft preparation, nor has she apparently,
as she said, had the opportunity to read it, which is one of
the limitations that we all labor under in this time frame.
I would simply urge you to urge our full chairman of the
full committee that it would be almost mandated, I think, that
she return to answer questions when we move to a legislative
proposal. We are talking about a draft. But here, when it moves
to a legislative proposal, that we be allowed the opportunity
to ask and to have answered questions.
You made the statement that she was speaking on behalf of
the Obama administration as it relates to the draft. I know
that she has done so in general terms, but I think there are
some specifics that we should have the opportunity to ask
specifics about. I would urge you to urge our chairman to ask
her to return to this committee. I think it is due diligence
for all of us to have the opportunity to explore these
questions in person with her.
Mr. Pallone. Well, let me just say I can't make that
commitment, Mr. Deal, and for various reasons. I think a part
of it is the fact that we have a draft, and obviously, there
are going to be changes to that based on your input, the input
from both sides of the aisle.
And we really asked her here today to comment on what the
administration thought about the draft. There has never--the
bill is never going to be exactly what the President wants or
doesn't want. But I just can't make that commitment. So I
appreciate your asking, but I can't.
Mr. Shadegg. Mr. Chairman, you are saying you can't commit
to ask?
Mr. Pallone. I can't commit the administration----
Mr. Shadegg. No. His request is that you ask the full
chairman.
Mr. Pallone. Look, she has been here. She has testified.
You can ask her questions. I am going to leave it at that. And
we are going to adjourn and start the subcommittee hearing at
1:00.
Mr. Shadegg. There are 12 Republicans who have not even had
a chance to speak and ask her questions.
Mr. Pallone. Members were told that she was going to leave
at 12:00.
Mr. Shadegg. We understand that. We are simply asking that
she come back on a piece of major legislation.
Mr. Pallone. I can't make that commitment at this time.
Mr. Shadegg. So you are refusing to allow us to ask
questions?
Mr. Pallone. I can't make that commitment, and we are going
to adjourn at this time.
Mr. Shadegg. Can you at least commit to ask the chairman?
Mr. Terry. Parliamentary inquiry. I request a recorded
vote.
Mr. Pallone. Look, I am going to certainly express your
views, but I can't commit the Secretary to anything at this
time. I am going to express the views.
Mr. Terry. I request a recorded vote on a motion to
adjourn. We can ask for a recorded vote.
Mr. Pallone. You can make that request. All those in favor
on the motion to adjourn. Let me just ask.
Mr. Walden. We already have a motion before us, which is a
motion to adjourn. The chairman has entered that motion.
Mr. Pallone. I think what we will do at this time, we had a
vote, and it was defeated, to adjourn. So at this time, we are
just going to recess.
Mr. Terry. We asked for a recorded vote.
[Recess at 12:13 p.m.]
Mr. Waxman. Before we go to the hearing in the Health
Subcommittee, I would like to reconvene the full committee,
which had an opportunity to hear from Secretary of HHS
Sebelius. And not all Members were able to ask her questions or
explore all the concerns that they had. So I would like to
suggest that we will ask her to respond in writing to any
questions that any Member wishes to submit. We will request
that she respond in a timely manner so that Members can receive
her responses before we go to markup in our committee. We will
urge her to do that. We can't force her to do that, but we will
urge it.
And I understand some Members may wish to meet with her,
and of course I don't know her schedule, but I think it is
always helpful to have people available to meet with Members.
So without objection, what we will do is hold the record
open for responses from the Secretary to written questions from
the members of our committee. And we would urge the Secretary
to respond for the record before we get to the markup in this
committee. Without objection, that will be the order.
So that the subcommittee can now meet and further have a
hearing on the issue, I would like to ask that the full
committee now be adjourned. And without objection, that will be
the order.
[Whereupon, at 1:10 p.m., the committee was adjourned.]
[Material submitted for inclusion in the record follows:]
COMPREHENSIVE HEALTH CARE REFORM DISCUSSION DRAFT--DAY 2, PART 2
----------
TUESDAY, JUNE 24, 2009
House of Representatives,
Subcommittee on Health,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 1:15 p.m., in
Room 2123, Rayburn House Office Building, Hon. Frank Pallone,
Jr., [chairman of the subcommittee] presiding.
Present: Representatives Pallone, Dingell, Gordon, Eshoo,
Engel, Schakowsky, Weiner, Matheson, Gonzalez, Castor,
Sarbanes, Green, Space, Sutton, Waxman [ex officio], Whitfield,
Shadegg, Buyer, Pitts, Myrick, Blackburn, and Gingrey.
Also present: Representative Hill.
Staff Present: Karen Nelson, Deputy Committee Staff
Director for Health; Andy Schneider, Chief Health Counsel;
Purvee Kampf, Counsel; Jack Ebeler, Senior Advisor on Health
Policy; Robert Clark, Policy Advisor; Tim Gronniger,
Professional Staff Member; Stephen Cha, Professional Staff
Member; Allison Corr, Special Assistant; Alvin Banks, Special
Assistant; Jon Donenberg, Fellow; Camille Sealy, Fellow; Karen
Lightfoot, Minority Communications Director/Senior Policy
Advisor; Caren Auchman, Minority Communications Associate;
Lindsay Vidal, Minority Special Assistant; Early Green,
Minority Chief Clerk; Jen Berenholz, Minority Deputy Clerk; and
Miriam Edelman, Minority Special Assistant.
Mr. Waxman. And I want to call on Mr. Pallone to convene
the subcommittee so that we can get a further record from
witnesses on the health care issue.
Mr. Pallone. The hearing of the Health Subcommittee is
reconvened. And we are now going to our next panel which is the
Panel on Single-Payer Health Care. And I would like to start by
introducing each of the witnesses.
Beginning on my left is Dr. Sidney M. Wolfe, who is
Director of Health Research Group at Public Citizen. And then
we have Dr. Steffie Woolhandler, who is Associate Professor of
Medicine at Harvard Medical School and Co-Founder of Physicians
for a National Health Program. And, finally, Dr. John C.
Goodman, who is President and CEO of the National Center for
Policy Analysis.
STATEMENTS OF SIDNEY M. WOLFE, M.D., DIRECTOR, HEALTH RESEARCH
GROUP AT PUBLIC CITIZEN; STEFFIE WOOLHANDLER, M.D., ASSOCIATE
PROFESSOR OF MEDICINE, HARVARD MEDICAL SCHOOL, CO-FOUNDER,
PHYSICIANS FOR A NATIONAL HEALTH PROGRAM; AND JOHN C. GOODMAN,
PH.D., PRESIDENT AND CEO, NATIONAL CENTER FOR POLICY ANALYSIS
Mr. Pallone. And I think you know how we proceed, but I
will mention that we ask you to give us a 5-minute,
approximately 5-minute opening statements. So your full
testimony is submitted for the record, and when you are done we
will have questions from the subcommittee.
And I will mention again that, because of the importance of
this issue, we are having full committee members participate.
They will be after the subcommittee members, but they will
participate with their questions as well. And we will start
with Dr. Wolfe.
Mr. Buyer. Mr. Chairman, may I ask unanimous consent to
speak out of order for 1 minute?
Mr. Pallone. Sure.
Mr. Buyer. I want to thank you. What I want to do is I want
to extend my apology to the Secretary. In the last hearing
during my questions to the Secretary, I had stated that the
State of Kansas Medicaid program had received a D rating when
she was the Governor of the State. According to the health
reform dot org Web site run by the Department of Health and
Human Services, she was given--a D rating had been given to the
U.S. health care system. And I meant to ask the Secretary
whether the Kansas Medicaid program merited a D rating.
I misspoke and created the impression that while she was
Governor that she specifically--her program had been rated a D.
That is wrong. And with that I extend my deepest and sincerest
apologies to her for creating such an impression. And for that
I apologize personally to the Secretary.
Mr. Pallone. Well, thank you. I thank the gentleman.
Dr. Wolfe.
STATEMENT OF SIDNEY M. WOLFE, M.D.
Dr. Wolfe. Thank you. What if you picked up the morning
paper tomorrow and saw the following headline: 50 People Died
Yesterday Because They Lacked Health Insurance? The next day
the same headline, and the next as well.
This is the average number of people in the United States
who, according to a 2004 report from the National Academy of
Sciences, die each day; more than 18,000 a year, because they
lack health insurance.
How should we respond to this unacceptable and embarrassing
finding? Not by saying, as President Obama has said, that if we
were starting now from scratch we would have a single payer,
but it is too disruptive. Or as the health insurance industry
said last week, having the public option that is just an option
would be too ``devastating''. What could be more disruptive and
devastating than being one of 45 million people who are
uninsured, from whose ranks come 18,000 people who die each
year because of that dangerous status?
The real question is why should we tolerate the fragmented,
highly profitable, administratively wasteful private health
insurance industry any longer?
In this regard, the public is way ahead of either President
Obama or most people in the Congress in its distrust of the
health insurance industry.
In a recent national Harris poll last fall, the following
question was asked: Which of these industries do you think are
generally honest and trustworthy so that you normally believe a
statement by a company in that industry? Only 1 in 14 people,
or 17 percent, thought that the health insurance industry was
honest and trustworthy. The only industries that were worse
than the health insurance industry were HMOs, 7 percent; oil, 4
percent; and tobacco, 3 percent.
The Congress, on the other hand, trusts the health
insurance industry and feels compelled to come up with a
solution that avoids a big fight with them, not only writing
them into the legislation, but assuring further growth of that
industry. The Congress wants to believe that the health
insurance and pharmaceutical industries will be good citizens
and voluntarily lower their prices to save some of the money
that is necessary to fund health insurance.
Several weeks ago, the collective forces of the health
industry promised that they could voluntarily save $2 trillion
over the next 10 years. But the amount that can be saved over
the next 10 years by just eliminating the health insurance
industry and the $400 billion of excessive administrative costs
it causes every year is $4 trillion, in one fell swoop. This
would be enough to finance health care for all, without the
additional revenues the Congress and the administration are
desperately seeking.
As an example of administrative waste, over the last 30
years or so, there may have been two to three times more
doctors and nurses, pretty much in proportion to the growth of
the population. But over the same interval of time, there are
30--30--times more health administrators. These people are not
doctors. They are not nurses. They are not pharmacists. They
are not providing care. Many of them are being paid to deny
care. So they are fighting with the doctors, with the
hospitals, to see how few bills can be paid. That is how the
health insurance industry thrives, by denying care, paying out
as little as it can.
There is no question that we have a fragmented health
insurance industry and it thrives on being fragmented, avoiding
any kind of serious centralized examination or control which
could affect--improve quality, costs and everything.
The drug companies make much more money with this insurance
fragmentation because there is no price control. The insurance
companies make much more money because they can push away
people who aren't going to be profitable, let public programs
take care of those patients who are ``unprofitable''.
What the President and the Congress are really
realistically advocating, since there is absolutely no
possibility of having enough money to cover all people in this
country as long as the private for-profit health insurance
industry is allowed to exist, is more incremental reform, not
national health insurance.
It is now 44 years since Medicare and Medicaid. In the
interim there have been many experiments in this country and
abroad to try and provide universal health coverage. Other
countries have uniformly rejected the private for-profit
insurance industry and have adopted national health insurance.
There are little experiments going on in Germany and
Australia, but mainly it is national health insurance. Is
everyone else wrong and only the United States is right?
A recent study by OECD, which is the Europe-based
Organization for Economic Cooperation and Development, provided
health insurance data from its 30 member countries, including
Europe, the United States and others. The latest data showed
that 27 of the 30 countries had health insurance coverage for
more than 96 percent of the population, with only Germany
having any non-public coverage, 10.3.
The other three that didn't have 96 percent coverage were
Mexico, with 60.4 percent; Turkey, with 67.2 percent; and the
United States, with 84.9 percent, of which 27.4 percent was
public coverage.
In Canada back in 1970, they were spending the same
percentage of their gross national product as we were on
health. They also had millions of uninsured people and many of
the same insurance companies, such as BlueCross BlueShield.
They decided to just get rid of the health insurance industry.
They had experimented with it in Saskatchewan ten years earlier
and it had worked so well they couldn't wait to do it
nationally. So where there is a will there is a way.
There is no way we are ever going to get to having good
health insurance for everyone as long as there is a health
insurance industry in the way of obstructing care.
One more recent experiment abroad includes Taiwan, where in
1995 they said we don't like the fact that 40 percent of our
population are uninsured. They passed essentially a single-
payer plan, and within a few years, 90 to 95 percent of people
were covered.
In the U.S. we have had experiments as well, with seven
States having instituted various versions of the public-private
combination that this legislation seeks to provide. In none of
these States has this worked. Once several years had elapsed
with little improvement in insurance coverage, it was back
pretty much to where it started, despite initial enthusiasm and
short-lived decreases in uninsured.
So as we consider what to do, which experiments do we
follow? The ones that were successful, all of which for
practical purposes eliminated the private insurance industry,
or the failed U.S. State examples, all of which were built on
this industry?
If instead of saying that a single-payer program is not
politically possible, the President and the Congress need to
say it is not only politically possible, politically feasible,
but it is the only practical way national health insurance will
ever happen. And anything short of that is essentially throwing
tens of billions of dollars at the insurance industry. And if
you are afraid of the insurance industry, then you are afraid
of doing the right thing, which is having everybody in and
nobody out.
[The prepared statement of Dr. Wolfe follows:]
Mr. Pallone. Dr. Woolhandler.
STATEMENT OF STEFFIE WOOLHANDLER, M.D.
Dr. Woolhandler. Members of the committee and Mr. Chairman,
I am Steffie Woolhandler, a primary care doctor in Cambridge,
Massachusetts, and associate professor of medicine at Harvard.
I also co-founded Physicians for a National Health Program, and
our 16,000 physician members support nonprofit single-payer
national health insurance because of overwhelming evidence that
lesser reforms, even with robust public plan option, lesser
reforms will fail.
Private insurance is a defective product. Unfortunately,
the tri-committee plan would keep private insurers in the
driver's seat and, indeed, require Americans to buy their
shoddy products. Once failure to buy health insurance is a
Federal offense, what comes next? A Ford Pinto in every garage,
lead-painted toys for every child, melamine chow for every
puppy?
Even middle-class families with supposedly good coverage
are just one serious illness away from financial ruin. My
colleagues and I recently found that medical bills and illness
contribute to 62 percent of all personal bankruptcies, a 50
percent increase since 2001. Strikingly, three-quarters of the
medically bankrupt had health insurance when they first got
sick. In case after case, the insurance families bought in good
faith failed them when they needed it most. Some were
bankrupted by copayments and deductibles and loopholes that
allowed their insurer to deny coverage. Others got too sick to
work, leaving them unemployed and uninsured. And insurance
regulations like those in the tri-committee bill cannot--
cannot--fix these problems.
We in Massachusetts have seen in action a plan virtually
identical to the one you are considering. In my State, beating
your wife, communicating a terrorist threat, or being uninsured
all carry $1,000 fines. Yet despite these steep penalties, most
of the new coverage in our State has come from expanding the
Medicaid-like programs at great public expense.
According to the State's disclosure to its bondholders, our
health reform has cost $5,000 annually for each newly insured
adult. That is equivalent to over $200 billion annually to
cover all Americans with this style of program, or about $2
trillion if you want to do it over 10 years.
But even such vast expenditures haven't made care
affordable for middle-class families in Massachusetts. If I
were to lose my Harvard coverage, I would be forced to lay out
$4,800 for a policy with a $2,000 deductible before the policy
paid a penny, and a 20 percent copayment after that.
The skimpy, overpriced, private coverage like this left one
in six Massachusetts residents unable to pay their medical
bills last year. One in six unable to pay their medical bills.
Meanwhile, rising costs have forced our legislature to rob
Peter to pay Paul. Funding cuts have decimated safety-net
hospitals and clinics. Today the State announced that health
reform funding would be cut by $115 million as of July 1. Only
115 million. And our State Treasurer Cahill opines that
Massachusetts could no longer afford reform. That is in today's
Boston Globe.
As research I published in the New England Journal of
Medicine showed, a single-payer reform could save about $400
billion annually by shrinking health care bureaucracy enough to
cover the uninsured, and to provide first-dollar coverage for
all Americans. A single-payer system would also include
effective cost containment mechanisms, like bulk purchasing and
global budgeting. As a result everyone would be covered, with
no net increase in U.S. health spending.
But these savings aren't available, are not available
unless we go all the way to single payer. Adding a public
insurance plan option cannot fix the flaws in Massachusetts to
our reform. A public plan might cut private insurer profits,
which is why private insurance companies hate it, but their
profits account for only about 3 percent of the money
squandered in bureaucracy. Far more goes for marketing, to
attract healthy profitable members, and demarketing, to avoid
the sick. And tens of billions are spent on the armies of
insurance administrators who fight over payment, and their
counterparts at hospitals and doctors' offices. All of these
would be retained in the public plan option. And overhead for
even the most efficient competitive public plan would be far
higher than Medicare's, which automatically enrolls seniors
when they turn 65, disenrolls them only at death, deducts
premiums automatically from Social Security checks, et cetera.
Unfortunately, competition in health insurance involves a
race to the bottom, not the top. Competition in health care is
a race to the bottom and a competing public plan would be
pushed to the bottom. Insurers compete by not paying for care,
by denying payment and shifting costs onto patients or other
payers. These bad behaviors confer a decisive competitive
advantage. A public plan option would either emulate them,
becoming a clone of private insurance, or simply go under.
A kinder, gentler, public plan option would quickly fail in
the marketplace, saddled with the sickest, most expensive
patients, whose high costs would drive premiums to
uncompetitive levels.
In contrast, the single-payer reform would radically
simplify the payment system and redirect the vast savings to
care. Hospitals could be paid like a fire department, receiving
a single monthly check for their entire budget, eliminating
most billing. Physicians; billing would be similarly
simplified.
Eight decades of experience teaches that private insurers
cannot control cost or provide American families with the
coverage they need. A government-run clone of private insurer,
a government-run clone of private insurers called a public plan
option cannot fix these flaws. Only single-payer insurance can.
Thank you.
Mr. Pallone. Thank you.
[The prepared statement of Dr. Woolhandler follows:]
Mr. Pallone. Dr. Goodman.
STATEMENT OF JOHN C. GOODMAN
Mr. Goodman. Thank you, Mr. Chairman, members of the
committee. Every single health care system in the world today
faces three fundamental problems: cost, quality, and access. In
our own country, health care spending is rising at twice the
rate of growth of income, and has been doing so for 40 years.
If that continues, clearly health care will crowd out
everything else that we care about.
But we are not worse in this respect than other developed
countries. Over the last 40 years the real rate of growth of
health care spending per capita in the United States has been
just slightly below the OECD average. We have quality problems
in this country. But despite those problems, we appear to,
overall, deliver a higher level of quality than just about any
other country. We are number one in the world, for example, in
survival of cancer patients.
We have access problems in this country, but I think we do
better than just about any other country with a heterogeneous
population. The U.S. population gets more preventive care by
far than Canadians, for example. Americans get more mammograms,
more Pap smears, more PSA tests, more colonoscopies, by quite a
considerable margin than the Canadians do.
Low-income white Americans appear to be in better health
than low-income white Canadians. The minority population of the
United States seems to do better in our health care than the
Inuits or the Crees in Canada, or the Aborigines in Australia,
or the Maori of New Zealand.
Now, what about the proposals being considered by Congress
right now? What will they do for the problems of cost, quality
and access? When Peter Orszag was head of the Congressional
Budget Office last year, he examined all of the major proposals
that can Candidate Barack Obama was making to lower health care
costs, preventive medicine, coordinated care, electronic
medical records, evidence-based medicine and so forth. And what
the CBO concluded was that none of these proposals would make
any significant difference in rising health care costs.
On the other hand, if we spend an additional $150 billion a
year on health care, that almost certainly will contribute to
health care inflation, making the problem of cost worse, not
better.
What about the problem of quality? Well, there is nothing
that I have seen in any of the proposals being seriously
discussed that would appear to make any significant difference
in the quality of care that Americans receive.
But on the other hand, if we create an artificial market in
which insurance companies are forced to community rate their
products to millions of people and do so annually, they will
very quickly discover that they want to seek to attract the
healthy and avoid the sick. And once enrollment occurs, they
will seek to overprovide to the healthy and underprovide to the
sick. That is good if you are healthy. It is not going to be
good if you are sick.
So we are setting in place an artificial market in which
the incentives to underprovide are going to be very strong. And
the more competitive that market is, the more insurers will be
inclined to act on those financial incentives.
What about access? Well, again, we do have access problems
in this country. No doubt about it. But we are not going to
solve those problems by putting millions of people into
Medicaid and encouraging private--people with private plans to
drop their private coverage and enroll in Medicaid, as a number
of the proposals now would do. Basically that is what
Massachusetts did. Massachusetts cut its uninsured rate in
half, and it did so by putting thousands of people into
Medicaid and thousands more into private plans that are paying
Medicaid rates. And those people are finding they have
difficulty in obtaining access to care.
A study just last month concluded that the wait to see a
new doctor in Boston is more than twice as long as it is in any
other U.S. city. And for Massachusetts as a whole, the number
of people who go to hospital emergency rooms today for non-
emergency care is as great as it was 3 years ago, before the
Massachusetts health care plan was started. Medicaid is not a
solution for the problems of the uninsured.
The cancer studies show that in terms of delays in
treatment and delays in detection, being on Medicaid is only
marginally better than being uninsured. And when people drop
private coverage to join Medicaid, they are leaving a plan
which allows them to see almost any physician, go to almost any
facility, get care fairly promptly, and go into a system where
there are long delays and where there are much fewer choices.
So the real danger, Mr. Chairman, is that we are about to
pass legislation that will not only not lower the cost of care,
but will make it higher; that will not improve quality, and may
actually cause quality of care to go down; and may even make
health care less accessible for millions of people. Thank you.
Mr. Pallone. Thank you, Dr. Goodman.
[The prepared statement of Mr. Goodman follows:]
Mr. Pallone. Thank all of you.
Now we will take questions. We will give you questions from
individual panel members. We have 5 minutes each, and I will
start with myself.
And this is about the public option. As you know--and this
is to Dr. Wolfe or Dr. Woolhandler, or both of you--as you
know, the discussion draft would create a public option to
compete with private plans to offer coverage within the new
health insurance exchange. Uninsured Americans would choose to
enroll in any of the plans in the exchange, either public or
private, and there has been concern expressed in some quarters
that this public option would inevitably evolve into a single-
payer system.
For example, last Friday, when the discussion draft was
released, Scott Sirota, the head of BlueCross and BlueShield
Association warned--and I will quote--that the proposed
creation of a government-run health plan would jeopardize the
coverage of 160 million people who receive their benefits
through their employer today.
An independent analysis by the Lewin Group estimates that
tens of millions of people would shift to a government plan,
dismantling the private market that is free to innovate without
the political pressures that often stifle efforts to innovate
in government programs like Medicare.
Now, we are going to have BlueCross BlueShield and the
Levin Group here tomorrow. But what I wanted to ask you today
is whether you think Sirota is right. Will the public option
strangle the private health insurance industry and become a
single-payer system?
I will start with Dr. Wolfe and Dr. Woolhandler.
Dr. Wolfe. We have heard the same things that you have
heard, Congressman Pallone, that somehow or other the public
option is really a Trojan horse or a stalking horse for the
single payer. What that would mean would be that if a public
option were to pass, alongside with the private, that it would
allow the public option to be as good as it can be. And
essentially, if that were the case--which I don't think is
going to happen--it might in fact lead to single payer.
I think there is zero possibility that anything that anyone
is remotely considering as the public option would lead to a
single-payer program. I think that it is more likely that it
would give bad word or bad reputation to a public option
because it would be so emasculated. I mean, at this point, I
would say that the chances are 50/50 that either the public
option would be completely scuttled--which I think is possible,
President Obama said yesterday he wouldn't be opposed to
signing a bill even it if didn't have that--or it would be so
emasculated that it won't be competitive as it should be with
the private plan. So I just don't think that that is realistic
at all. I think that this is sort of scare tactics from the
right, which includes the entire health insurance industry.
Mr. Pallone. And Dr. Woolhandler, because I want to get to
another question.
Dr. Woolhandler. A public plan option is not single payer,
nor would it lead to a single payer. As you have envisaged it
in the tri-committee report, it is going to be an identical
clone of private health insurance with a public label on it.
And that still might be OK if competition and health care were
about giving people care. But competition health insurance is
about not giving people care, about competing to enroll a lot
of people and not cover them. And if you don't behave like
that, if you don't misbehave like that, you go out of business
in a competitive market.
So a private insurance clone with public label is not going
to solve this problem. It is really irrelevant to the problem
of access to care. And I appreciate the private insurance
industry doesn't want it. They don't want any new competitors.
But they are wrong when they say that what is here in this bill
is going to lead to single payer. That is not true.
Mr. Pallone. Well, I am probably going to say something
that you won't want to hear. But I am beginning to feel more
and more that, since I am getting so much opposition from the
insurance industry that the public option is going to hurt
them, and so much opposition from single payers that the public
option won't work, that I actually now believe that we have a
great discussion draft because neither group likes it. But that
is not a question. That is just my comment.
I wanted to ask Dr. Woolhandler, on the bankruptcy issue, I
know you did this important study on bankruptcies and health
insurance, and as you testified this afternoon, your study
found that medical bills and illnesses contribute to over 60
percent of all personal bankruptcies. Three-quarters of people
with these medical bankruptcies have insurance at the start of
their illness. It was a real eye-opener for me.
In the discussion draft, we have consumer protections that
would prevent the abuses of the past, practices like medical
underwriting and preexisting conditions exclusion and
rescissions which deny or take away coverage just when it is
needed most. So I am happy with these consumer protections in
our discussion draft.
And I wanted to know, you know, whether you thought the
House discussion draft addresses some of these critical
consumer protections adequately, based on your research.
Dr. Woolhandler. There is nothing in the draft that would
have protected families from bankruptcy. The average family in
medical bankruptcy had unpaid medical bills of about $17,000.
And in your draft you would allow people to have out-of-pocket
expenses of about $10,000 per family per year. So in less than
2 years, if you had a serious illness, you could accumulate
$17,000 in out-of-pocket expenses that bankrupted families in
our study.
So the protections you have, maybe they are better than no
protections, but based on the actual circumstances that drove
people to bankruptcy in our study, no, the bill would not
protect people from bankruptcy.
Mr. Pallone. OK. I know we are not going to agree on
everything, but I do think that it is important that these
insurance abuses be eliminated, and we are certainly making an
effort in that regard. Thank you very much.
The gentleman from Indiana, Mr. Buyer.
Mr. Buyer. Thank you very much.
Dr. Goodman, the legislation mandates a massive expansion
of the Medicaid program that some believe could lead to well
over 20 million Americans becoming enrolled, then, into the
Medicaid program. First of all, I would like to know your
thoughts about this as a proposal. And do you believe that
there will be a similar crowd-out effect as is currently being
seen in the SCHIP program?
Dr. Goodman. Well, I do. And I think that is what is
intended; that when you make something available for free, even
if the quality is not as good, people will tend to drop the
high-priced alternative. That is what happened in SCHIP. That
is what happened in TennCare in Tennessee. That is what
happened in Hawaii. So we have quite a number of examples of
people dropping private coverage to take advantage of public
plans.
What happens in Medicaid is that it is really an inferior
insurance plan. It pays, in many places, 40 percent below what
the private market is paying. And so the Medicaid patient is
the last patient the doctor wants to see at the end of the day.
So you have increasingly long waits to see doctors, difficulty
finding new doctors that will even see Medicaid patients, and
pretty poor results when it comes to serious health care like
cancer care.
Mr. Buyer. And in those cases that you just discussed,
where the crowd-out effect had occurred within the SCHIP
program, what was the impact upon insurance premiums because of
the crowd-out? Did they increase or decrease?
Dr. Goodman. I don't know what the effect has been on
insurance premiums. On the crowd-out, the Congressional Budget
Office estimated that the bill that Congress passed in January,
that would put 4 million new children into SCHIP, as many as
half those children would leave private coverage in order to
enroll in that coverage.
Mr. Pallone. Dr. Goodman, I am told your microphone may not
be on. Is it?
Dr. Goodman. Can you hear me now?
Mr. Pallone. I was more concerned about the transcription.
OK. Thank you.
Dr. Goodman. When those children had private insurance they
could see almost any doctor, go to almost any facility in the
area where they live. Once they go into Medicaid they could see
far fewer physicians, go to fewer facilities, and their choices
are more limited and their wait for care is longer.
Mr. Buyer. There have been some comments with regard to--
that a public option plan would be able to compete on a level
playing field with private insurance. Are you familiar at all
at the tax revenues that are paid into the States and the
Federal Government because of the insurances, the tax on their
revenues? I mean, I guess if we were to have a public plan that
would compete equally with private plans, my question would be,
would we need to exclude these companies from State and Federal
taxes in order for us to be able to compete on a level playing
field?
Dr. Goodman. What a level playing field means to me is that
the public plan doesn't get any advantages. It cannot do what
Medicare now does and use the monopoly buying power of the
State to push the rates it pays down below 30 percent below
market. It can't use the criminal law to enforce its contracts
when everybody has to use the civil law. And it can't avoid the
payment of taxes on revenues. And it is allowed to go bankrupt.
But if you protect it the way Medicare is protected, having
protections that private insurance does not have, then that is
not a level playing field.
Mr. Buyer. And that public option with regard to the
coverage of health would be far greater than perhaps a private
plan, would it not?
Dr. Goodman. Well, I don't know. I wouldn't object to
competition if it is a real level playing field. If it is a
real level playing field, you just create a corporation; you
can call it a corporation, let it sink or swim on its own, and
I don't think it would much matter. But if it has advantages
that Medicare now has over private insurers, it would matter a
lot. And when you hear these estimates from Lewin and others,
they are assuming it would have the advantages that Medicare
has that private insurers do not.
Mr. Buyer. It is hard for me to imagine this competition,
to create a public option and say that it will be on an equal
plane with private insurance. And the reason I say that is I am
sitting here with my colleague, John Shadegg--and Joe Barton
was here. There were five of us that worked really hard when we
were creating the Medicare drug discount card program, and then
our analysis into the Medicare Part D, and we were trying to
create choice and competition in the marketplace. At the same
time, my Democrat colleagues were questioning whether or not
that would be ever be successful. In particular, the Chairman,
Henry Waxman, was very critical of what we were doing, and
wanted a government position in there.
But in the end, we went pro-market forces and were able to
reduce the price. As a matter of fact, we got all the estimates
all wrong. In the end, we were able to save tens and billions
and billions of dollars. And now trying to provide that same
analysis into this one, to me, it creates a heterodox. And you
are taking doctrine which people know and understand, and
giving it a completely different definition. And so we are
screwing up words, languages, and it just doesn't fit. I yield
back.
Dr. Goodman. May I answer that?
Mr. Pallone. Was it a question? Go ahead.
Before you go, let me just mention we are going to have--
well, we have three votes pending. I will hear from a couple
more members and then we will recess. But go ahead, Doctor.
Dr. Goodman. Part B competition I think is working well,
better than anyone predicted that it would work. But that is
different than what we are now talking about. What most people
don't realize is that Medicare is, almost everywhere,
administered by BlueCross. Now, do we really think that
BlueCross administering Medicare is any more efficient than
BlueCross administering other plans? No, of course not.
So why is it that Medicare has an advantage? It is because
of advantages that are created by government, by law. So a
level playing field would mean that anything administered by
BlueCross plays by the same rules. And then I think it really
wouldn't matter whether we call it public or not.
Mr. Pallone. Thank you. Chairman Dingell. Questions?
Mr. Dingell. Not at this time, Mr. Chairman. Thank you.
Mr. Pallone. Ms. Eshoo?
Ms. Eshoo. Thank you, Mr. Chairman, for holding these
series of hearings. And to all of the witnesses, I respect and
admire the work that you have done and your testimony here
today. There are great passions around single payer. I know
that from some people in my own district, others in California,
and certainly people across the country.
Let me ask you about something that I think important to
the American people. In fact, I think they kind of have it in
their DNA. Nobody likes--no American, I don't think, really
likes a one-size-fits-all. They really like to have choice. So
I know that--I mean, single payer doesn't provide that.
But I am asking you very sincerely, do you believe that
this would--do you think that single payer could in any way
preserve choice for patients? Because as I understand single
payer, it is just--it is the one system that is paid by one
outfit, the Federal Government, and that is it.
Dr. Woolhandler. OK. Well, from the patient's point of
view----
Ms. Eshoo. And we have learned a lot from--and I was here,
I was here for the health care debate in 1993-1994. And if
there was anything that I heard from my constituents it was,
don't force me into a plan. If I have what I have and I like
what I have, that is what I want to stay with.
Dr. Woolhandler. Well, the choice that patients care about
is that they are able to choose any doctor or hospital they
want. And of course, that kind of choice is enhanced and
expanded in single payer. In a single-payer system you go to
any doctor, you go to any hospital. So that is the choice
patients care about. Once they know the bill is going to get
paid, they don't care about how the insurance person is. They
care about the doctor and the hospital.
From the doctors' point of view, the choice we want is to
be able to do what is best for our patients and not have to ask
permission from some private insurance bureaucrat or be told we
can only refer patient X to doctor Y because of restrictions.
So choice is actually bigger.
The important choice, the choice of doctor is hospitals is
bigger.
Ms. Eshoo. What the Democrats are proposing in the bill
does preserve some choice that matches somewhat what you just
described. And that is that they have a choice of doctors, they
have a choice of hospitals.
Dr. Woolhandler. But that is actually generally not a
characteristic of private HMO coverage in this country.
Ms. Eshoo. Well, as it stands today. But I think that we
have to ramp-up what we are talking about, because we are
comparing and contrasting new ideas. We know what is broken. I
mean, we don't need panels of people and all kinds of hearings
to reiterate what is broken. We are looking at how to fix this
thing.
So, you know, again, I mean I admire your work. I really
think that if we were starting from scratch, from total scratch
in the country, probably what you all described today is what
would be built. But we are not starting from scratch, and that
is why I think a public option is so important.
Can you tell the committee how you think a single-payer
system would affect innovation in health care, which I think is
so important because we constantly have to be pushing the edges
of the envelope out in our country on this? It is what makes
the best part of caring for people in our country, the high end
of it, something that is admired by people in different parts
of the world.
So can you enlighten us on that and how you think your
proposal would do that?
Dr. Wolfe. One of the things that gets focused on so much
with single payer is that the government collects the money and
pays the bills. Anyone can go to any doctor and hospital. But
the very important element that doesn't get talked about very
much is that you have a single data system. So for example, in
Ontario, they can easily look at every patient in Ontario who
got a certain prescription drug over a 2-year period, and then
look to see how many of them had to get hospitalized because of
something that is suspected to be an average reaction.
Ms. Eshoo. That is tracking the statistics. I am talking
about innovation in medical devices and biotechnology.
Let me ask one last question here because I only have 17
seconds left. How do you pay for your system that you are
advocates of?
Dr. Woolhandler. Well, the beauty of single payer is it
contains its only funding.
Ms. Eshoo. How do you pay for it?
Dr. Woolhandler. You simplify administration. Currently,
administration----
Ms. Eshoo. What is the savings over 10 years?
Dr. Woolhandler. It is $400 billion a year. So that is 4
trillion. You don't really save it because you take that same 4
trillion and use it to cover the uninsured and plug the holes
in coverage for people who now have these crummy private
policies. But you don't raise total health spending by a single
penny. You just simplify administration, capture just under 400
billion annually by administrative simplification, and then you
use that to provide care.
Ms. Eshoo. Thank you, Mr. Chairman.
Mr. Pallone. Thank you. I am going to ask Mr. Gingrey next,
and then we will recess after him.
Dr. Gingrey. Mr. Chairman, thank you. I am going to go
straight to Dr. Goodman with my questions, because I don't
think any constituents in the 11th of Georgia, or any
stakeholders, whether they are doctors or hospitals or
especially insurance companies, would want to hear me ask any
questions of Dr. Wolfe or Dr. Woolhandler, based on their
testimony. I would like to address a couple of questions,
though, to Dr. Goodman.
Dr. Goodman, many of my constituents fear that a
government-run council making health coverage determination for
a government-run insurance plan will impede or stop their
ability to receive quality health care and eventually result in
a government-run health care system where it is bureaucrats in
Washington controlling their health care decisions.
Some of my Democratic colleagues say that a government-run
plan will only provide choice and not lead to a single-payer
system.
Now, my concern, of course, is that it will--and the old
expression, if it walks like a duck and it quacks like a duck,
you can bet that it probably is a duck. And speaking of ducks,
you mentioned long wait times in other foreign countries like
Canada.
In Norway, for instance, patients can expect to wait an
average of 133 days for a hip replacement, 63 days for cataract
surgery, 160 days for knee replacement, 46 days for bypass
surgery, after having been approved for the procedure.
Well, Dr. Goodman, it seems that quality health care is not
only the doctor you see, but the amount of time it takes to get
through the door. In your opinion, are waiting times
symptomatic and consistent with a government-run health care
system?
Dr. Goodman. Well, yes. And you get long waits because you
make medical care free to the patient, and you limit resources.
And so demand exceeds supply at every margin. So you wait for
everything.
I might point out that we are getting a waiting problem in
our health care system, too. We are inching toward Canada
without changing anything about how we pay for health care, and
I am concerned about that. On the Health Board, you know, I
have to rely on Senator Daschle and the book he wrote and what
he said about----
Dr. Gingrey. The book titled Critical? Is that the book?
Dr. Goodman. The book that Senator Daschle wrote about
health care.
Dr. Gingrey. Critical, I think, was the name of that book.
Dr. Goodman. Now, Senator Daschle pointed to the British
example of the Health Board with the acronym NICE and he said,
what do they do? They compare treatments and they compare
costs, and they compare benefits and they look at
effectiveness. And quite frankly, in Britain there is sort of a
cutoff point. They don't want to spend much more than $35,000
to save a year of life. And that means that in Britain, people
often do not get cancer drugs that are routinely available in
the United States and on the European Continent.
So yes, I am very concerned about that. And I am concerned,
not that the government is going to tell doctors what to do,
because even in Britain it doesn't always tell doctors what to
do, but that it will give cover to health plans that already
have an economic incentive to underprovide to the sick anyway.
And if the Health Board is saying, you know, that expensive
drug is experimental and we really don't need to buy it, that
is all the health plan would need by way of guidance in order
to deny coverage.
Dr. Gingrey. Well, let me reclaim my time, because I did
want to put out some statistics which speaks to exactly what
you are saying, because you stated in your testimony that
health care plays a leading role in determining the outcomes
for diseases such as cancer, diabetes and hypertension. As a
physician, practicing 26 years, OB-GYN, I cannot agree with you
more.
Focus on cancer just for a moment. You mentioned that the
5-year survival rate of women diagnosed with breast cancer in
the United States is 90 percent, versus 79 percent for women in
Europe. You also mentioned the United States has a better
relative survival rate than Norway for colon, rectal and breast
cancer, lower rates of vaccine preventable pertussis, measles,
Hepatitis B. Given that we do live in a global economy where
breakthroughs in medical science and technology can be shared
with patients in other countries half a world away, I am
curious as to your thoughts for this disparity. What is the
difference?
These survival rates are significantly different.
Dr. Goodman. In the first place, there is a difference in
diagnosis. And remember--take mammograms. American women get
more mammograms than Canadian women do. They get more Pap
smears than Canadian women.
Then there is the treatment. And regardless of the state of
medical science, people in other countries may not get the same
treatment that we get.
And then there is access to expensive but effective drugs.
And in other countries, that is controlled more than it is in
the United States. So those are three things I would point to.
Dr. Woolhandler. I would just like to go on record as
saying I disagree completely with what Dr. Goodman is saying. I
don't think that is supported by the scientific evidence.
Dr. Goodman. Well, I would like to say that I have a paper
here with more than 100 peer-reviewed studies that we drew on
to make these statements.
Mr. Pallone. We are going to have to----
Dr. Gingrey. Mr. Chairman, thank you. I realize my time has
expired. And I appreciate Dr. Woolhandler's comment. And Dr.
Goodman, thank you for responding to those two questions.
And I yield back, Mr. Chairman.
Mr. Pallone. Thank you. We have three votes and we will be
back maybe half an hour or so. The subcommittee stands in
recess.
[Recess.]
Mr. Pallone. The hearing of the Subcommittee on Health will
reconvene. And I apologize. What did I say, we would be back in
half an hour? I obviously misjudged that. Hopefully we will
have some time now, though.
And our next member for questions is the gentlewoman from
Illinois Ms. Schakowsky.
Ms. Schakowsky. Thank you, Mr. Chairman. I regret that I
didn't hear all the testimony, but I am quite familiar with
both Dr. Wolfe and Dr. Woolhandler. And I also want to refer a
bit to Dr. Goodman's testimony which has been told to me.
I am a supporter of a single-payer, something that has been
used to sort of beat me over the head, because I understand
that it is going to--I believe that the compromise that we have
that--that the President and the bill, the draft bill, endorses
is something that I endorse as well, because I think that it is
an important beginning to controlling costs and to providing--
and to providing good service.
But I do find it pretty ironic, when I say ``beaten over
the head,'' I am talking really about the other side of the
aisle, and people who, I can't quite figure it out, find that
it is quite all right--and I don't know what the public
interest rationale is--is to defend the private insurance
industry, which has had their way with us for all these years
without much accountability and gotten us into this mess, and
why those of us who are single-payer advocates who are willing
to compromise, but the other side who are all for just the
insurance industry are not, talking about giving Americans a
choice. And I find it not very collegial and certainly not in
the best interest of providing health care to all Americans,
which, after all, is the goal of the exercise, not to figure
out how we can prop up the private insurance industry. Those of
us who have agreed to the compromise think that they ought to
be able to compete. But that is not the principal goal here.
And we are willing to set up a situation where it is--you know,
maybe it is easy enough for them to do, but not if they
continue to do what they have been doing. They are going to
clearly have to change their ways in order to compete. I am
really sorry, I guess--I am not--about that, but that is the
reality.
I was just talking to a representative of Cook County
Hospital, Dr. Goodman, who was telling me that in Cook County
Hospital, which is our public hospital, the wait for
colonoscopies, hip replacements, and certain gynecological
services is up to 2 years. So let us be clear that there are
certainly people waiting in line now.
And I have to tell you, my understanding is-- you can
correct me if I am wrong--that you said if you compare white
patients in the United States to white patients in Canada, the
outcomes are the same; but if you compare minority patients to
Aborigines, we are doing better. Oh, my God. I cannot believe
that you said that in a public hearing. We are all Americans,
and to somehow separate out those minorities and compare them
to Aborigines as opposed to white Americans, minority
Americans, all Americans, Canadian Americans--Canadians, et
cetera, that would be reasonable. The other comparisons are
offensive. And I don't know if you want to comment on that or
defend yourself on that.
Mr. Goodman. I am not sure you heard my testimony. I said
we have access problems. And there have been lots of studies
that show that----
Ms. Schakowsky. Did you make that comparison?
Mr. Goodman. These problems are more severe for minorities
in the United States than the white population. But it is also
true in Canada, it is also true in New Zealand, it is also true
in Australia. And if you compare our progress to theirs, we are
ahead of them. We are doing better than they are doing.
Ms. Schakowsky. Well, let me ask about this. Dr. Wolfe and
Dr. Woolhandler, Dr. Goodman has testified that, again, if you
compare whites to whites, that we are--it is about even. But I
wondered if you could actually talk to us about how we are
doing compared internationally to other countries that actually
do provide health care for all of their citizens.
Dr. Wolfe. Well, in my testimony I referred to what
percentage of people in the 30 OECD countries have insurance.
And as I said, for 27 of the 30, it was over 96 percent. But in
the same report, which just came out a few months ago, they
also asked the question: How many people in various countries
have an unmet care need? And that is sort of what they are
talking about. Unmet care need was defined as unfilled
prescriptions or missed medications; medical problems; didn't
visit a doctor; missed tests, treatment or follow-up. And here
the comparisons are really striking.
In the United States, for people who were below average
income, below average income, over half of them had an unmet
care problem, 52 percent; whereas, in Canada, it was 18
percent, just about a third as much. And even for the people
with--that was below average income. For people with above
average income, again, it was three times more likely in the
United States to have an unmet care problem.
When you look at these seven countries----
Ms. Schakowsky. So what you found contradicts what Dr.
Goodman just said, that we are doing better.
Dr. Wolfe. That is right. OECD--and this is generally
agreed upon, and the United States is one of 30 countries that
belong to it. They produce very interesting data not only on
health, but other measures, and they put these out frequently.
These are valid comparisons, interestingly, and they really go
against what Dr. Goodman said earlier, a couple hours ago, that
there are more access problems here, there--that there are more
access problems in other countries than here. There are more
access problems whether you are above average income or below
average income in the United States than in other countries.
And obviously one of the reasons is that people are all
insured, and they don't get thrown out of emergency rooms as
people frequently do in the United States, violating the
patient dumping law.
Mr. Pallone. We are going to have to move on.
Mr. Shimkus.
Mr. Shimkus. Mr. Chairman, can I defer and come back in the
next Republican round so I can listen? Can I just defer,
whoever is next on the list?
Mr. Pallone. You want Mr. Shadegg to go first? Sure.
Mr. Shadegg.
Mr. Shadegg. Thank you, Mr. Chairman.
Mr. Goodman, do you agree with the statement of Mr. Wolfe
that there are frequent violations of the laws requiring the
treatment of patients at hospital emergency rooms in the United
States? And are you aware of any studies that show that?
Mr. Goodman. I am not, but----
Mr. Shadegg. I don't think your microphone is on.
Mr. Goodman. No, I am not. But I do concede we have an
access problem, and I think the waiting in hospital emergency
rooms in this country is atrocious. We had in Dallas a man who
waited 19 hours and died before he ever got care. So I don't
know if any law was violated, but I don't think that should be
happening.
Dr. Wolfe. If I could respond.
Mr. Shadegg. I am sorry, my time is limited.
I would agree with that. Can you tell me, since he
challenged you on the point made earlier, would you reiterate
the point made earlier and explain to me or contrast for me
waiting times or waiting periods in the United States under the
current system versus those experienced in England or Canada?
Mr. Goodman. Well, see, what I think is happening in our
hospital emergency rooms is exactly what happens in Toronto and
exactly what happens in London. We are rationing care here just
like they are rationing care in other countries. And to talk
about everybody having access to care just because they are
paper insured is nonsense. The reality is that lots of people
aren't getting care they need when they need it in a timely way
around the world. And I think that if you look at the data, we
do a reasonable job with a heterogeneous population compared to
other countries. We could do a lot better, but let us not
pretend that they are way ahead of us, because they are not.
Mr. Shadegg. Let me make a statement. I am unaware of
waiting periods in the United States at any facility, emergency
room or otherwise, of months. And I am very much aware of
waiting periods in Canada for various procedures that go more
than a month. That is not a question; that is my statement.
What is your suggestion or what would you do as opposed
to--I presume you do not favor a public plan?
Mr. Goodman. No, I don't.
Mr. Shadegg. What would you suggest we do rather than
moving to a public plan?
Mr. Goodman. I think we ought to focus with the problem we
began with, and that is the uninsured. What should we be doing
for them? Right now, if they buy their own insurance, they get
no tax relief whatsoever. Right now, if your employer--your
employer is not allowed to buy for you insurance that you can
take with you when you leave a place of employment. It is
illegal in every State to buy personal portable insurance,
which is the only kind of insurance that people can take with
them in and out of the labor market and from job to job.
Mr. Shadegg. You are familiar with the legislation that I
introduced that would allow individuals to buy health insurance
that was qualified under a Federal law, and then written to
comply with one State's law and then be sold in multiple
States?
Mr. Goodman. I am, and I think that is a good idea.
Mr. Shadegg. And would that bring down the cost of
insurance?
Mr. Goodman. I think it would.
Mr. Shadegg. And would that reduce the number of uninsured?
Mr. Goodman. I think it would.
Mr. Shadegg. What would be the best mechanism you think for
making insurance portable for those Americans who do not have
health insurance? And would it include a refundable tax credit
as I have proposed and others such as Congressman Ryan and
Senator Coburn?
Mr. Goodman. The Coburn bill is a wonderful bill, but even
without going that far, we need to give tax relief to people
who buy their own insurance. We need to allow employers to buy
the kind of insurance that people can take with them and is
individually and personally owned. And we need to get rid of a
lot of these State regulations which force up the price of
insurance and price way too many people out of the market.
Mr. Shadegg. That last point is exactly what we were doing
with my legislation that would let you buy a policy essentially
filed in 1 State and then sold in the other 49.
Mr. Goodman. That would be the practical effect of it. Yes.
Mr. Shadegg. It would be the practical effect of reducing
those mandates and thereby bringing down the cost of health
insurance?
Mr. Goodman. That is right.
Mr. Shadegg. You and I have talked about refundable tax
credits and about the outrage of a current American law which
says that if you get tax--if you get health insurance through
your employer, it is pretax, but if you buy it on your own, it
is taxed. We have been talking about that for how many years
now, John?
Mr. Goodman. At least two decades.
Mr. Shadegg. It seems to me----
Mr. Goodman. And it is just as bad now as it was two
decades ago.
Mr. Shadegg. If we just changed that law and said we are
going to allow all Americans who want to buy health insurance
to do so on the same tax-favored basis as businesses can do,
that would create dramatically more competition in the health
insurance industry, wouldn't it?
Mr. Goodman. Well, but, more importantly, it would allow
people who are on their own to have tax relief and would
encourage them to buy insurance which they are not now buying.
Mr. Shadegg. If we coupled that with a refundable tax
credit for those who can't afford health insurance, which is
what I would propose doing, we would both bring down the cost
of health insurance for all Americans and drive up quality;
would we not?
Mr. Goodman. That would be the most important thing, most
important change in the health care system: Give every American
a refundable tax credit. Let it be the same for everybody. And
in the latest Coburn bill I think it is $5,700 for a family. So
the first $5,700 is effectively paid for by the government for
everybody. And then additional insurance comes, after tax, out
of our own pockets. It would radically change the kind of
insurance we have. It would change everyone's incentives.
Nothing would--that I can think of that has been proposed
recently would have a bigger impact on the health care system.
Mr. Shadegg. The Republican-proposed refundable tax credit
for health care has been on the table for years by Senators,
like Senator Tom Coburn, and I, who have been advocating it.
That would have solved the problem of America's uninsured a
long time ago; Would it not?
Mr. Goodman. It would go a long way toward it.
Mr. Shadegg. Thank you very much.
I thank you, Mr. Chairman, for your indulgence.
Mr. Pallone. Mr. Weiner.
Mr. Weiner. Thank you, Mr. Chairman.
Is there consensus of the three of you on the panel that
the administrative costs for private insurance claims is much
higher than what it is for the Medicare system? We will start
with you, Mr. Goodman.
Mr. Goodman. There probably isn't a consensus here, because
the statistics that you heard earlier count the private
insurers' costs of collecting premiums, but they ignore the
government's cost of raising taxes. If you want to make a fair
comparison, you have to compare apples with apples and oranges
with oranges.
Mr. Weiner. So the administrative costs, you mean the IRS?
Mr. Goodman. Yes.
Mr. Weiner. If you back out the IRS for the purpose of this
conversation, then it is obviously--is there any disagreement
that the Medicare system is much more administratively
efficient than private insurance?
Mr. Goodman. Well, if you mean by backing out the IRS, we
ignore the cost of getting public funds, but we count the cost
of getting private funds, then, yes, Medicare would be cheaper.
Mr. Weiner. Is there anything that we can learn from how
Medicare does things administratively? Is there an obvious
place that we can find that that efficiency is found? Dr.
Woolhander, would you have a sense of is there something in
that? I know, for example, that insurance companies benefit to
some degree monetarily from delays and inertia. Right? If they
don't pay, for example, a doctor, reimburse a doctor or a
hospital for a 30- or 60-day period of time, they make money on
the money that they are not allocating. There are things like
that.
But are there other elements that we can learn if we wanted
to teach the private insurance companies? Which is what
President Obama said the other day in his press conference, he
thought it might be instructive for the private guys to copy
some of the things that the public model does. Is there any one
or two things that jumps out at you that makes Medicare more
efficient?
Dr. Woolhandler. There are a lot of things, but you
couldn't transplant them to private insurance, because private
insurance makes their money by not paying the bill, by
collecting lots of premiums and not paying. So there is lots of
expenses they have that are essential to their competitive
strategy. So they want to be very, very careful to recruit
healthy people.
Mr. Weiner. I understand that, but you are answering a
different question. I understand they are not going to want to
do it. I am asking you, if you were to say, here are two or
three things that Medicare does that they do more efficiently
than private insurance, like are there a couple that may come
to mind that might inform the committee's deliberations here?
Dr. Woolhandler. Medicare is universal, and it does use the
IRS to collect money and the Social Security System, which is a
very efficient way to do it because those things exist already
anyway, and they are not going to disappear or get any smaller.
Mr. Weiner. So their building apparatus is much more
efficient.
Dr. Woolhandler. They are collecting of--the equivalent of
premiums is much more efficient. Also, Medicare doesn't do any
cherry-picking. They don't try to attract healthy people and
keep sick people out. They can't. It would be illegal. They
take everyone. So they don't have any so-called marketing
expenses, which is really about recruiting healthy people and
keeping sick people out.
Mr. Weiner. Dr. Wolfe, let me ask you this question.
Doctor, feel free to weigh in when he is done. The argument
made against single-payer--and I don't know how persuasive it
is, and, frankly, I plan on offering single-payer as an option
here when we mark up the bill. But the argument that is made is
there are a lot of people for whom their present insurance plan
is satisfactory. They say that they are satisfied with it, they
like the doctor relationship, they don't mind getting the
bills. They like what they have chosen.
And a political argument is made that essentially says
don't, when you are trying to do something this big and
difficult, pursue what Dr. Goodman has been pushing; try to
solve the problem without creating the big tumult around people
who don't generally see there would be a problem. That is a
pretty persuasive argument on a political level; I mean, to say
to 120-, 130-, 140 million people, we are not going to touch
your thing that you have.
How do you respond as an advocate for single-payer for the
idea that while it might be more efficient for the reasons you
stated in your testimony, we may be permitting the perfect to
be the enemy of the good by creating an untenable political
dynamic? Why don't you give us your response for that.
Dr. Wolfe. I think the main response is that people would
be concerned if you thought they were going to disrupt the
relationship they had with their doctor, with their dentist,
with their physical therapist, with their hospital. And the
single-payer is looking only at how the money is collected and
how the bills are paid. There is no reason why anyone who is
going to Dr. A would not be allowed to go to Dr. A if there was
a single-payer system. In fact, they might also want to go to
Dr. B, who they would have liked to go before.
Mr. Weiner. Because, in your vision of the single-payer, a
doctor would be compelled to participate; otherwise, they
wouldn't be able to be a doctor in the United States because
they would be opting out so many patients?
Dr. Wolfe. Right. In Canada and lots of other countries, if
you are going to receive money for delivering medical care, you
can't discriminate against this or that kind of patient, so
that, if anything, the doctor-patient relationship would be
enhanced instead of disrupted. A patient could go to a doctor
that they couldn't have gone to before because that doctor
wasn't in their pool. There is no such thing as your limited
pool of doctors or hospitals, for that matter, you can go to.
So in terms of--the disruption is really a disruption of
the health insurance industry, not of the doctors, not of the
patients. I mean, the reason why 60 percent of the doctors in
Massachusetts in a study published a couple years ago support
single-payer is that they are getting sick and tired of
spending so much time in their offices fighting with insurance
companies to pay bills, hiring people that are not delivering
medical care, but are just sort of engaging in phone or e-mail
or fax wars. So I think that if the focus is the patient, then
it is less disruptive.
Mr. Weiner. I thank you. And my time has expired. I would
just caution you, Dr. Wolfe, that what you are answering is a
substantive question, and mine was a political one. Someone who
has Oxford who then is going to go to a single-payer is going
to lose their Oxford whether they get the same doctor or not.
That is the rhetorical challenge that we have as advocates for
a better system. But I appreciate the candor of your answer.
Thank you, Mr. Chairman.
Mr. Pallone. Thank you.
I am just going to ask Members, I know we each have 5
minutes, but this is the first of three panels. Just try to at
least end your questions within the 5 minutes. I don't have a
problem if the panelists' answers go beyond the 5, but I want
our questions or comments to end at the 5 minutes, otherwise we
are going to be here until 8:00 or 9:00 tonight.
Next is Mr. Shimkus.
Mr. Shimkus. Thank you, Mr. Chairman.
There are a couple ways that Members could come to these
hearings. This is a very important issue. And I think we all
come in all the seriousness that we should.
You know, first, just on this rush to move, I have talked
about in the energy bill having a discussion draft that people
can't really talk about because we know the discussion draft
will not be the bill. It is not going to be it. So when we end
up marking the bill, we are going to get a bill on a Friday,
just like the energy bill, which will have 300 more pages that
my staff will try to e-mail me at home that they hope that I
will read and go over to be prepared for a markup.
So this process is--the health care is broken, this
legislative process. Now, we can do it in this committee. We
did it in FDA reform. We really did. Democrats worked with us,
we compromised, we got a good bill. We got a bill that passed
out on a voice vote. Major reform in the Food and Drug
Administration. And I think people are--you win some, you lose
some. Overall we are pretty happy. We didn't have that in
energy, and we are going to have a Texas death match fight on
the floor come Friday. We are not going to have it here, and so
we are going to have another Texas death match fight whenever
this moves to the floor. And it is just too important of an
issue to do that.
So I have always been struck by why don't we move--I mean,
there is an incremental process, and people understand that,
and call our bluff. Let us get insurance to more people. Let us
try associated health plans. Let us try giving people tax
incentives. Prove us wrong that a private system doesn't work,
and then the public option might be the default. Maybe a one-
payer might be the default.
I was in Chicago at the American Society of Plastics, and I
talked to a legislative luncheon with some of my colleagues.
One of the guys there whose spouse was attending sold medical
technology, and he had just come back from Canada. This
hospital was excited to buy their second MRI, and they are
going to reduce their wait list from 8 months to 4 months for
an MRI. I am not making this up. We all know, there are horror
stories on both sides. So my plea is for us to try to move in a
way that we can try to cover people before we bring what I
believe is the heavy hand of government.
Let me go to questions. Let us talk about this, Mr.
Goodman, first, and I will let people chime in. I am not really
trying to incentivize one side or the other. Usually I do that,
but not here. Let us talk about this Medicare thing, and let us
address--every time politicians talk about saving the
government money, what is the first thing off our lips? Waste,
fraud, and abuse. And where do they point that this waste,
fraud, and abuse is? Medicare and Medicaid. And my friend from
New York talked about the cost of this. Shouldn't the cost of
waste, fraud, and abuse be part of this calculation if we are
going to compare private insurance with a government-backed
product?
Mr. Goodman. Well, it should be. And in my opinion, the
thing that Dr. Woolhandler praises about Medicare and Medicaid
is, in fact, one of its faults. It spends too little on the
administration. You ought to spend some resources watching
where the dollars go. And apparently there is an enormous
amount of fraud in Medicaid and Medicare, and you are not going
to get rid of it if you don't spend some resources to find out
where the dollars are going.
Mr. Shimkus. And the percentages of like 30 percent claims,
that are paying claims that shouldn't be paid. So 10 percent. I
can't even read my notes anymore. But there is a credible cost,
if you are going to claim you are going to save money on waste,
fraud, and abuse, that it ought to go into. That would be good
money to go after, the return on the investment.
Let me just finish with this in my time, and I want to be
respectful to the Chairman. The Massachusetts example just
recently released, what are they doing? They are going to raise
their costs, they are going to cut services, they are going to
reduce their beneficiaries. That was just announced today. What
does it make us feel like that is not where we are going to be
if we move to a one-payer system or a public option?
Dr. Woolhandler. The one aspect of Massachusetts that is
very prominent, and it is actually in this bill, in the tri-
committee bill that we haven't discussed much----
Mr. Shimkus. The draft language. There is no bill. A bill
is a bill when you actually drop it and it gets a number.
Dr. Woolhandler. The tri-committee draft includes an
individual mandate, just like Massachusetts, which is, of
course, what the private insurance industry wanted. They said
that was their number one thing that they wanted was an
individual mandate. And it is here in this bill called
``individual responsibility.''
Mr. Shimkus. But Massachusetts is cutting benefits, raising
premiums, and reducing--cutting service.
Dr. Woolhandler. Absolutely. Absolutely. Because it is not
affordable what they have done. And the individual mandate
piece hasn't worked. It has been very punitive, and it is here
in the tri-committee draft. And it is a complete gift to the
private health insurance industry, just as it was in
Massachusetts, because it is saying that the government is
going to make it illegal not to buy private insurance. And that
is actually something that needs to be discussed and is really
totally caving in to the insurance industry no matter what else
is in this bill.
Mr. Pallone. Mr. Deal.
Mr. Deal. I would like to follow up, Dr. Wolfe, on
something that you said about how your world of a single-payer
would work. And I believe you said it in response to an earlier
question that, in a single-payer world, physicians would either
be in the system accepting the payments that the system
dictates that they are entitled to, or else they would not be
able to practice, period. Is that correct?
Dr. Wolfe. Well, they can practice privately and collect
money from patients. There is nothing to stop that. In the
United Kingdom the so-called Harley Street physicians are
physicians who aren't part of the national health service. They
practice. They have expensive practices for patients who can
pay them.
The only point I was making is that the Canadian system,
which is called Medicare for everyone in the country, is one
that if a physician wants to take care of patients who don't
have money to go to a private doctor, then that physician needs
to participate.
The physicians in Canada actually make reasonably large
amounts of money with the kinds of prices that are placed on
the services by the government. So it is not--it is restrictive
only to the sense that if someone really wants to practice
medicine for someone other than a group of very wealthy people,
they participate in the program. Again, they are in private
practice; they are not working for the government, they are
just getting paid by the government.
Mr. Deal. One of the concerns that we currently have is
doctors who will not take Medicare patients simply because
reimbursement rates they consider are not adequate.
Under the proposal that we are looking at, the public
option plan, as I understand it, keys reimbursements to
Medicare reimbursement rates. Now, one of two things is going
to happen. Either the public option plan is not going to be
able to get any doctors to sign up to participate without
coercion to do so, or the private plans are going to decide
that the only way they can compete with the government is to
ratchet down their reimbursements to the Medicare levels; and,
therefore, the private insurance market providers are going to
have the same complaints that they currently have in our
Medicare reimbursement system.
Dr. Goodman, maybe I could ask you to comment on that.
Mr. Goodman. Well, I think you are exactly right, except I
don't think it will be all one way or the other. With that kind
of system, what we will gravitate to is a public system in
which most people will be enrolled, and the doctors will be
paid below-market rates. And then there will be a private
system, just like they have in the United Kingdom, or some
version of that, and anyone who has the money will buy better
coverage, and they will be seen first by the doctors, and they
won't wait as long. And Britain has a two-tier system, and what
you are pointing toward would be a two-tiered system for the
United States.
Dr. Wolfe. Could I just respond briefly to that? Which is,
one of the reasons that we are opposed to this public-private
option is that it does cause some of the exact things you are
talking about. Why should it be that a given doctor should not
get the same amount of money for seeing patient A versus
patient B versus patient C versus patient D? In other words,
what I am saying is that under a single-payer system, the
doctor could see any patient they want; the patient could go to
any doctor they want without the fear that this doctor won't
see them because they are not getting paid as much as they
would be paid if they had some other insurance.
It is bewildering to a doctor and their staff to have to
look at a patient and say, do they have this plan or plan
number 10 or plan number 20? And if they have that, does it
cover this or that or whatever? It is just an unbelievably
complicated matrix, as opposed to just saying you go to the
doctor, and whenever you are or whoever you are, the doctor
gets reimbursed the same amount. I think that that kind of
twofold system that is possibly built into the draft bill that
we are discussing isn't a good idea. But it is not the only
reason the draft bill is not a good idea.
Mr. Deal. We agree on that last statement.
Dr. Woolhandler. I would just have to say as a practicing
physician in Massachusetts not only do I take Medicare and
welcome it, but essentially every doctor in the State of
Massachusetts takes Medicare. And, you know, none of us are
going to the poorhouse. So I know there are people who can
command even higher payments than Medicare pays, but Medicare
payment is generally compatible with a pretty good standard of
living for the medical profession. So I wouldn't worry too much
about that issue, personally, coming from Massachusetts.
Mr. Deal. Well, coming from Georgia, I can tell you
firsthand that we are having physicians who will refuse to
continue to treat long-term patients that they have had for
many, many years when those patients become Medicare-eligible
simply because of the reimbursement rates, and they consider
them to be inadequate. And my State at least, I think, is
experiencing that kind of problem currently, and I just don't
want to see us magnify that problem.
I believe my time is up. Thank you, Mr. Chairman.
Mr. Pallone. Thank you.
Dr. Burgess.
Dr. Burgess. Thank you, Mr. Chairman. You had no choice but
to come to me, and I appreciate the time. And just for the
record, I always saw Medicare patients in my practice in
Louisville, Texas, because my mother told me I had to, and it
made it very simple to follow that rule.
Dr. Goodman, Dr. Wolfe testified just a moment ago that, in
Canada, the doctor-patient relationship is enhanced by having a
single-payer system. Is that your opinion also?
Mr. Goodman. No. No. No, it is not. I think in general
third-party payment undermines the doctor-patient relationship,
and that the ideal relationship is for the patient to control
the dollars, and that is why I have advocated for many years
the health savings account. I would like to see patients
control a third or fourth of all the dollars. And for chronic
patients, they can control even more than that.
And we are doing this in Medicaid, by the way. We have a
cash and counseling pilot program under way in more than half
the States where the Medicaid homebound disabled control their
dollars. They can hire and fire the people who provide them
with services. There is 98 percent satisfaction. Well, there
isn't any health care system in the world where you get 98
percent satisfaction.
So we know that health care can be more satisfying, and we
can meet the needs of patients in a better way if we reduce the
role of the third-party payer, whether it is government or
private.
Dr. Burgess. And I actually agree with that as well, and I
have often wondered why we don't construct a system where it is
possible for an individual to have more of a longitudinal
relationship with their insurance company. If an insurance
company or a Medicare system is a necessary evil, why would we
not construct one where there is some sensitivity to the
purchaser on the part of the seller just like there would be in
any other transaction?
We heard just a moment ago from the gentleman from New York
about there being a policy versus a political question. I also
wonder if the back door into the policy that is desired, which
may be a single-payer system, is to not involve ourselves in
political incrementalism at this point in order to achieve that
desired goal.
Dr. Wolfe, I wonder, do you see that as being part of the
trajectory or part of the desired outcome of the--I realize it
is not a bill, but the draft that we have in front of us this
afternoon?
Dr. Wolfe. I think I alluded a little bit to this earlier,
but I think that we now have essentially 44 years since the
last health insurance was passed, Medicare and Medicaid. And
many people hoped, and I think sincerely, that somehow during
the 44 years we would incrementally be able to cover more
people with health insurance, and it just hasn't happened. I
mean, we have the same insurance companies, some new ones that
are more HMOs and so forth than there were back then, but I
think the incrementalism just hasn't worked, and particularly
compounded by the economic problems of the last year or two,
things are getting tougher and tougher. I would expect that the
number of uninsured will rapidly go over 50 million, it is
close to that now, if we had numbers from 2009.
So I don't see--back to your question directly. I don't see
anything in this draft bill, as we are correctly talking, it is
a draft bill. It is. And there is a lot of distance between
here and, if anything--I say ``if anything'' seriously--is
going to come to the floor. But I don't think there is anything
that is in the draft bill that, to me, could be rationally
viewed as a stalking horse as a way towards a single-payer. If
anything, one could argue that it is away from a single-payer.
Because if it is changed and comes to the floor with some form
of a public partnership with the private, it is going to be so
bad that, if anything, it will move away from the single-payer
rather than towards it.
Dr. Burgess. Like Ranking Member Deal, I do agree on that
last point.
Let me just ask you a question, because my time is going to
run out. There has been some allusions to Canada versus the
United States. My understanding, correct me if I am wrong, the
Canadian system, their health care system, is on a budget.
Their Parliament passes a budget every year, just as we do, and
their health care expenses are going to be budgeted. Ours, in
this country, we have the largest single-payer system in the
world. It is called Medicare and Medicaid. We don't budget for
that; we just simply say, send us your bills, and we are going
to pay them, and we will draw down the Federal Treasury or
expand the deficit in order to do that.
Do you think we should look more at Canada's budgetary
system as a way to controlling some of our costs in our public
system, in our Medicare and Medicaid system?
Dr. Wolfe. Well, one of the advantages of having a single-
payer, single-insurer collector of money is that you can more
easily do what is called in Canada global budgeting. So for a
given hospital, for instance, instead of counting every----
Dr. Burgess. But you have already got 50 percent.
Dr. Wolfe. But I am saying they are not doing it.
Mr. Pallone. Can I just ask Dr. Wolfe to answer the
question, because the time has expired.
Dr. Wolfe. The answer to the question is in Canada global
budgeting is a good idea. We could benefit from it here. I
don't think that Medicare has been run as efficiently as it
could be. The administrative costs are certainly low, and there
have been some forms of price control on everything other than
prescription drugs. So I think we could learn from that. But
Medicare has now been around for 44 years, and, if anything,
for a bunch of reasons it is getting worse than it was at the
beginning. So we need to go back to some of the original
principles of Medicare.
Dr. Burgess. Some of our distributional issues would become
greater, though, with a budgetary constriction.
Mr. Pallone. Dr. Burgess, you are a minute over. You can't
ask any more questions. We have got to move on. Thank you.
Let me thank all of you. We appreciate it, and I think it
was a good discussion. I am sorry that you were interrupted so
long with the votes.
Mr. Pallone. Let us ask the next panel to come forward,
please. This panel is on State, local, and tribal views. I ask
our panelists to be seated.
Now, let me just warn everyone that you are seated out of
order, so I am not going to ask anybody to change, but I am
going to call Members to speak on the order that I have here.
So let me introduce everyone.
First is Honorable Michael Leavitt, who is former Secretary
of U.S. Department of Health and Human Services. Thank you for
being with us. I know you can't stay the whole time, but that
is fine. We have you first.
Second is my good friend, the Honorable Joseph Vitale, who
is chairman of the Committee on Health, Human Services and
Senior Citizens of the New Jersey State Senate, who his
district is in my congressional district, and he has been here
before, and we appreciate your coming today as Senator Vitale.
Then I have W. Ron Allen, who is the chairman of the
Jamestown S'Klallam Tribe.
And then we have the Honorable Jay Webber, who is a State
assemblyman from my State of New Jersey. Welcome.
And then is Dr. Raymond S. Scheppach, who is the executive
director of the National Governors Association.
Then we have Robert S. Freeman, who is deputy executive
director of CenCal Health, California Association of Health
Insuring Organizations.
And finally is Ron Pollack, who is executive director of
Families USA, again, a frequent visitor to this subcommittee.
So we will start with the Secretary Leavitt. Thank you for
being here.
Let me mention again, I think you have probably heard it
enough times, but 5 minutes. We ask you to speak for 5 minutes.
Keep it to that. Your written testimony will become part of the
record. And, of course, after you are finished, we will have
questions from the panel.
Secretary Leavitt.
STATEMENTS OF MICHAEL O. LEAVITT, FORMER SECRETARY, U.S.
DEPARTMENT OF HEALTH AND HUMAN SERVICES; JOSEPH VITALE,
CHAIRMAN, COMMITTEE ON HEALTH, HUMAN SERVICES, AND SENIOR
CITIZENS, NEW JERSEY STATE SENATE; W. RON ALLEN, CHAIRMAN,
JAMESTOWN S'KLALLAM TRIBE; JAY WEBBER, STATE ASSEMBLY, STATE OF
NEW JERSEY; RAYMOND C. SCHEPPACH, PH.D., EXECUTIVE DIRECTOR,
NATIONAL GOVERNORS ASSOCIATION; ROBERT S. FREEMAN, DEPUTY
EXECUTIVE DIRECTOR, CENCAL HEALTH, CALIFORNIA ASSOCIATION OF
HEALTH INSURING ORGANIZATIONS; AND RON POLLACK, EXECUTIVE
DIRECTOR, FAMILIES USA
STATEMENT OF MICHAEL O. LEAVITT
Mr. Leavitt. Thank you, Mr. Chairman. And thank you for
your acknowledgement of my inability to stay the whole time.
But I am pleased to be here.
My formal statement, I will summarize it by saying I have
listed 10 things in this draft that I believe could be unifying
principles, I have listed 10 things that I believe are serious
problems, and 10 ways I think those could be resolved. So the
committee will have access to that. And to the extent that you
have questions for me, I would be happy to respond to them
either in writing or later publicly.
I was intrigued, however, by conversation in the earlier
panel, and I would like to take my time to respond to the
question of Medicare's efficiency. I suspect I am the only, or
at least one of the only, people in this room who has actually
overseen Medicare, and I would like to answer the question as
to its relative efficiency, if I could.
If the question is does Medicare issue checks on a more
efficient basis than anyone else, I think it is important to
answer that: Yes, Medicare issues checks more efficiently than
anyone else on the planet. And we should, because Medicare
issues about 1 billion of them a year.
The problem isn't its administrative efficiency. The
problem is what it pays and how it pays it.
Medicare has three fundamental problems, in my assessment.
The first I call silo syndrome. Silo syndrome is a function
that everything is paid without coordination. So it isn't how
efficiently it pays; it is the fact that it pays the wrong
things and pays too many things, and does not require any level
of coordination.
If we were to impose on, say, the automobile industry the
process of finance in the health care industry, you would walk
into a car dealership and you would say, I want to buy a car.
The dealer would say, we can see you do. Pick one out, and we
will send you the bills later. And a few months later or weeks
later, you would get one from the chassis maker, you would get
one from the tire manufacturer, you would get one from the
dashboard people, one from the windshield, and one from the
dealer. And the dealer would say, you were in the showroom for
a while, then you went to the salesman's office, and then there
was that $21.97 cup of coffee you thought you were getting
because you thought you were thirsty.
The point is that if there was a steering wheel that was
$800, the manufacturer of the car under the current system
would say, we can't afford that because we have got to deliver
it for $23,000.
In the health care system, if the crutch's provider in a
knee operation says, we want $400 for the crutches, we just
provide it. There is no coordination.
So it is not the fact that we are able to issue checks
efficiently; it is that all of the care is siloed and
uncoordinated, and that runs up the costs. So what might look
like efficiency, I would suggest to you, is not.
The second problem with Medicare is that it has what I call
chronic more. Everything is oriented to more.
And the third point I would say is that it is quality
indifferent.
So it isn't efficient because it can issue more checks than
anyone on the planet. It is inefficient because it is siloed,
because it is quality indifferent, and because every incentive
leads to more. And I suspect you will see that reflected in my
testimony as to why I oppose and why I hope our country will
not go to a public option plan. For us to adopt a system that
has moved our country financially toward what I believe will be
its most devastating financial crisis and then put more people
in it is like suggesting that we are going to cure obesity with
a perpetual regimen of double calories.
That is not the solution, and I have listed in my testimony
a series of suggestions on how I believe this bill could
unifying, how the bill could become a bipartisan proposal, and
I am very hopeful that that can occur. This country badly needs
for every American to have access to insurance. We desperately
need to reform the system. And I hope very much that this will
be a moment where we can do so on a bipartisan basis. Thank
you.
Mr. Pallone. Thank you, Mr. Secretary.
[The information follows:]
Mr. Pallone. Senator Vitale.
STATEMENT OF JOSEPH VITALE
Mr. Vitale. Thank you, Chairman Pallone and members of the
committee. I am Joe Vitale. I chair the Senate Health Committee
in New Jersey, and pleased to be here again. I was here a
couple years ago when we were debating the reauthorization of
SCHIP and what it meant to my State and to the millions of
parents and children who we are now blessed to cover under that
program.
I wanted to highlight some of the sentinel points of New
Jersey's journey toward health care reform as well as my
personal view as a State legislator, a leader in health care
reform, and as a small business owner as well, to discuss the
access to affordable and dependable health care for not just
the 1.3 million uninsured New Jerseyans, but the remaining 45-
some million Americans.
New Jersey has learned many lessons as we grappled with the
complexity of reform over the past several years. Our State's
reform efforts will benefit the proposals being discussed here
in Washington now.
When SCHIP was first adopted in 1998, New Jersey initially
offered enrollment for children whose family income did not
exceed 200 percent of the Federal poverty level. Shortly
thereafter, we increased eligibility to 350 percent of Federal
poverty for those kids, recognizing that we needed to do more,
that New Jersey was an expensive place to be low-income, and we
needed to get those kids insured because the parents couldn't
afford the insurance on their own or through their employer.
In addition to expanding affordable access to kids, we also
began to welcome parents into our program through a waiver by
CMS whose families' income did not exceed 150 percent of the
Federal poverty level. These legislative initiatives became the
foundation upon which we in New Jersey have begun to build a
framework for providing universal, portable, affordable, and
sustainable health care access to New Jersey's remaining 1.3
million uninsured.
Our efforts began nearly 3 years ago with the formation of
a working group comprised of 22 policy experts representing a
wide variety of experience and professional background. I
believed then, as I do today, that New Jersey could not have
enacted our most recent reforms without taking the necessary
time to painstakingly understand the complexity of reform's
impact on the diverse group of stakeholders health care
encompasses.
Our working group met for 2\1/2\ hours every week, worked
on a daily basis with staff to process the input from those
sessions, and traveled the country from San Francisco to
Chicago to Washington to meet with other States actively
reforming their systems. We shared the reform efforts each of
us were undertaking and met with national policy groups with
expertise in health care access, quality, cost modeling,
efficiency, and insurance reform. It was through those efforts
that we were able to offer a thorough and well-planned
legislative proposal that enjoyed overwhelming bipartisan
support approval moving from announcement to passage into our
law in a short 4 months.
Our most recent initiative accomplished much. It increased
eligibility for more working parents whose income did not
exceed 200 percent of the Federal poverty level. We established
a buy-in program for children whose families' income exceeded
our SCHIP cap of 350. This program was created after
negotiating with two of our State's leading health plans, who
agreed to offer an excellent benefit design at a very low
price. This program does not use any State or Federal dollars.
We implemented a kids first mandate that required all
eligible children to enroll in either a free or very low-cost
health insurance program in our State. It required the
Department of Treasury to include a check-off on all State
income taxes, tax returns that seeks information on filers
regarding the health insurance status of household dependents.
This provision enabled New Jersey to be the first State in the
Nation to utilize the express enrollment process approved here
in Washington and CHIPRA. It also directed our State Department
of Human Services to design a cost-effective and thorough
enrollment outreach program, and to design a minimum hardship
exclusion or premium hardship exclusion that does not allow an
enrollee to jump out of coverage, that provides for an income
set-aside that can lower their premium to an affordable level,
but also maintains them in coverage and not out of coverage.
It also instituted a number of reforms so individuals or
employer market that made those policies more affordable will
dedicate a larger percentage of collected premiums to the
actual provision of care.
I am proud of what we have accomplished in New Jersey. We
have been one of the most progressive States in offering
expanded access to hundreds of thousands of children and
working parents, and we are currently well on our way toward
comprehensive and transformational reform. But, as you know all
too well, States can only do so much. We have limited finances.
We have limited political will. And with States having
different programs at different levels for children and for
parents in some States, it becomes just undependable and
unreliable.
We in New Jersey, though we are proud of the work we have
done and the great steps and strides we have made to insure
hundreds of thousands of kids and many parents in our State, we
need the Federal Government. We need your leadership and the
leadership of your colleagues and the President to make sure
that the remaining 1.3 million who are uninsured today and
those who will become uninsured have access to the same kind of
health care that we all enjoy; that they will have the same
kind of card that we all have. And, in some cases, I know we
all take for granted maybe the health care that we do have, but
for them, they wake up every day with the fear that they will
get sick, their kids will get sick, they won't have the ability
to pay. And a national program that brings together in a large
group those millions of Americans who need our help is well
justified and well needed. And I want to thank you for the
effort.
Mr. Pallone. Thank you, Senator.
[The prepared statement of Mr. Vitale follows:]
Mr. Pallone. And thank you for waiting, all of you,
actually. I know you have been here since early this morning.
So I appreciate it.
Next is Mr. Allen.
STATEMENT OF W. RON ALLEN
Mr. Allen. Thank you, Mr. Chairman. My name is Ron Allen. I
am the Chair and CEO for the Jamestown S'Klallam Tribe located
up in Northwest Washington. And I am also an officer at the
National Congress of American Indians. And my testimony
presented to you and the committee is on behalf of our
organization that represents and advocates for all Indian
Nations from Alaska to Florida, representing over 560 Indian
Nations and communities and 4 million people.
As I listened to the dialogue all day today, we find it
interesting. When we talk about the unmet needs of health care,
no one knows that more than Indian Country. I was listening to
some interesting comments this morning about how America is
high represented in cancer recovery rates and diabetes recovery
rates, et cetera. Well, in Indian Country we have the highest
level of cancer rates and deaths and diabetes crisis,
tuberculosis exposure, et cetera, than any other ethnic group
or any other sector of our society. And it reflects the
incredible unmet needs in our Indian communities.
But what we do believe is that this initiative that is
being advanced by the Congress and by the administration is an
important one. We agree that the idea of addressing and
reducing costs and providing competent care and affordability
and quality is something we all look forward to, and that the
Indian tribes across America concur that that has to happen.
We want to remind the Congress, it seems like every time a
key piece of legislation that emerges, that the tribal
governments are a part of the American political family, and
that we are governments, and that we are very unique in America
as governments and as employers, as governments and our
businesses that are important to the revenue generation for our
essential services, including health care in our communities.
And any legislation that is advanced to address a subject
matter as this must include our government.
So we appreciate what is being advanced in all the
different components of this proposed bill, but we do want to
point out there is a number of issues that we are concerned
about, and that we would urge you as the committee and as the
Congress to consider these specific conditions that are
essential for the services to be provided to the Indian
communities because of our unique conditions and how services
are provided to the American Indian, Alaskan Native peoples
across the Nation.
We need the legislation to exempt American Indians and
Alaskan Natives from mandates and penalties. We need this
legislation to exempt tribal governments from the employee-
employer penalties. It is essential that the American Indians,
Alaskan Natives should be eligible for those insurance
subsidies, and that the portability component is also essential
for our people as well. It explicitly states that the Indian
Health Service and the tribes are essential community providers
so that is clear that that is how the services are being
provided.
And another key component that we are concerned about is
making sure that it is clear that the health care services that
are provided to the Indian people, that they are exempt as
income. The IRS wants to identify these resources as taxable
income, and for the Indian communities we have paid for it.
They are reflected in our treaties and the commitments of this
Nation. This Nation is great because of the commitment of the
Indian communities across the Nation, and so, therefore, that
as prepaid health care, they should not be taxed for services
that have been long overdue from this Nation to our
communities.
So these aren't just a wish list. They are critically
important to make it effective to fulfill what we believe is
the unmet need for our communities consistent with a lot of
sectors of America.
The Health Care Improvement Act is important, and it does
need to be passed and addressed, but it is not--this does not
replace that bill, that legislation, that is fundamental for
Indian Country and is so important for all of us.
There are many other points I could address, but I think
that I have highlighted the main issues. Our testimony has
identified a long list of issues and recommendations that we
have made to you, and we look forward to working with you, the
committee members, the staff, and the President, on making this
happen to raise the level of health care for all people,
including American Indians and Alaskan Natives.
Thank you, Mr. Chair.
Mr. Pallone. Thank you, Mr. Allen.
[The information follows:]
Mr. Pallone. Next is Assemblyman Webber. Thank you for
being here as well.
STATEMENT OF JAY WEBBER
Mr. Webber. Thank you, Chairman. And I would like to thank
the committee for the invitation.
My name is Jay Webber. I represent the 26th legislative
district in the New Jersey State Assembly. I am here actually
like Senator Vitale; I think we both take great pride in our
State, but we have different views of the state of health care
in our State. And one of the reasons that we are in such
desperate need of reform in New Jersey is some of the things
that we have done in the past.
My message to the committee, if I can leave one, is please
don't do to the Nation what New Jersey has done to itself. We
embarked on a series of reforms in 1992 with the intent of
improving access to health care and health care insurance for
our citizens. Many of the policies we put in place have been
discussed already in the committee today, things like
guaranteed issue, community rating. There were a series of
mandated coverages that have continued to be piled on. And even
as recently as this year, the legislature and the Governor
raised the minimum loss ratios for insurance companies in our
small-employer and individual markets.
These reforms, so-called, have created what I would call a
toxic mix for destroying the health insurance market in the
State. Actually, one commentator called New Jersey the poster
child for how to destroy the health insurance market. And the
results have been rather predictable: Costs for health
insurance in New Jersey have skyrocketed to the point where
today the average premium for families on the individual market
is as much as twice the national average. Small employers find
themselves not being able to afford to provide insurance to
their employees anymore. And consumers have fewer choices as
fewer insurance companies write policies in the State.
The reforms in 1992 did not result in a reduction in the
number of uninsured. Quite the contrary. Whereas in 1992 we had
13.9 percent of our population uninsured, after these reforms
the uninsured population stands today at about 15.8 percent.
I have a lot more statistics in my written testimony to the
subcommittee, but there is one story I would like to relate to
you. A constituent wrote in to me just after the bill that
Senator Vitale discussed earlier--just after that bill was
passed. A man named Fred, he is a CPA, his wife is quite ill
with a lot of doctors bills. Very content with his coverage
that his employer was able to provide him, but after the bill
that the senator discussed was passed, and the minimum loss
ratios were put into place, the insurance company stopped
writing insurance in New Jersey, and Fred lost his insurance
coverage. His employer could no longer afford to purchase it.
There are stories like that being played out across the
State as our attempts to reform the system wind up doing more
harm than good. There are solutions that I advocate vigorously
and many members of the legislature do advocate in New Jersey,
the most prominent of which would be to allow New Jerseyans to
purchase health insurance across State lines. Increasing
competition and consumer choice will provide less expensive and
higher quality health care to New Jerseyans. It will lower
their premiums. And one study by University of Minnesota
economists estimated that as many as 700,000 New Jerseyans
would be able to afford to buy health insurance if they simply
were allowed to purchase health insurance across State lines.
That is 700,000 or almost 50 percent of the uninsured
population in the State wiped off the uninsured rolls without
spending a taxpayer dime. I think that is a significant reform
that we should try.
There is great enthusiasm for that measure; and I have
gotten unsolicited letters, e-mails all across the State, not
just from constituents in my district, urging the legislature
to go forward with it. I just think it is no longer acceptable
to trap New Jerseyans in a State and in a system that they want
to leave. We have New Jerseyans who are looking to purchase
health insurance out of State, would do it if they could, and
insurers who would sell them insurance if they were allowed to
come in and sell policies free of the underwriting rules and
the coverage mandates that New Jersey puts on them, but we
stand in their way with regulations and laws that block those
transactions.
I discussed with a colleague of mine on the floor of the
assembly why they opposed the Health Care Choice Act that I
have sponsored in New Jersey, and the answer was quite simple,
and it was rather disturbing. And the answer that I got was, we
need their lives. We can't have New Jerseyans who would buy
cheaper health insurance across State lines who might be
uninsured today. We can't have them leaving the State because
we want to do single payer, and we need their lives to
subsidize the sicker and the older in the State.
I disagree with that approach; and it is disturbing to me
that after--you know, more than 20 years after Ronald Reagan
went to the Brandenburg Gate and told the Soviet Union to tear
down that wall in Berlin, that New Jersey continues to put up
walls to trap its citizens in a system that is failing them and
that they want to leave.
So if that is the enduring lesson that I can bring to you
today, that is what I am trying to do. Again, I would
respectfully request that the members of the committee and
Congress not repeat the mistakes that New Jersey has made on a
national level.
Thank you, Mr. Chairman.
Mr. Pallone. Thank you, Assemblyman.
[The prepared statement of Mr. Webber follows:]
Mr. Pallone. Dr. Scheppach--I had to ask how to pronounce
it.
STATEMENT OF RAYMOND C. SCHEPPACH, PH.D.
Mr. Scheppach. Thank you, Mr. Chairman. I appreciate the
opportunity to appear before you today on behalf of the
Nation's Governors.
I will very quickly focus on six issues, the first with
respect to the insurance reforms.
Although we agree that the Federal Government probably
should set the market rules with respect to guaranteed issue
and renewability, we think the rate bands in the bill are too
narrow. They should be broader so that States have the ability
to go above those particular minimums.
We are also very concerned that a lot of the State
insurance reform is being preempted essentially by the Health
Choices Administration in the bill. We think that States do a
relatively good job of protecting consumers, but we think that
the bill is going to add a lot of confusion with respect to who
does regulation and who does enforcement. Is it the State, is
it the Department of Labor, is it the independent agency or the
Department of Human Services?
Finally, I think there is going to be a real challenge in
setting of market rules outside the exchange to be consistent
with the ones in the exchange, because different rules would
likely perpetuate the risk selection and fragmentation that
exists in the marketplace today. With respect to the health
insurance exchanges, it seems that the draft bill creates a
super independent agency, the Health Choices Administration, to
make just about every decision with respect to exchanges. There
does not seem to be any clear advantage for States to design
and administer the exchanges, and yet they have the expertise
and capability and I think it is very important that the other
subsidized population needs to be well coordinated with
Medicaid.
The bottom line is, given the rigidity of the
administrative rules here, I question at this time whether a
substantial number of States would actually opt in to the
system.
With respect to the Medicaid expansion, while governors
differ somewhat on the Medicaid expansion, my sense is that
they would question the necessity of increasing the eligibility
of childless adults and parents over 100 percent of poverty. It
seems that these individuals could be made directly eligible
for the other subsidy and receive their benefits through the
exchange.
Governors do, however, very much appreciate the fact that
the committee is willing to have the Federal Government pay 100
percent of the expansion. The phased-in mandate to increase
reimbursement rates for primary care physicians give States
pause, but we do realize that it is a very, very small
percentage of the total reimbursement rate.
Governors do support the choice for individuals to move out
of Medicaid into the exchange. However, we would not support
requiring States to provide the wraparound benefit. This would
also include the CHIP population. The problem is that the
wraparound benefit is administratively difficult, and
maintaining the additional benefits may weaken the negotiating
power of the exchange in receiving the most competitive prices.
With respect to the dual eligibles, there is a number of
provisions in the bill that we do think strengthen the
integration of the dual eligibles, so governors are generally
supportive of those provisions. And, also, with respect to the
drug benefit rebates and a number of the provisions there,
governors support that as well.
Just one final comment on the transition, that if and when
this bill passes it is going to be a huge implementation role
for States and others; and, therefore, I think that the bill
should include specific provisions about some up-front money
for States to build capacity to implement as well as certain
certifications when the insurance reforms are done and what
other components are willing to be administered.
Clearly, you have got to coordinate the individual mandate,
the other subsidized population, as well as the employer
mandate in the bill.
Thank you for the opportunity to testify. I look forward to
working with the committee as you move the bill forward.
Mr. Pallone. Thank you.
[The prepared statement of Mr. Scheppach follows:]
Mr. Pallone. Mr. Freeman.
STATEMENT OF ROBERT S. FREEMAN
Mr. Freeman. Mr. Chairman, members of the committee, my
name is Robert Freeman; and I am here to represent five
publicly run health plans that administer the Medicaid, SCHIP,
and other programs for low-income individuals. We currently
serve 9 and soon to be 11 California counties, and our group is
the California Association of Health Insuring Organizations.
Today, I hope to provide a local perspective of what is
currently being accomplished by our publicly sponsored health
plans in California. I do so in the hopes that it may serve
this committee as it addresses the massive task of national
health care reform.
I would like to briefly describe how our health plans
operate. I hope that it will further discussion by policy
makers in relation to the health care delivery administration
at the local level as opposed--I mean, in addition to the State
and national level.
County organized health systems are one of two public plan
models in California, and we have been in existence for over 25
years. My plan, CenCal Health, was the first, beginning
operations in 1983. Since that time, four other county
organized health systems have been established in California
and one in Minnesota. These five plans have built on their
success and will soon be effectively providing access to high-
quality health care to over 880,000 individuals. That is larger
than 25 State Medicaid programs.
Our governing boards consist of local government officials,
physicians, hospital administrators, plan members and other
health providers. We are independent of county government and
function as a business. Although we are public entities, we
have no guarantee of perpetuity so, like a business, if we
don't do our jobs well, we can go away. We also operate full-
risk contracts with the State of California, necessitating
efficiency and innovation.
We are cost-effective. In relation to CenCal Health, 92
cents out of every dollar goes to the direct provision of
health care services.
Further, the California legislative analysts, which is
similar to the Congressional Budget Office, has stated that
county organized health systems annually save the State of
California $150 million over what it was would otherwise spend
on its Medicaid program. As public entities, all governing
board meetings are public, and board decisions are made in an
open and transparent environment.
Our plans also have broad-based provider networks. We found
the policy of broad-based provider networks to be very
effective in both providing member choice and building
community support.
Speaking of my own plan, we have approximately 90,000
members and have 289 primary care physicians, 1,200
specialists, 9 hospitals, and 113 pharmacies who serve our
population in two counties.
We also believe that our broad-based provider policies have
contributed to the high quality of care we provide to our
members. The State of California has a series of indicators
that annually measures to assess access to care and quality of
care levels, mostly preventive. County organized health systems
are consistently high performers in relation to these measures.
We also score well in biannual consumer satisfaction surveys.
With this in mind, we believe that the public health plan
concept currently works at the local level in relation to our
plans. Further, in relation to the SCHIP program in California,
public plans compete with private plans effectively and fairly,
with neither private nor public model working from a
disadvantage.
In the areas of Medicaid expansion and creating vehicles
who serve currently uninsured, we are in favor of both
concepts. Expanding the Medicaid programs is an existing means
to provide health coverage to currently uninsured individuals.
The infrastructure to provide the care already exists, as do
significant State and Federal standards, requirements, and
regulations to protect members, providers, and others.
The health insurance exchange concept outlined in the draft
legislation seeks to create a fair and reasonable means of
providing access to care and quality of care and choice. We do
suggest that extra care be given to ensure the development of a
health exchange will do no harm to existing health care
programs and safety nets in our communities that currently work
well. Our association believes the transparency provisions in
the draft legislation are essential to build and maintain
public trust in the delivery system.
I will conclude my remarks by requesting the committee to
take a good look at local delivery of health care options in
relation to national health care reform. We believe including
such a local component would promote community involvement,
investment, and enthusiasm in national health care delivery as
all health care delivery is local.
Thank you for your time.
Mr. Pallone. Thank you, Mr. Freeman.
[The prepared statement of Mr. Freeman follows:]
Mr. Pallone. Mr. Pollack.
STATEMENT OF RON POLLACK
Mr. Pollack. Thank you, Mr. Chairman. Thank you and members
of the committee for your prodigious patience. Very much
appreciated.
I want to thank you for the draft bill that has been
offered. We think it goes in the right direction for a number
of reasons. I was asked by the staff to focus my remarks on the
changes with respect to the Medicaid program, and so I will
focus my comments on that.
As you know, Medicaid provides coverage today for almost 60
million low-income people, approximately half of whom are
children; and we think that Medicaid is the right vehicle to
provide coverage for the poor. Medicaid provides certain things
that simply don't exist today in the private marketplace that I
think are absolutely critical for low-income populations.
A recent article in Health Affairs pinpointed how important
it is to provide cost-sharing protections for low-income
people; and if they don't have those cost-sharing protections,
it means they are unlikely to get the services that they need.
Well, Medicaid rises to that challenge. Medicaid does not
require premiums or enrollment fees. Copayments for individual
services are limited normally to nominal amounts. Certain kinds
of services are exempt from cost sharing, things like
preventive care for children, emergency services, pregnancy
related services; and certain populations also are exempted
from cost sharing: foster children, hospice patients, women in
Medicaid, breast or cervical programs. These are very important
protections that simply do not exist in the private sector.
But, over and above that, Medicaid provides certain kinds
of services. For example, for children, early and periodic
screening, diagnosis, and treatment was very important so that
children get preventive care and any diagnosis that shows that
something needs to be taken care of does get treated.
Transportation is provided to doctors' offices for appointments
and to community health centers. There are appeals rights that
are very important that do not exist in any similar robust
fashion in the private sector.
There aren't insurance market problems like you have in the
private sector, kinds of problems that would be corrected over
time with the bill that you have introduced.
Medicaid provides good health outcomes. As the Kaiser
Commission on Medicaid and the Uninsured reported in May of
this year, those in Medicaid are less likely to lack a usual
source of care. Obviously, that is true, compared to the
uninsured, but it is also true compared to those with private
insurance. They are more likely to have a doctor's appointment
in the last year. They do not have an unmet health need with
the same frequency as those who are uninsured and those that
have private insurance. Low-income women are more likely to
have a pap test in the past 2 years.
So Medicaid does provide very significant services for this
important population, and it does so while costing
approximately 20 percent less to cover people in Medicaid than
it would cost if they purchased coverage in the private market.
Now, building on Medicaid and strengthening the eligibility
standards is something that I believe is close to consensus
agreement. There was huge support for this from the various
stakeholders: American health insurance plans, Blue Cross/Blue
Shield, American Medical Association, American Hospital
Association, AARP, NFIB, Chamber of Commerce, Business
Roundtable. We all reached agreement about the importance of
doing this.
And one of your favored colleagues of the past, Billy
Tauzin, and we at Families USA have agreed that it is very
important to extend eligibility, as this draft bill does, to
133 percent of the Federal poverty level.
So I want to concentrate on why I think that measure is so
important. We have huge differences today between different
populations, children, their parents, and other adults who do
not have dependent children. For children, due to the
confluence of the Children's Health Insurance Program and
Medicaid, in almost every State children are eligible for
coverage if their income standards are below, family standard
is below 200 percent of poverty. And in some States, as you
know, Mr. Chairman, some States have exceeded that.
However, for parents, in only 16 States and the District of
Columbia does the eligibility standard even reach the Federal
poverty level, which, mind you, for a family of three is only
$18,310. Indeed, the median income eligibility standard among
the 50 States, as you will see in the chart at the end of my
testimony, is only 67 percent of the Federal poverty level,
roughly $12,300 for a family of three.
Mr. Pallone. Mr. Pollack, you are a minute over. If you
could summarize.
Mr. Pollack. I apologize. I would just say I think this
would be very helpful if we did extend eligibility,
irrespective of family status; and I am glad that the committee
appears to want to go in that direction and pay for those
costs. Thank you.
Mr. Pallone. Thank you.
[The prepared statement of Mr. Pollack follows:]
Mr. Pallone. I want to thank all of the panelists.
Now we are going to go to questions, and we are going to
start with Ms. Schakowsky.
Ms. Schakowsky. I appreciate your beginning with me, Mr.
Chairman. I really have just one question.
Mr. Freeman, I wanted to, first of all, thank you for
flying from California to testify this evening. And I really
want to thank all of you. I was in the State legislature in
1993 and testified at a very similar panel about what the State
of Illinois was doing. So it is a little bit deja vu for me
too.
I want to congratulate your county and the other California
counties that operate health plans and for providing a public
option for families enrolled in Medicaid and the CHIP program.
I wanted to ask you about a provision in the discussion
draft that is intended to reduce waste and increase value for
Medicaid taxpayers, for the taxpayer dollars that your State
and the Federal Government is paying. The provision would
require that all Medicaid-managed care plans have a medical
loss ratio of at least 85 percent. You have already testified
that your plan's medical loss ratio is a pretty remarkable 92
percent. So I think everybody understands that that means--85
percent, it would mean that of every Medicaid dollar that is
paid to the plan, at least 85 cents are used to pay for health
care services furnished by hospitals and doctors and other
providers. No more than 15 cents on the dollar could be used
for marketing administration or, in the case of private, for-
profit plans, payouts to shareholders.
So do you believe that it is reasonable for taxpayers to
expect that any well-managed plan, whether public or private,
have a medical loss ratio of at least 85 percent? We have heard
from some that that is somehow unreasonable, so I would like to
hear what you say about that.
Mr. Freeman. Well, I will just respond from our own
experience.
First of all, the California CHIP program has that
requirement. So every plan----
Ms. Schakowsky. Same requirement?
Mr. Freeman. Yes, same requirement. And as for our plan and
our sister plans, none of our plans have had an issue of
meeting that requirement on a consolidated basis. It has never
been an issue for us.
Ms. Schakowsky. You looked like you wanted to say
something. Do you have that at all? Do you have a requirement
on loss ratio?
Mr. Vitale. Yes, thank you, Congresswoman. We just changed
our medical loss ratio in New Jersey from 75/25 to 80/20, which
means that more money will be directed toward providers and the
care that they provide to reimbursement with regard to doctors
and hospitals.
It is something that works in our State. It hadn't been
changed in years. So we took an incremental step. We had
discussed 85/15, but we settled at 80/20, which literally puts
millions of dollars more into the providers' side of the
equation and a little less money into the profit side of the
insurance industry.
It did not cause any disruption in the insurance industry
market. A couple of small companies closed and moved out, but
that was unrelated to the 80/20 change. It is just that more
money is now spent on the provider side, then less in the
pockets.
Ms. Schakowsky. Does anyone else want to comment on that?
Yes.
Mr. Webber. I just take a very different view from Senator
Vitale on the issue. And in fact, Guardian, which is a not a
small provider, the representative was in my office last week
saying the 80 percent loss ratio made us leave the State. They
simply couldn't be profitable in New Jersey after the loss
ratio went to 80 percent.
And that is actually what caused the constituent that I
referred to during my testimony to lose his coverage. The
insurance company told him flat out that because New Jersey is
going to impose an 80 percent loss ratio and because they are
going to make us write in the individual market, which is not
profitable for insurers in the State, we are going to pull out
of New Jersey and you are going to lose your coverage.
So there is a difference of opinion from the legislators in
New Jersey as to whether this 80 percent loss ratio is a good
thing.
Mr. Scheppach. The only comment I would make is that we are
dealing with three separate populations in Medicaid. You have
got the women and children, you have got the disabled, and you
have got the long-term care. I am just saying that the mix
there, because the disabled and long-term care are more
intensive in terms of managing, if it is done correctly,
integrating the services. So States that have an unusual
percentage of that might have more difficulty meeting that than
other States.
Mr. Vitale. I just wanted to follow up on my colleague's
response to you. I appreciate your years in the State
legislature and understanding the nuances of that business.
When I spoke with the Department of Banking and Insurance
and I learned that Guardian and a small company left, their
letter to the Department had nothing to do with the MLR, with
the medical loss ratio. In fact, it had to do with other
reasons.
You know, there are--most every--well, actually, every
insurance company who writes in New Jersey already has a higher
MLR by practice. We put it--we codified it into law. They
don't.
There isn't one company that is going to leave that State.
They are profitable. Some of it is difficult, just like any
other business. But for those who are in that State, whether it
is Horizon or it is Blue or it is anyone else, they are doing
just fine. They would always like more.
And when a lobbyist or a representative from an insurance
company will come to my office and complain to me that they are
going to make less this year, well, that is just what they do.
They will want to put the fear into any legislator that, if
something changes, if the dynamic in the insurance industry
changes, if they are made to pay more to providers and put less
in their pocket, then the sky is going to fall and the world
will end for them; and none of that has happened.
Ms. Schakowsky. Thank you very much.
Mr. Pallone. The gentleman from Georgia, Mr. Gingrey.
Dr. Gingrey. Mr. Chairman, I am not quite ready. If you
could come back to me, or if I am the only one I will get
ready.
Mr. Pallone. Sure.
Mr. Shadegg, do you have questions?
Mr. Shadegg. I do, Mr. Chairman. Thank you very much. I
would like to ask each of the witnesses a set of three brief
questions. I would like just a quick answer to them, if I
could.
First would be, do you have a copy of the tri-committee
discussion draft? Yes or no. When did you receive it, and have
you had a chance to read the entire bill?
Mr. Allen, do you have a copy?
Mr. Allen. Yes, we do have a copy. We received it Friday.
We have reviewed it as best we can over the weekend.
Mr. Shadegg. I understand the ``we''. I like the pronoun.
Have you read the bill personally?
Mr. Allen. No, I have not.
Mr. Shadegg. Mr. Vitale?
Mr. Vitale. We have received a copy in our office, and we
have not reviewed it yet. Thank you.
Mr. Webber. I have got an answer to only one of your
questions, the first one. No.
Mr. Shadegg. You don't have a copy of the bill? You were
not provided a copy of the bill?
Mr. Webber. No.
Mr. Shadegg. OK. Doctor.
Mr. Scheppach. Yes, I have a copy of the bill. I received
it Friday; and, yes, I have read the entire bill.
Mr. Shadegg. Thank you. You are the first.
Mr. Freeman.
Mr. Freeman. Yes, we received the bill. We received it
Friday around noon California time. And I have read--I think I
am on Page 115.
Mr. Shadegg. Out of?
Mr. Freeman. 852.
Mr. Shadegg. Thank you.
Mr. Pollack.
Mr. Pollack. I did receive the bill on Friday. I have read
portions of the bill. Our staff has read the entire bill.
Mr. Shadegg. Thank you very much.
Assemblyman Webber, I appreciate your testimony. I was able
to watch it from my office. I do appreciate your efforts on
behalf of consumers; and I, as you know, share your interest in
allowing the across State purchase of health insurance so that
we could bring some competition to the market and bring down
cost.
But I guess we are looking at a broader debate here. We are
looking at the government becoming vastly more involved in the
insurance sector and, quite frankly, getting the government or
giving the government a much larger role kind of between
patients and their doctors.
You made a plea in your testimony for not--for the Congress
not to do what has been done in New Jersey. I presume that is a
reference to the 1992 legislation in New Jersey and also to
guaranteed issue and community rating. Can you expand on that?
Mr. Webber. Well, again, the health insurance market is not
healthy in New Jersey. In fact, it is very sick. We had at many
as 28 insurers writing policies in the State back in the early
'90s; and due to these reforms undercutting their ability to
underwrite effectively and efficiently, mandating coverages,
putting in minimum loss ratios that are not profitable, we are
down to about only five companies that really write policies on
the individual market to any great degree. So consumer choice
has been virtually eliminated, certainly diminished in the
State.
And, Congressman, I am eager to take on the challenge of
health care reform at the State level; and we have talked about
this many times, actually. If we had the opportunity to get at
it and allow New Jerseyans to get out of State and create a
system in which they could really shop for policies that suit
them, instead of the policies that the politicians in Trenton
think are suitable for them, I think we would go a long way to
making health care and the delivery of health care better in
New Jersey, and then we can get at the rest of the uninsureds.
Mr. Shadegg. Mr. Pollack seems to be concerned, and I think
justifiably so, about uninsured Americans, about those people
who do not have health insurance coverage at all. If we
provided everyone in New Jersey and indeed everyone in America
who does not have insurance right now and who cannot afford to
buy health insurance right now with a refundable tax credit,
that is, cash from the Federal Government to go buy a health
insurance policy of their own, do you believe that would take
care of, number one, their health insurance needs? And, number
two, would it benefit them to let them make those choices? Or
is it better to put them in some form of, I guess, a Medicare
program or a program like the tri-committee draft?
Mr. Webber. No, I think there is broad consensus that
people want more control over their health care decisions.
Certainly the refundable tax credit would help. But I have to
tell you that, as I understand it, the range for a family would
be around $5,000; and in New Jersey that is not even going to
buy half of the average premium for a family. So New Jersey
would need a little more reform.
If we had the opportunity, for example, to buy health
insurance policies across State lines and got a tax credit to
purchase that, then we could really start to eliminate the
uninsureds from the rolls.
Mr. Shadegg. Many of us have advocated not only a
refundable tax credit but the creation of more insurance pools,
allowing more pooling mechanisms so people would have more
choices and obviously creating a level playing field in terms
of taxes so people could buy health insurance on the same tax
basis that a company can. Would you support those reforms? And
do you think those would help the people of New Jersey?
Mr. Webber. Well, absolutely; and that is why I am eager
for the States to get a shot at this and really take our cut,
not in the way that New Jersey has tried it but in the way New
Jersey can try it going forward. And association group plans
like you are talking about, certainly, after health care choice
and interstate purchase of health insurance, would be one of
the top things we would want to do.
Mr. Shadegg. Thank you very much for your work in this
area. And I think Mr. Chairman, I concluded my last question
within the 5 minutes.
Mr. Pallone. And I certainly appreciate that.
Mrs. Capps, our Vice Chair.
Mrs. Capps. Thank you, Mr. Chairman; and I thank you all
for your patience and your testimony today.
I particularly want to thank and welcome my constituent,
Mr. Robert Freeman. The program that he described, CenCal, and
the counties that I represent in Congress, I can attest to the
fact that you, since its beginning, which I was a part of as a
community member and also one who worked in public health
nursing in the school districts, that it is very successful,
very effective, and now has grown to include two counties and
is part of, as you describe, the alternative ways of delivering
Medicaid, which we know as MediCal, and Healthy Families in
California.
Now, I want to give you a chance to expand further but ask
you some--two or three questions. One of the complaints that we
are hearing from many who oppose a public plan option is that
it would we weed out unfairly, they say, private competitors.
Can you elaborate on how CenCal competes and does business
alongside of private entities for the Healthy Families Program,
which is how we term the SCHIP in California? Are there still
private plans offering coverage? And how do you get along with
one another?
Mr. Freeman. Thank you, Mrs. Capps.
Sure, in the California SCHIP program it is called Healthy
Families. It is set up as a competitive model where they have
the States divided into regions and in those regions counties
where you would have multiple plans compete for the Healthy
Families business, usually three or four health plans in a
designated area. And in those areas where, like in Santa
Barbara and San Luis Obispo counties where we are from, we are
a public plan and we compete with private insurers, as well as
those other areas of the State that have public plans.
And in the 10 years that the Healthy Families Program has
been going, the competition between the public and private
models has been, we think, effective. It has been friendly. It
has been, I think, successful in providing choice and in giving
options for those subscribers as to which health plan they
would like to join.
Recently, actually, we have had a couple of the private
plans pull out of our area because--I don't know their reasons.
I am assuming the business situation changed. But--so now we
are one of only--instead of four plans, we are one of two plans
in both Santa Barbara and San Luis Obispo counties. And we do
think one of the advantages of our plan is because we are
created by--of the community, we can't exit the market place.
We wouldn't. Our mission is to serve our service area.
But, in general, I think the competition has--it has done
as it was intended to do at the time.
Mrs. Capps. Actually, I described San Luis Obispo County
where the number of private providers has dwindled in large
part because of the lack of providers. It is a very rural area,
and the reimbursement rate being so low, and that there really
is a monopoly in the private sector. So this really is the only
choice that families eligible for Healthy Families can choose.
My second question, does the county organized health
system, as you have experienced it, have bipartisan support
both within our county and the State? It is not particularly
seen as a partisan program, is it? Does it enjoy broad-based
support; I am asking.
Mr. Freeman. It does. All of our plans enjoy, I think,
bipartisan support at both the local and State level. I think
anytime you have a public program that delivers what the
policymakers intend it to do and is very watchful and efficient
with taxpayer monies, I think that is something that either--no
matter what your party affiliation, that is good public policy.
And our assemblymen and State senators and county supervisors
of both parties and over time have been supportive, because
they do see it is a community run plan where the community
actually--the health care community gets together to solve
problems.
Mrs. Capps. And I know the State appreciates it, because
you have saved a great deal of money and provide also very
individualized services to your constituents.
Mr. Freeman. We do our best, and we think we have been
successful.
Mrs. Capps. And you do have representation on your board,
all of those sectors. I have talked with many of them.
Finally, can you tell us how you contract with providers,
and especially with safety net providers in the community?
Mr. Freeman. Sure. Safety net providers make up--first of
all, we contract with all the safety net providers in our
community; and we consider that county clinics, community
health clinics, all the hospitals. We have all the hospitals.
And we also, which is fairly unique for a Medicaid plan, we do
cover long-term care. So we contract with all the skilled
nursing facilities. And we think that it has been--it is very
effective.
We know that--it is important to us that these safety net
providers stay healthy, because they do see a large portion of
our membership. They are open at times when our members can get
to them.
And we have also been very mindful that some of these,
especially some of these skilled nursing facilities, really are
watching every penny. So we do our best to make sure they get
paid as quickly as possible; and at times in the past we have
literally cut checks early so they can meet payroll and so
forth, because it is in our interest for them to survive. They
are part of our community, they are partners with us, and it is
certainly in our interest to make sure they are as viable as
possible.
Mrs. Capps. Thank you. Thank you, Mr. Chairman.
Mr. Pallone. Thank you.
Mr. Pitts.
Mr. Pitts. Thank you, Mr. Chairman.
I would like to thank the panel for your testimony,
especially thank Assemblyman Webber for your comments.
I would like to ask you, Assemblyman, why does health care
in New Jersey cost so much? Is it because of the mandates?
Mr. Webber. There is a lot of things that drive the cost of
insurance in New Jersey. Certainly, the underwriting rules,
notice guaranteed issue, that is, the insurance companies have
to take all comers, regardless of their health condition, and
then the community rating that has been modified recently, that
also drives up the cost of insurance for many.
There are other New Jersey specific reasons. I mean, it is
an expensive place to live and work and provide the medical
care as well.
But, in addition to those factors, we do have as many as 45
mandated coverages for everything from mammograms to cervical
cancer to Wilms tumor and infertility treatments, and there is
a series of mandated coverages that also drive up the cost.
Mr. Pitts. How has the price of health insurance increased
since New Jersey enacted these mandates? Can you give us
examples of the amounts of increases?
Mr. Webber. Well, it is difficult to pin down how much each
mandate costs and increased the cost of insurance. But the
estimate is that for every 1 percent of increase in the health
insurance premium that mandates cause as many as 8,000 people
in the State lose their health coverage because their employers
can no longer afford to provide it for them or because they can
no longer afford to purchase it themselves. So just in the
last, I believe, 7 years we have had over 110,000 people in the
State join the uninsured rolls.
At the same time, we are putting in rules and mandates. We
have mandated over 15 coverages in the last 7 or 8 years in the
State. So we can continue to increase the costs even as people
find it more and more unaffordable to purchase health insurance
in New Jersey. And I just think that is backwards. We need to
start looking for ways we can provide more efficiently health
insurance to our constituents.
Mr. Pitts. In your testimony, you mention that your
legislation maintains your State's core consumer protections.
What are those protections?
Mr. Webber. The legislation would require out-of-State
insurance companies to come in and be certified by the State
Department of Banking and Insurance, the New Jersey DOBI. In
order to do that, they would submit themselves to jurisdiction
to be sued in the State of New Jersey; and if there were
complaints or appeals, they would have to submit themselves to
the jurisdiction of the Department of Banking and Insurance to
rectify those problems.
So a New Jerseyan who would purchase, say, a policy from
Colorado wouldn't be going to Boulder to fight with the
insurance company. They could go to Trenton or the local
Department of Banking and Insurance representative.
I think that strikes the right balance. It gives New
Jerseyans the opportunity to purchase health insurance that
meets their needs in terms of the mandated coverages and the
underwriting rules that might be written in another State, but
it maintains protection for New Jersey consumers and allows
them to deal with their insurance companies in their home
State.
Mr. Pitts. And do you think that a public plan like the one
in the discussion draft before us will lead to crowding out of
the private insurance market?
Mr. Webber. Well, again, I haven't seen the bill. But I
think, just intuitively, when there is a government plan
available, subsidized by the taxpayers, without any real profit
motive or incentive, there are going to be private companies
who will dump their employees into what we call New Jersey
Family Care, or whatever alternative government program is
available, especially as those income levels rise for
eligibility in New Jersey.
Now we have 350 percent of poverty. There are going to be
employers who recognize that they can still have their
employees covered by insurance and not have to pay for it
themselves. I think intuitively, yes, they will start to crowd
out private health insurance.
Mr. Pallone. The gentleman's time has expired.
I know the clock is a little weird there. I apologize for
that. I am going to recognize myself for 5 minutes.
This discussion about the protections, if you will, it
really goes to the heart of a lot of what we are dealing with
in this bill. I mean, I have to be honest with you. When I--you
know, Members from other States are constantly telling me that
they want to make sure that, you know, that individuals can get
insurance regardless of pre-existing conditions.
I mean, the proposal before us says that insurance
companies can no longer be able to engage in discriminatory
practices that enable them to refuse to sell or renew policies
due to an individual's health status. They can no longer
exclude coverage or treatments for pre-existing conditions. It
limits the ability of insurance companies to charge higher
rates due to health status, gender, or other factors, I mean.
It is a very important part of the discussion draft. And
frankly, when I--you know, I am proud of the fact that in New
Jersey those kinds of discriminations are not allowed. OK?
So the other thing you have to understand is that, you
know, the Insurance Trade Association, AHIP I guess it is
called, they have told us that they are willing to accept new
regulations at the Federal level with limitations on their
underwriting rating practices, no more pre-existing condition
exclusion.
How is it--and I have to get to three questions, so I am
going to ask you first, Assemblyman Webber. How is it that the
trade association thinks that we should include these
provisions and you don't? What is the theory?
I mean, obviously, they think they can sell insurance
nationally. They are suggesting that these New Jersey
provisions be put into the Federal legislation. Why are they
advocating that?
Mr. Webber. Well, I can't speak for the insurance industry,
for sure. And when there is a big hammer hanging over your
head, I think insurance companies might be willing to
compromise more than they otherwise would.
Let's say this. There are better ways to deal with people
with pre-existing conditions and those we call the chronically
uninsured or chronically uninsurable than to require guaranteed
issue of all insurance policies.
Mr. Pallone. And I just don't have a lot of time, and I
want to ask Senator Vitale. I mean, my fear is just the
opposite, that if we don't include these provisions or, as you
suggest in New Jersey, that we simply deregulate, it would have
major consequences. I mean, I would ask Senator Vitale to
respond that. I mean, this is a cornerstone of what we are
trying to do is to not allow, you know, to have these
protections at a Federal level. You have them at the State
level. What happens if we don't have them?
Mr. Vitale. Well, it has been very meaningful for the
consumers in New Jersey to have guaranteed issue, one of the
few States that enjoys that provision. It guarantees that
insurance companies shall write a policy and can't exclude
someone because of pre-existing conditions. So, essentially, it
is take all comers.
Imagine an environment in New Jersey, as bad as it is in
our State for those who are uninsured and every other State,
for an insurance company to cherry-pick who it is that they
would like to insure. Will they decide not to insure women of
child-bearing years because they are higher risk and they are
going to be expensive?
Mr. Pallone. And gender is one of the things that has been
used. Exactly.
Mr. Vitale. That is right. And will they decide not to
insure an older New Jerseyan, a pre-Medicare New Jerseyan
because he or she is at higher risk of anything, heart disease,
kidney disease, cancer? The older you get, the sicker you get.
It is a fact of life. Will they only want to insure children?
When you purchase insurance out of State without the
safeguards provided in our State, they will only take those who
are in good condition who are considered to be a good risk,
leaving those in New Jersey who are considered to be a higher
risk, women of child-bearing years, older men and women, out of
the mix. And the way the insurance business works--and I don't
need to give you this lesson--is it is about pooling risk with
healthy lives and sick lives together and risky lives and less
risky lives together and you come up with an average price.
Mr. Pallone. I don't mean--I know I am going to have to cut
you off. Regardless of the debate--and I am going to move on to
Mr. Allen and just make a comment here. Regardless of the
debate, though, about whether you think we should deregulate in
New Jersey and people should go to other States--I mean, the
bottom line is that what the discussion draft would do would be
to basically say that insurance companies would have to apply
these rules federally across the country. And I mean, if the
Insurance Trade Association says it is OK, I frankly don't
understand why it wouldn't be.
But let me just go to Mr. Allen, very quickly, because I am
concerned--you know, I want you to comment, if you will. The
discussion draft raises Medicaid eligibility levels to 133
percent of Federal poverty in every State. In addition, it
makes available income-based subsidies for persons obtaining
insurance coverage in the new health insurance exchange. I
think these provisions are very important for Native Americans;
and I just wanted you to comment on them, if you could.
Mr. Allen. Well, without a doubt. I spend a lot of energy
on the Travel Advisory Council for CMS with regard to Medicaid
rates. I can't tell you specifically, you know, because I am
not the one who actually administers it with my tribe. But we
can get back to you in terms of, is it enough? Is it going in
the right direction? And I think it is. Off the top of my head,
knowing what we have been trying to do with regard to the
recovery rates for the tribes, that it will help us immensely.
Accessing Medicare and Medicaid has been real challenging
for the tribes in terms of the policies they administer over
there. So it has been difficult for us, and we are looking
forward to our new opportunities. I can say that if this bill
incorporates some language in there that strengthens it and
puts provisions in there that it improves our ability to, as
providers, whether it is through the Indian Health Service or
the tribal clinics and hospitals, then it is definitely going
to improve our ability to raise the level of services to all of
our people.
Mr. Pallone. I mean, we are trying. I mean, you probably
know that the Indian Health Care Improvement Act, which you
know is my bill, that I am the prime sponsor, is coming up in
Resources tomorrow. We have been trying since the beginning of
the year to incorporate a lot of the provisions of that, you
know, in SCHIP and the stimulus and also protections in this
health care reform or in Native Americans. And we will still
try to move the other bill. But we do want to and we are really
trying, as much as possible, to address some of the disparities
that we know exist with Native Americans. I just wanted you to
know that.
Mr. Allen. I would also like to inform you, Mr. Chair,
that, you know, times are changing for tribes in terms of how
we provide services. So our clinics and hospitals provide
services to both Indian and nonIndian alike now. It has
changed. Where in the old days where we just provided services
to the tribal citizens; and now, because of the diversity of
our communities and the communities around us where, like my
community, the providers actually bailed out in the community,
so we basically took on that role. So we have a clinic right
now where 95 percent of our patients are nonIndian.
Mr. Pallone. I appreciate that, and I know I went over. But
I am just concerned that--I want to make sure that the Native
American concerns come out.
Mr. Gingrey.
Dr. Gingrey. Mr. Chairman, thank you for doing that.
Mr. Chairman, you were just, I think, asking Representative
Vitale in regard to why, in the State of New Jersey, this
situation where there would be guaranteed access, community
rating, all of these mandates that make it untenable for many
insurance companies to continue to do business in the State of
New Jersey. And the chairman said, well, gee, you know, AHIP
says it is OK, and they are buying into that across the
country.
But I would suggest that they, as soon as we--if we did
this--and I hope we do--pull out the mandate that everybody has
to have health insurance, the mandate that they have to do it,
and employers also have to provide it, that would be at the
point at which AHIP would say all of a sudden no longer are we
going to accept community rating and universal mandated
coverage.
So I will just throw that out there.
Let me ask a question of Representative Webber. Your State,
as you said in your testimony, has had massive decrease in
insurance carriers, I think from 28 in 1992 down to seven
insurance carriers now in the individual health insurance
market. Do you think that a public plan like the one we are
discussing in this draft before us, do you think it will lead
to maybe some of these private carriers coming back into New
Jersey or, rather, a further crowding out and lesser numbers
participating?
Mr. Webber. Well, I can't see any of the private insurers
coming back just because there is a public plan now being made
available. You know, there will be fewer lives on the private
insurance market. I would assume--you know, bear in mind we
might have seven companies writing policies, but if you are
writing policies and charge $18,000 a year in premiums, you are
really not intending to cover anyone. So we really have fewer
than seven who are still writing policies seriously in the
State. I don't think it is going to get any better anytime
soon.
Dr. Gingrey. Let me ask your colleague from New Jersey, the
Honorable--is it Vitale? And I heard that--in fact, it is right
here in this document--that New Jersey has in fact enrolled
people earning as much as $295,000 a year in public coverage.
Yet 23 percent of children below 200 percent the Federal
poverty level are uninsured. How can that happen in the State
of New Jersey?
Mr. Vitale. Well, let me--I appreciate that question, but
it is a question that has been asked and answered during budget
hearings in New Jersey, of which I am a member, also. But it is
a question that has a very simple answer, and the answer is
that there were as many as three or four individuals who
applied for coverage in New Jersey who lied on their forms when
they applied for New Jersey family care. And it was through the
process of an audit that we discovered that lie. And it was
corrected. In fact, I wrote additional legislation that
required not only that people fill out more information on
their form in terms of their income but that Treasury do a back
check against their wages and the filing so we know exactly
what they are earning in the year that they are claiming they
want to be a member of the program.
So it was a matter of fraud on behalf of the three or four
individuals that made big headlines. But--and, unfortunately,
tried to give a black eye to the hundreds of thousands of
honest New Jerseyans and parents and children who are doing the
right thing.
Dr. Gingrey. Reclaiming my time. I mean, I have got a sheet
here of all the States and the average annual premiums in the
individual market. In New Jersey, it is $5,300. And you go down
to Wisconsin, it is $1,200. And I think we are getting some
answers in regard to what the problem is in New Jersey.
Mr. Pollack, in the limited amount of time I have left, let
me just ask you this. I know you have been involved in health
care reform for a long time. You had a lot of things to say
about Medicare Part D and government controlling prices and
setting prices of drugs and things like that. But your
organization is, you know, well respected, of course, and has a
lot of opinions on all this.
Let me just ask you a quick question, though. Shouldn't we
require States to ensure that low-income children are covered,
let's say in the CHIP program, before opening up coverage to
middle- and high-income families?
Now, I ask that question really in a way for my colleague,
Representative Nathan Deal, who is the ranking member, as you
know, on the Subcommittee on Health that has a bill to that
effect, that had an amendment when we were working on the CHIP
program to say that if we are going to expand it, let's at
least assure that 95 percent of those who are intended in the
original bill between 100 and 200 percent of the Federal
poverty level that we cover them before going up to 300 and 350
percent. Your response.
Mr. Pollack. Well, Congressman, I don't think it is one or
the other. The CHIP legislation, which the President signed in
February, is designed to accomplish what you just described,
namely, making sure that more children who have been eligible
for CHIP actually enroll in the program, and the States are
actually provided financial incentives in order to do that
work.
Now, when you are talking about 200 percent of the Federal
poverty level, remember, for a family of three, that is
approximately 36, $37,000. The average cost of family health
coverage today is approximately $13,000. So that is more than
one-third of their income. And so if you go above 200 percent
of poverty, you are helping people who otherwise could not
afford to provide coverage for their children.
And I don't think those two goals that you described are
antithetical to one another. I think we can do and should do a
much better job of getting kids enrolled who have been eligible
and who are not in the program; and, at the same time, we
should make coverage more affordable for those people who
simply can't afford it, even though their incomes are above 200
percent of poverty.
Dr. Gingrey. I thank you.
Mr. Chairman, I know that my time has expired. I appreciate
your patience on that. Thank you, Mr. Pollack.
Mr. Pallone. Thank you.
The gentlewoman from Florida, Ms. Castor.
Ms. Castor. Thank you very much, Mr. Chairman.
Since we have some experts on local and State initiatives,
I would like you all to address a concern I have. You know, all
across America, local communities have stepped up to fill the
void because they don't have anywhere else to turn.
For example, in my hometown in Tampa, Hillsborough County,
we have, for the past 15 years, provided an initiative where if
you do not have health insurance from any other place, if you
don't qualify for Medicaid or Medicare, and you are a working
family below about 200 percent of poverty, the county has
created a partnership with local hospitals and community health
centers so that these folks don't end up in the emergency room
and county government doesn't pay those very high costs out of
property taxes, which everyone hates.
It is very successful, and it has created a robust primary
care system of 12 clinics, and hospitals are reimbursed and the
doctors there are reimbursed. And now, with our health reform
initiative, it looks like we, the Feds, now will come in and we
will cover the cost for the people that my community were
covering. And that is great. That is going to be great for my
taxpayers. But I hate the thought of losing this award-winning
local clinic system of primary care system that we have.
And there are other communities across the country, I
think--Oakland, California, maybe, San Antonio, Texas, others,
plenty of others--that have these. How do we, in transition,
ensure that these terrific initiatives on the local level
survive?
Mr. Vitale. Well, I think the program in Tampa is
wonderful, and it is programs like that in New Jersey that we
are trying to emulate. We have called them collaborative care
models. We are working with local hospitals who are in close
proximity to federally qualified health centers and other
clinics to transition the uninsured, or even the insured, who
present in an emergency department with what is really non-
emergent illnesses or injuries.
We are required, of course, to take all comers, but those
who present at an emergency department really don't need to be
there. So we are working with our local hospitals. So it is a
great model.
I think the question, I hope, I think is, how are those
providers, those caregivers, doctors and nurse practitioners
and nurses reimbursed for the care they would provide?
Ms. Castor. So is it--Dr. Scheppach, is it State leadership
that needs to step in, because the States will have so much of
the responsibility when we are talking about the 133 percent of
poverty? It is going to be through Medicaid that they will be
covered.
Mr. Scheppach. Yes. I mean, there is a lot of programs now.
Some States do programs with State-only dollars and a lot of
the locals do. So there are those sort of tiered effects. This
is probably going to be--if this bill were to pass, it is going
to be a transition, I suspect, of 4 to 5 years before you
transition. And I think to some extent what States would do
would be to work with communities to ensure that they are doing
part of the eligibility. That is feeding in. Because all the
problems in Medicaid and SCHIP, oddly enough, is finding these
kids and getting them, in fact, enrolled. And I think we are
going to have the same problem with the other subsidized
populations.
What worries me very much about this bill, however, is that
the entire sort of gateway or alliance is Federal. So now you
are going to have the Federal Government in the middle of this
doing insurance regulation for those qualified plans, and then
you have got States outside that doing nonqualified plans. So I
think the coordination problem is going to be greater going
forward. I would worry about that.
Mr. Pollack. Congresswoman, your community is well known as
doing something that is exceptional. Obviously so many
communities across the country don't do that. And it is one
thing to provide primary care as community health centers do.
Often people who get primary care may have difficulty getting
access to a specialist.
But your question and what Ray was just talking about, I
think, tells us that, yes, there is going to be a transition,
but it makes a whole lot more sense to put that lower-income
population into Medicaid that exists rather than create the
exchanges and overburden those exchanges which are going to
have significant difficulty reaching out to larger portions of
the population. Let us keep that lower-income population, at
least for the time being, in Medicaid. Let us see how the
exchanges function. But also, let us make sure that the
protections that now exist uniquely in Medicaid continue to be
provided to that low-income population.
Mr. Freeman. If I could finish up and briefly add that,
again, we think that all health delivery is local. And I think
we also believe that the ability of local communities to
address their own needs is very effective, and what has
happened in your community is a perfect example.
And also, when you have the local delivery, you really do--
you do encourage physicians and hospitals and other health care
providers to really talk to each other and work towards this
common goal of how can we make the community that we all live
in a better place for all of their citizens.
So we are big believers in really having whatever comes out
of the Federal health care reform take a look at what is
working at the local level and hopefully maintaining that.
Ms. Castor. Good. I look forward to working with you all on
that.
Thank you, Mr. Chairman.
Mr. Pallone. Thank you.
Mr. Shimkus.
Mr. Shimkus. Thank you, Mr. Chairman. And I have got a
couple points I want to try to drive, but I will try to be
quick and pretty efficient.
Senator Vitale and Assemblyman Webber, when constituents
have problems with the New Jersey program, do they call your
offices? So you have--and that is probably not part of the
calculations of the costs. We do the same thing. We have
Medicare, Medicaid. We have, I have at least, one person full
time to address those constituent concerns, and they are not
easy, and they are bureaucratic. And I was just wondering, if
we take on this as a national health care plan, guess what? We
get it all, gang. We are going to get all the caseload calls.
And that is why you guys support it, because then they won't be
calling your offices. No.
Let me--and just for the record, Medicare D is very
successful. Medicare and Medicaid for the 60 years that it was
here, still here, did not do what the private sector did, which
was provide prescription drugs to people who had private
insurance. You can't have modern medicine without prescription
drugs. Although we have carried a system that didn't have it,
and we fixed it, and we are under budget, provide better
service, and the quality of service is high. And I think we can
do that in this private sector debate, I really do, if we would
just give it a chance.
Let me--I want to go to Mr. Allen real quick. The Indian
Health Service--I don't have any Indian tribes, so I am not as
familiar--isn't it a one-payer system?
Mr. Allen. It is referred to as a payer of last resort, so
it requires that the tribes tap the insurance system or the
Medicare or Medicaid, and then if there is still a gap in
providing services to the tribal citizen, then we access the
IHS monies.
Mr. Shimkus. OK. Let me go to your encouragement to move
people, I think, from the Indian Health Service to this
insurance plan. I guess a better way to ask this is in your
testimony, you do--you want to exempt the mandates and
penalties from the Indian tribes; is that correct?
Mr. Allen. Yes.
Mr. Shimkus. Why would you want to--and we will have
problems with that. I know there is tribal issues and
sovereignty issues and stuff, but if we are going to do a one-
size-fits-all arena, we are going to have to do a one-size-
fits-all arena. I am not sure how we start exempting.
One of the--and you want--in your testimony you also talk
about you want exemption from employer mandates that should be
exempt even for the Indian tribes that have the benefit of the
casinos and golf courses and tourism issues; is that correct?
Mr. Allen. Yes.
Mr. Shimkus. And you want that exemption also to employees
of that facility that may not be American Indians?
Mr. Allen. Say again?
Mr. Shimkus. Say you have an employee at a casino that is
not an American Indian.
Mr. Allen. Yes.
Mr. Shimkus. And you are pushing for some exemptions of the
mandates for the insurance provided to them.
Mr. Allen. Yes. Our argument is that the tribal government,
those businesses are under the umbrella of the tribal
government, and as a tribal government, that it should be
exempt.
Mr. Shimkus. I got it.
I have got one last question, and I want to try to be
respectful of the time.
Senator Vitale, Assemblyman Webber, what is your FMAP
percentage? Do you know? Do you know what FMAP is? Do you know
what your percentage is?
Mr. Vitale. For those who are Medicaid and those childless
adults covered in Medicaid are 33 percent of the Federal
poverty level.
Mr. Shimkus. But what is our share? What is the Federal
payment?
Mr. Vitale. Now, what is it----
Mr. Shimkus. I think you are 50 percent. Who is California?
Freeman?
Mr. Freeman. I believe it is 50 percent.
Mr. Shimkus. What would you say if there are States that
have higher FMAP rates? Would you say that is intrinsically
unfair and un-American that this Federal Government would allow
some States to get a higher Federal reimbursement for Medicaid
versus others? Senator Vitale?
Mr. Vitale. Well, we are for----
Mr. Shimkus. I am just talking about fairness. We are all
citizens of the United States. The Medicaid is a Federal
program, shared with the State. We do--we have a ratio of what
we are going to compensate. Would you say it is fair that some
States pay less than other States?
Mr. Vitale. I would say that it is unfair that some States
get less, and New Jersey is one of those States.
Mr. Shimkus. So I will take that as yes.
And I am going to end up with Assemblyman Webber.
Mr. Pallone. This will have to be the last question.
Mr. Webber. The same question. You are talking to a guy
from a State who gets pennies back on the dollar that we send
down to Washington. So I am not going to advocate for New
Jersey to give money away, if that is the question.
Mr. Shimkus. No. Should every State be given the same
ratio?
Mr. Webber. I don't think I am an expert.
Mr. Shimkus. Say yes.
Mr. Pallone. You can't tell him what to say.
Mr. Shimkus. Let me tell you, if the bottom line is if
Mississippi gets 76 percent return, and you are getting 50
percent, should we change the law?
Mr. Pallone. Don't answer the question, because he is a
minute over. We have to try to stick to the time.
All right. Mrs. Christensen.
Mrs. Christensen. Thank you, Mr. Chairman. I think just a
few brief questions.
Mr. Allen, like Chairman Pallone, I am a member of Natural
Resources, and there are several others of us on this Health
Subcommittee and on the big committee, so we definitely have an
interest in addressing the issues of the Native Americans in
our country, and the tri-caucus, I will tell you, has taken a
position of equity for American Indians as well as territories.
But we haven't really addressed some of those exemptions that
you have put in your testimony, so that is very helpful to us.
But the urban Indians, the Indians who are not on the
reservations, we generally have had problems in coverage and
reaching that population. Do the recommendations in your
testimony address the unique issues of that population, or are
there other recommendations that you might want to add?
Mr. Allen. The answer is, yes, we have additional
recommendations. The provisions in the bill go a long way to
helping fill the gap. There is a lot of very positive
conditions in there, including access to subsidies.
The issue for us will be that over half of our citizens of
each of the tribes in general are outside what we call the
service area, and they are in urban communities, et cetera. And
if we are able to access the resources to serve them if they
are underserved, then we can fill that gap. We can close that
gap. That has been an historical gap for the tribes.
This testimony is in collaboration with the National Indian
Urban Centers, and they work very closely with us trying to
fill that gap. But there are service centers who have been
severely underfunded historically and don't even come close to
providing the quality care that this bill is intended to
address.
Mrs. Christensen. Thank you.
Dr. Scheppach, my Governor and Governor deJongh of the U.S.
Virgin Islands is an active member of NGA and has signed on to
the policy statements on health care reform, energy, and many
of the other ones. We have a particular issue with Medicaid and
wanting to get the cap lifted, at least begin to move in that
direction. Does the NGA have a position on the territories if
you support it? Are you supporting my Governor in his attempt
to move the cap?
Mr. Scheppach. I sure am. We do have a policy position to
support all the territories in raising the cap. Yes.
Mrs. Christensen. Thank you.
Mr. Pollack, it is good to see you here. You have told us
about some of the reports on Medicaid that show--that are
positive, but there are also some other reports that, while,
yes, there is increased access to services and to care, there
is still some reports that show that the outcomes are not as
good as they need to be. And you didn't really have a chance to
talk about where we may need to go to improve on Medicaid,
which I feel we definitely need to do. Medicaid patients are
often in another line if they are not in the back of the line
because they are Medicaid patients. The cost, as you said, of
providing that service is lower than the private insurance
market, but part of that is because they don't pay, and so the
providers do not locate or they move out of poor areas. So we
have access issues.
You know that I have proposed that we put the Medicaid
patients into the public plan. I am not going to necessarily
ask you to comment on that, but do you have some suggestions as
to how we can improve Medicaid outcomes? How can we improve
Medicaid and make it not only just so that patients can get to
a physician, which is often a problem, but that we can ensure
that they have better outcomes?
Mr. Pollack. I think one of the biggest problems that
exists for those people on Medicaid is sometimes they have
difficulty getting a doctor, and that is largely a function of
the payments that are provided, that are given to providers.
I am happy to see that in this draft bill there are some
improvements made with respect to payments to primary care
doctors. I think there is also, I think, hope for improvements
because there is an experiment proposed here, a pilot program
for medical homes. So I think those kinds of things will lead
us in a much better direction in making care actually much more
accessible for people on the program.
Mrs. Christensen. My time is up, so I don't get to go back
to the public plan issue. We will talk about that again.
Thank you, Mr. Chairman.
Mr. Pallone. Thank you.
Mr. Green.
Mr. Green. Thank you, Mr. Chairman. I just have one
question.
Dr. Scheppach, in your testimony, you mentioned you would
oppose changes to Medicaid that were drawn in an unfunded
mandate. And having served 20 years as a State legislator, I
can relate to that. And you say States must take into
consideration not only actual costs of including individuals on
their roles. I understand why you oppose a Medicaid expansion
if it is unfunded, but what about a mandate to cover the
population the States are already supposed to be covering under
Medicare? And I will give you an example.
In Texas, we have approximately 900,000 uninsured children;
600,000 are Medicaid-eligible but unenrolled, and 300,000 are
SCHIP-eligible but unenrolled. And I would like Texas to cover
those children, and I would like to mandate 12 months of
continuing eligibility under both programs to do so. Texas has
that responsibility to cover these children, but has repeatedly
allowed these kids to drop off the SCHIP and Medicaid roles in
order to avoid paying the State match. We cannot continue to
allow children to remain uninsured so States can avoid paying
their match.
Short of federalizing Medicaid, what can we do to ensure
States cover the individuals under Medicaid that they are
responsible for covering? And I can understand what my
colleague Mr. Shimkus--although as a lawyer probably the worst
case I have ever seen of leading the witness when you say,
``Please answer yes.'' I don't quite go that far.
But what can we do short of federalizing Medicaid to get
States like Texas and maybe Florida from my colleague Ms.
Castor to cover more of the children particularly, since we
have had SCHIP since 1997, and Medicaid for 30 years?
Mr. Scheppach. In all seriousness, one of the problems with
Medicaid is it is three sort of programs in one. It is women
and kids, it is the disabled, and it is long-term care. And it
is the long-term care that we think is the biggest problem
because the demographics are changing and so on, and a lot of
the dollars really go there. The women and children are
relatively inexpensive and a good investment.
And so the problem is, is that Medicaid now is 22, 23
percent of the average State budget, about what all elementary
and secondary education is. And right now, from a State
perspective, we are looking at about 180 billion in terms of
shortfalls over the next 3 years. So what you are seeing, and I
think you are beginning to--Texas is a little bit better off
than a lot of States, but it also has a problem of basically
raising the State's share to cover those.
I think at some point Medicaid needs to be restructured so
that the long-term care portion of the population goes into a
separate trust fund or so on. States, I think, understand it is
sort of their responsibility, women and children, because it is
also a population they have to work with in terms of welfare
and other things. So I don't think the women and kids are a
huge problem.
Mr. Pollack. Mr. Green, I would say there are two things in
response to your question. First, we obviously can do a whole
lot better in terms of the enrollment process. It is rather
cumbersome, and particularly the reenrollment process. After
the year is up, and a child has been eligible, they have to
reenroll. If they fail to do that for whatever reason, they are
off the rolls. And there is a lot of churning in the program.
So we can do a lot more in terms of outreach and better
enrollment. And the CHIP legislation that passed in February
actually, I think, provides some opportunities to make that
happen.
But with respect to Texas, there is a very important thing.
One of the things we know is that children are less likely to
enroll if their parents can't enroll with them. And in Texas
the eligibility standard for parents is a meager 27 percent of
the Federal poverty level. So if you have got a parent and two
kids or two parents and one child, if that family has income in
excess of $5,000 a year, they are ineligible. The parents are
ineligible.
So I think one of the things this bill does is it allows
the parents to enroll with the children, and I think that will
help solve the problem you are talking about.
Mr. Green. Well, I have a concern again about the churning,
because I know in 2003 when some tough budget decisions like
our legislators have to make, they cut a bunch of children off
of CHIPS. And they knew how to do it; they made them reenroll
every 6 months. And you can quantify it very quickly to say you
know how many kids are going to drop off because the parents
just can't go down and stand in line at the Health and Human
Services office. So that is the concern.
Thank you, Mr. Chairman, for your patience.
Mr. Pallone. Thank you. And I think that concludes the
questions for this panel. But I want to thank you. I know it is
late, and I know you had to wait a long time, but we really
appreciate your input, because what you are saying at the
State, local, and tribal level is very important in terms of
what we are doing with this health care reform.
Mr. Allen. Mr. Chair, could I correct one point that I said
that was not right in the record? The Congressman from Illinois
asked were we asking the tribal government and our casino, our
businesses to be exempt? We are asking that our governments are
exempt, not our businesses. So that is a distinction that I
think he was asking for with that question, and I wasn't quite
clear.
Mr. Pallone. All right. Thank you for that clarification.
And thank you all, really, for being here. Thank you.
Mr. Pallone. And we will ask the next panel to come
forward, and this is our panel on drug and device manufacturer
views.
I want to welcome all of you. I know the hour is late. It
is already 6:00, and we may end up having votes, too, to
interrupt us, but hopefully not. And I am changing the order a
little bit because Mr. Gottlieb, I know, does have to leave.
So let me first introduce Dr. Scott Gottlieb, who is a
resident fellow at the American Enterprise Institute.
And then to his left, I guess my right, is Thomas Miller,
who is chief executive officer, workflow and solutions
division, for Siemens Medical Solutions, USA.
And then we have Kathleen Buto, who is vice president for
health policy at Johnson & Johnson. Thank you for being here.
And William Vaughan, senior health policy analyst for
Consumers Union. He is no stranger to this committee.
And finally is my friend Paul Kelly, who is vice president
of government affairs and public policy of the National
Association of Chain Drug Stores.
And you know the drill: Five minutes, but your written
testimony in complete becomes part of the record.
And we will start with Dr. Gottlieb.
STATEMENTS OF SCOTT GOTTLIEB, M.D., RESIDENT FELLOW, AMERICAN
ENTERPRISE INSTITUTE; THOMAS MILLER, CEO, WORKFLOW AND
SOLUTIONS DIVISION, SIEMENS MEDICAL SOLUTIONS, USA; KATHLEEN
BUTO, VICE PRESIDENT FOR HEALTH POLICY, JOHNSON & JOHNSON;
WILLIAM VAUGHAN, SENIOR HEALTH POLICY ANALYST, CONSUMERS UNION;
AND PAUL KELLY, SENIOR VICE PRESIDENT, GOVERNMENT AFFAIRS AND
PUBLIC POLICY, NATIONAL ASSOCIATION OF CHAIN DRUG STORES
STATEMENT OF SCOTT GOTTLIEB
Dr. Gottlieb. Thank you, Mr. Chairman. I would like to
submit my oral statement for the record.
I just want to pick up on some themes that were discussed
in some of the earlier statements. It is a pleasure to be here,
by the way. I am from the 12th Congressional District of New
Jersey, and my parents still live there, so it is a pleasure to
be here with you.
There was a lot of discussion around Medicare's efficiency
in some of the earlier testimony, and the issue of rationing
also came up tangentially in Medicare.
With respect to Medicare's efficiency--and I worked at the
agency for a period of time under Dr. McClellan--one of the
things that Medicare lacks is clinical expertise on the staff,
and I think it has become quite apparent in recent years. If
you look at the structure of Medicare, they have about 20
physicians in the entire organization. If you look at private
plans, by comparison they will have literally hundreds. And I
think this gets to an important consideration when you talk
about why Medicare is able to operate with less overhead. It is
in part because they are not doing a lot of clinical review,
for better or worse, in the context of the kinds of
reimbursement decisions they have made and even the kinds of
coverage decisions they make.
Just anecdotally, they made about 165 different decisions
with respect to cancer products since 2000 without a single
oncologist on the staff of the organization. And why this is
important, I think, with respect to the intersection of talking
about Medicare's efficiency and the low overhead that they
operate with, and then you get into discussions around
rationing, is because it is without a doubt that we already
engage in issues of rationing with respect to the Medicare
program. We are doing it right now in the context of coverage
decisions and reimbursement decisions and how we go about
coding. And my fear is that if we expand government control
over health care, we are going to have to do those things much
more.
If you look at the kinds of proposals that have been put
forward in front of this committee, as well as the proposals in
the Senate, and you look at some of the cost containment
measures in those proposals, they are really not very robust.
Comparative effectiveness, product medical records, paying for
prevention, all those individual proposals might have merit on
their own, but there is a reason why the Congressional Budget
Office hasn't assigned meaningful savings to them.
And so the fear is, of people who talk about the potential
for rationing inside a government program, is that in the
absence of being able to control costs with policy
prescriptions that are embedded in these bills, ultimately the
default case 2, 3, 4 years from now will be to have to engage
in more robust rationing decisions inside the Medicare program
or whatever other government scheme we come up with. And if you
look at the draft legislation in the Senate and the House, you
see multiple references to quasi-independent advisory
committees that we could certainly contemplate could become
vehicles for that sort of rationing.
So why is this important in the context of thinking about
Medicare structure and its efficiency and its overhead? Well,
if one of the reasons why Medicare is efficient and operates
with a low overhead is because they don't have a lot of
clinical expertise, the intersection between an organization
that is going to be called upon to engage in more decisions to
deny access on the basis of their own clinical judgment and
their reading of the clinical literature with an organization
that doesn't have a lot of clinical expertise is, quite
frankly, frightening. And it was frightening in certain
instances, anecdotally, when I was at the organization.
And so in my written testimony today I tried to lay out a
couple suggestions for how we could improve that process,
because if we are to go down a road where we will have a system
that has to make more clinical judgments in the context of what
they decide to reimburse people for and give people access to,
the least we should expect is that organization is clinically
proficient, it is rigorous, it is based on good science, it is
a transparent process. And we have none of those things today.
And so some of the proposals I laid out in my written
testimony was the creation of an advisory committee structure
on Medicare where you subject decisionmaking of that body to
external therapeutically focused advisory committees. Certainly
if we contemplate a public insurance plan that will be making
similar kinds of decisions either initially or eventually, we
should create a similar structure. I think we also need to
contemplate what the structure is for making coverage process
decisions, reimbursement decisions, coding decisions, and
making clinical considerations in the context of these
programs.
If you look at the structure right now of Medicare, if you
were to ask anyone in a company, or if someone in a company,
CEO, asked one of the subordinates who works on Medicare
coverage processes what is the process, they would be hard-
pressed to delineate that process in a clear and coherent
fashion, certainly not with the same clarity that you would be
able to explain the FDA review process, which is very clear,
very structured.
Finally, in the proposals before this committee, there is a
proposal for the creation of a comparative effectiveness center
agency, if you will. I think before we step into that, once
again we need to think about the structure for how that
information will be used. And in many contexts of government
decisionmaking, when scientific information is being created by
a government entity, there is very clearly delineated in
legislation regulation what the threshold is for an actionable
piece of data. When will a piece of data reach sufficient
scientific rigor to be deemed actionable for a regulatory body?
Certainly this is a case at FDA where you have a clear
threshold for actual information in the context of the paradigm
around P equals .05. There is no contemplation of what the
threshold will be for actionable information on the part of any
government organization with respect to comparative
effectiveness information. And I think marrying the criteria
inside CMS and any other government plan with the criteria used
by FDA for consideration of comparative information, it
certainly would be a step in the right direction, and I
recently wrote a long paper on this and put it out for the
American Enterprise Institute.
But in summation, Mr. Chairman, I don't see a lot of
elements in the proposal before this committee that we could
have confidence are truly going to bend the cost curve in a way
where we are realigning reimbursement with the kinds of
outcomes we want to see these programs achieve. And in the
absence of that kind of reimbursement scheme, I fear we are
just going to have more of the kind of wasteful spending that
we have seen under Medicare; that the marketplace for health
care is inefficient not in spite of Medicare, but, frankly,
because of the way Medicare pays for things. And so if we go
down the route where an organization like Medicare----
Mr. Pallone. I know you said you are summarizing, but you
are a minute and a half over.
Dr. Gottlieb. I am finishing right now--make more
decisions, I think the least we can do is make sure it is a
clinically rigorous process.
Thank you, Mr. Chairman.
Mr. Pallone. Thank you.
[The information follows:]
Mr. Pallone. Mr. Miller.
STATEMENT OF THOMAS MILLER
Mr. Miller. Thank you, Mr. Chairman. It is an honor to be
here. I represent Siemens Health Care. It is one of the largest
medical technology companies on the planet. And I can only say
to you, when I was a young medical physics student at MIT
studying quantum electrodynamics, I thought that was hard, but
the task in front of you folks seems to be a lot more difficult
than that.
In the written testimony, we talked about four what I would
call myths surrounding medical-imaging technology, and we tried
to dispel those myths. And the myths were, first, that medical-
imaging technology increases the cost of care. We would
actually argue just the opposite.
It is amazing that the phrase ``exploratory surgery'' has
vanished from our vocabulary. It is because of imaging. It used
to be 30 percent of appendectomies were unnecessary; we were
cutting open healthy kids. We don't do that anymore. It used to
be the patient coming into an ED with stroke symptoms would be
observed, and now we use a CT scanner with clot-busting drugs
to take care of them with potentially millions in cost savings
for care later. And CT angiography is now being used to
intervene in intermediate-risk chest pain patients, avoiding
healthy patients going for angiography.
One thing in common with all these examples. We introduced
something that seems to be expensive, that raises costs, but
the total cost of care actually goes down.
The second myth that I wanted to address was that the
financial self-interest of physicians has led to technology
overuse: The evil physicians are just lining their pockets by
ordering unnecessary exams. That is not true. Over 90 percent
of imaging tests are ordered by nonradiologists, read by
radiologists who have no financial link. In fact, medical
imaging increases have happened also in Canada, a nation we
have talked about a lot today, and there is no financial
incentive to do so.
Imaging is being used more. It is being used more because
of the diagnostic confidence. You know, I am a physician, I
want to know what is going on with my patients, I will order an
image.
Further reductions in reimbursements are the best means to
reduce costs. We would actually argue just the opposite. Demand
and supply in medical imaging are decoupled. By reducing
reimbursement, you reduce supply. You do nothing to affect
demand. And the DRA, which was implemented a couple of years
ago, resulted in dramatic cuts, saving up to three times what
the CBO estimated. Our business was affected by it by a 30
percent reduction, and we ended up laying off a bunch of
people. I hate laying off people. That wasn't pleasant.
But last but not least, anyone that even attempts to argue
that the use of advanced medical technology does not produce
health care outcomes will have a fight with me. And breast
cancer is the best example. It has been cited here before. It
used to be a death sentence. It is not anymore. We find it
earlier.
So what are our suggestions and recommendations to the
committees? First, we wish to applaud the committee on four
things: First of all, the attempt to permanently fix the
Medicare physician fee schedule sustainable growth rate
formula; second, the abandonment of the Ways and Means
Committee formula fix that would have created a separate
expense target for radiology; the lack of a recommendation for
radiology benefits managers. Personally, I like physicians to
manage my care. I also wish to thank the House committees for
not increasing utilization calculation on equipment in the
draft from 50 to 95 percent, as some people estimate.
Let me make one point clear. A 95 percent utilization
assumption would result in rationing care. We finance many of
our customers. We know what their P&Ls look like, and medical
imaging centers will close. Access will plummet, especially in
rural areas. Wait times will result possibly for time-critical
care, and hospitals in their current capital constraints state
they can't pick up the slack.
Now, 75 percent, your recommendation, is better than 95
percent, but there has no credible data for either number. I
think we had better study it and figure out what the access
impact is before we do either.
So how do you get costs under control? What would we
recommend? Well, you could do what Massachusetts General
Hospital did and have physicians develop appropriateness
guidelines. They reduced diet patient CT growth from 12 percent
per year to 1 percent per year, despite of the fact their
outpatient visits went up. We could get behind that.
We have been a strong advocate for accreditation
requirements, containing the Medicare improvements for patient
providers back to 2008, which assures that if you don't meet
the accreditation, you don't get paid.
We support comparative effectiveness research. It might
surprise you, but we do. We are a fan of our technology. We
think it does good. But we support it only if it looks at the
entire longitude of care, because as we have said, we believe
in some cases the cost for imaging will go up, but the
resulting expenses longitudinally will go down.
And, finally, we commend other legislative efforts to fund
medical-imaging research. Specifically, we need to find a
diagnostic imaging test for prostate cancer to benefit men like
mammography has benefited women. The PRIME Act in House
Resolution 353 does exactly this.
To conclude, medical imaging not only improves health care,
it saves lives, and it also contributes to cost reductions in
health care. So we should be careful of any policy that could
reduce access.
I thank you for the privilege of representing Siemens
Health Care in this national dialogue and your patience.
Mr. Pallone. Thank you, Mr. Miller.
[The information follows:]
Mr. Pallone. Ms. Buto.
STATEMENT OF KATHLEEN BUTO
Ms. Buto. Thank you, Mr. Chairman. My name is Kathy Buto. I
am vice president of health policy for Johnson & Johnson, and
we really appreciate the opportunity to be here to comment on
the discussion draft. We very much support enacting legislation
this year to provide coverage for all Americans, and we look
forward to working with the committee toward that end.
By way of introduction, I want to just say that I focus on
a broad array of health policy issues for Johnson & Johnson
worldwide in many countries, including China and India as well
as the United States, and I have spent much of my career on
these issues, including 18 years with the Health Care Financing
Administration where I was involved with implementing changes
in Medicare and Medicaid and in efforts to pass earlier health
care reform legislation.
I am going to focus on really four things, and leave to you
my written testimony on a number of other provisions that we
support in the bill: wellness and prevention, comparative
effectiveness research, part D of Medicare, and the public
plan. So first wellness and prevention.
As an employer that has focused for more than 30 years on
improving the total health of our employees, we strongly
support the inclusion of prevention benefits and zero cost
sharing to promote greater wellness in the population. Our CEO,
Bill Weldon, was invited recently to meet with President Obama
along with other executives to describe their experiences in
reducing risk factors in the workforce. And I will just give
you one example. At Johnson & Johnson over a 10-year period
beginning 1995-1999 and measuring a difference in 2007, we
reduced smoking from 12 percent in the workforce to 4.3
percent. And we had many results like that, which are in the
written testimony. So we believe that this is critical. We at
J&J have saved about $250 million over 10 years through these
efforts.
Now, comparative effectiveness research. We are very
pleased that the bill includes an enterprise that will focus on
improving the evidence physicians and patients can use to make
treatment and care decisions. And while we have great respect
for the Agency For Healthcare Research and Quality under
Carolyn Clancy's leadership, we actually believe a public-
private entity provides a stronger long-term framework with
transparency of methods and processes, inclusion of
stakeholders, and a focus on clinical comparative effectiveness
research. We think a public-private entity can build trust and
collaboration, which is critical in this important area;
leverage additional research dollars of physician and academic
groups as well as industry; and create a broader-based
constituency for sustainable funding resources for this
enterprise.
Rather than provide a single assessment of cost
effectiveness, we believe the entity should provide information
that allows the market to determine the relationship between
clinical value and costs for different patients of varying
plans. And I would include, for example, minorities and women
who have particular issues in this kind of research.
Now, switching to Medicare Part D. We want to commend the
committee for taking on this difficult issue of closing the
coverage gap or doughnut hole over time. The pharmaceutical
industry's recent proposal to provide discounts of 50 percent
for the majority of beneficiaries in that gap we think is going
to complement your approach by providing immediate relief in
reducing those costs.
We also want to applaud the committee for allowing payments
to be made through AIDS drug assistance programs and the Indian
Health Service to count toward meeting the out-of-pocket
threshold as well.
Let me conclude by talking a bit about the public plan. We
certainly support having a health insurance exchange that can
provide information for the public on different options, and we
support a number of the other changes proposed, such as
administrative simplification and insurance reforms. We think
these changes are going to actually make the government plan
unnecessary, and we believe concerns about a public plan takes
the focus off sort of job number one, which is achieving
coverage of all Americans and identifying sustainable financing
approaches as well as making fundamental changes in the system
of care.
Providers like the Mayo Clinic--and they were recently
cited in an Atul Gawande article in the New Yorker as providing
highest quality care at the lowest cost--have been very vocal
about their concern that the public plan is going to use
Medicare rates and therefore not cover actual provider costs.
Cost shifting will ultimately lead to higher-cost private plans
and ultimately a dominant public plan that underpays. We are
concerned, and our industry is concerned, because systematic
underpayment of providers will undermine the market base system
that allows incentives to find cures for cancers, Alzheimer's,
and other dread diseases.
We also are concerned about government negotiation of
pharmaceutical prices reducing the willingness of our industry
to undertake risky and long-term investment needed to produce
important treatments. And we also think this threatens American
leadership in medical innovation in ways that we don't fully
understand and would be hard to anticipate.
The last point on this is that biologics promise to be a
major avenue for breakthrough medicines and one we know the
committee is considering. We have been at the forefront in the
U.S. And other countries of supporting a regulatory pathway for
biosimilars that assures patients safety and preserves
incentives for life-changing and life-saving medicines. We have
strongly supported H.R. 1548, introduced by Representative Anna
Eshoo, which has over 100 cosponsors.
I will leave to you the written testimony which enumerates
a number of other provisions in the discussion draft, such as
the Medicaid eligibility; expansion of funding for community
health centers, which we have recently supported in a bill
introduced by Representative Clyburn and others; as well as a
focus on health disparities and health literacy; and a process
to make payments between two physicians from industry more
transparent.
So thank you again for the opportunity, and we look forward
to working with you.
Mr. Pallone. Thank you.
[The information follows:]
Mr. Pallone. Mr. Vaughan.
STATEMENT OF WILLIAM VAUGHAN
Mr. Vaughan. Thank you, Mr. Chairman and Members, for
inviting us.
Consumers Union is the publisher of Consumer Reports, and
we don't just test tires and toasters; we try to help people
with medical products. And we do strongly endorse the approach
taken in the tri-committee draft, assuming that additional
savings are found or progressive financing to make sure that it
is budget-neutral and sustainable over time.
We believe the draft is a plan that can give all Americans
that peace of mind of health security and an affordable quality
system. The draft bill has done an excellent job of identifying
a number of savings, both large and small, but we hope you can
dig deeper for some more savings to stop that Pacman that is
gobbling up our GDP. Gotta try.
As for PhRMA's pledge for $80 billion in savings, wow, that
is great. Congratulations to PhRMA, but I think it was Ronald
Reagan used to say, trust but verify. We hope that you can get
this in legislative language in a way that CBO would score it
for $80 billion in savings.
We like the drafts bill trying to close the doughnut hole,
and we really like the provisions on helping low-income people
in Part D. We would like to see that doughnut hole closed
faster, but that would take more money, and we suspect that
PhRMA is likely to say, hey, we have given at the office, go
away. But we hope you will keep pushing on that door a little
bit.
There should be no excuse whatsoever to reduce the pressure
for the maximum use of generics in Part D. In fact, you might
want to consider an amendment to get a rebate from Part D plans
that are poor in doing generic substitution.
There are a lot of other sources of money on the table.
H.R. 1706, by Mr. Rush and seven others of this committee,
would ban reverse payments from brand companies to generics to
keep the generic off the market. Yesterday the FTC Commissioner
said: Gee, that would save the government about $1.2 billion a
year and consumers $3.5 billion a year. Hope you guys can do
that one.
We have supported Mr. Waxman's follow-on biologics, but we
have got to find a solution. Last June--as of last June, Europe
had approved over 10 of these, and I am assuming they have gone
higher, and we are sitting here paralyzed. And so we hope you
can come together and work something out, because that is
essential.
The June MedPac report that has just come out in talking
about FOBs also suggested maybe take a look at reference
pricing. Why pay more for something that doesn't bring more to
the table than what you are already paying?
We urge you to also support giving Medicare negotiating
authority in Part D. Once you get a good food and drug safety
program in place on imports, let us have reimportation or free
trade in pharmaceuticals. And, a new idea, require rebates to
Medicare for drug inflation in excess of population growth and
CPI, except--except--no rebate on a new kind of drug, a new
molecular entity that the FDA would identify. This would get
you a handle on spending, but move the industry more towards
really breakthrough research. If my wife sees an ad on TV for a
fourth type of ED, she is going to throw something at the TV. I
mean, we need lifesaving breakthrough research, and not just
more of some of these ``me too's.''
The other areas, we love comparative effectiveness research
provisions in your bill. Save the consumers a ton of money. If
you want to see how it works for consumers, the last page of my
testimony takes a look at heartburn medicine and proton pump
inhibitor stuff. And if you look at the science that the
comparative effectiveness research brings, there is no
particular difference between a $20 pill and that purple pill.
And working with your doctor, check it out. We always say check
with your doctor first, but why in the world would you start
with a $200-a-month medicine when you can get a $20-a-month one
that is just about as good?
Finally, we endorse the physicians' payment sunshine
provision in this bill. That is the one that would disclose how
much drug and device companies are giving to doctors and med
schools. We think those gifts aren't totally free. They come
with some strings of influence, and we need to stop that.
Thank you so much for your time.
Mr. Pallone. Thank you, Mr. Vaughan.
[The information follows:]
Mr. Pallone. Mr. Kelly.
STATEMENT OF PAUL KELLY
Mr. Kelly. Thank you, Chairman Pallone and Ranking Member
Deal. National Association of Chain Drug Stores appreciates the
opportunity to testify today.
I am Paul Kelly, vice president of Federal Government
affairs, and I am substituting today for Carol Kelly, our
senior vice president, who was ill and sends her regrets. But I
really appreciate your indulgence in allowing me to pinch hit.
NACDS represents the Nation's chain pharmacies, whose
40,000 pharmacies and 118,000 pharmacists fill 2.5 billion
prescriptions a year. That is 72 percent of all prescriptions
nationwide. Pharmacies are the face of neighborhood health
care. There is a community pharmacy, on average, within about 2
miles of every American.
One of pharmacy's major contributions is helping with
medication adherence. Simply put, adherence is taking
medications correctly. It has major implications for patient
health and for health costs. Nonadherence leads to long-term
health complications that diminish the quality of life, and
nonadherence has been estimated to cost $177 billion annually.
I am here to make recommendations that will help prevent this
problem from getting worse.
Preventing it from getting worse involves preserving access
to pharmacies. Essential to this is reforming the pharmacy-
Medicaid reimbursement system. As you know, the Deficit
Reduction Act of 2005 would set pharmacy reimbursement for some
generic drugs at 36 percent below cost. The issue is complex,
but it boils down to a basic principle. This is unworkable for
pharmacies, as it would be for any health provider. Unless
Congress intervenes, current policies would put 20 percent of
pharmacies at risk, most of which serve low-income individuals.
Last year Congress blocked implementation of these severe
Medicaid cuts until October 1, which we appreciate. We also
appreciate that members of this subcommittee, including you,
Chairman Pallone and Mr. Deal, remain highly cognizant of this
issue, and we really appreciate your leadership, Mr. Pallone,
in keeping this issue on the radar screen. We are also grateful
that the committee draft recognizes the need to address this
problem, and there is an AMP provision in that legislation. But
as this legislation unfolds, we would emphasize there are
several essential reforms that we think are needed to ensure a
patient-centered Medicaid AMP policy.
First, average manufacturer price, or AMP, which will be
used as a basis for reimbursement to pharmacies, must be
defined correctly.
Second, AMP-based Federal upper limits should be determined
using weighted average AMPs rather than the lower AMP. And we
sincerely appreciate that the draft includes this provision.
Third, Federal upper limits should be set when there are
three sources of supply, the brand and two generics. Setting
limits prior to that when there are two sources of supply is
premature.
Fourth, there is a concern that the multiplier of 130
percent that is proposed in the draft is not sufficient to
ensure pharmacies are reimbursed fairly.
And, fifth, we deeply appreciate the provision in the draft
to strike the requirement to post brand and generic AMPs on a
public Web site until AMPs are based on an accurate definition.
Now, regarding the cost of nonadherence and increasing the
quality of care. We appreciate the recognition of medication
therapy management as part of the medical home concept in the
committee's draft. MTM, medication therapy management, is
preventative care and includes services designed to help ensure
drugs are used appropriately to maximize health and reduce
adverse medication events. Pharmacist-provided MTM services
have been shown in one study to reduce overall health care
costs--overall costs by $12 for every dollar invested.
Our recommendation is to enhance and expand the medication
therapy management program in Medicare Part D, and we thank
Congressman Ross and Congressman Murphy of this subcommittee
for their leadership on this issue.
We have other recommendations, including the need to
maintain patients' access to diabetes management tools through
their neighborhood pharmacies. Two current rules related to the
treatment of durable medical equipment and Medicare jeopardize
access to diabetes care and jeopardize patient health. We
recommend that health reform legislation address this
misapplication of these rules to pharmacies, which pharmacies
are already licensed and highly regulated by the States. We are
the good actors when it comes to Medicare durable medical
equipment, and additional hurdles and costs are simply
counterproductive. We thank Congressman Space for his
leadership on this issue.
In closing, part of the value of pharmacy is its ability to
help patients stay on medication therapy. The improvement of
lives and reduction of long-term costs is worth fighting for,
and we look forward to working with this committee in pursuit
of those goals.
Thank you again for your support, Chairman Pallone, and
look forward to answering any questions.
Mr. Pallone. Thank you.
[The information follows:]
Mr. Pallone. And we are going to go to questions, and start
with the gentlewoman from the Virgin Islands Mrs. Christensen.
Mrs. Christensen. Thank you, Mr. Chairman. And I know the
hour is late. I am not going to have a zillion questions. But I
want to start with Mr. Miller.
And, first of all, let me say that no one supports--I don't
support, and I know you don't support--unnecessary or
duplicative tests. That being said, though, I really appreciate
as a physician your defense of physicians in your testimony and
your defense of the diagnostic technologies. As you said, and I
had made note of this before you said it, I think we have
forgotten how far we have come from the days when you had to
undergo anesthesia, one risk; laparotomy, another risk, to make
these diagnoses. But my question--you said that your experience
is really in HIT. Is that correct? Did I read that in your
testimony?
Mr. Miller. I have actually experience in both diagnostic
imaging, HIT, as well as therapies.
Mrs. Christensen. Sure. But I wanted to ask about HIT. I
think you were very clear in your defense of the technologies.
We have been told by many that the projected savings from HIT
are grossly exaggerated. And I wondered if, based on your long-
time experience on HIT, if you had any thoughts on whether that
was the case, or whether we would be realizing the savings that
we think we are.
Mr. Miller. The answer to the question is, unfortunately,
it depends. If we simply say that what we will do is digitize
all information for all patients at all times and think that
will lead to productivity, I think we are misguided. I don't
know about you, when I get an e-mail with a huge attachment to
it, I still print it out. And I used to run with the largest
health care information technology businesses in the world.
The fact of the matter is, just like pharmaceuticals, to
get efficiency out of health care information technology, you
need the right information about the right patient and the
right context of care going to the right provider at the right
time. It is a lot different than just a big file full of data.
If a patient is coming to me with severe chest pain, I don't
want to know about the mole that was removed last week as the
first thing I see in the file. I want to know whether they are
taking medication. I want to know what contraindications for
medications there may be. This requires a little more
intelligence.
So I think the potential is there. We certainly have
customers who have realized a lot of potential. But the devil
is in the details, and an inexpensive HIT system which simply
takes all data, logs it, and makes it available will not change
productivity. Productivity rhymes with activity, not with
information.
Mrs. Christensen. Thank you.
Ms. Buto, we applauded J&J's wellness and prevention
programs and also the recent proposal by PhRMA to cut the cost
of medication during the doughnut hole by 50 percent. We also
appreciate your support for elimination of health disparities
in the community health centers that you stated in your
testimony. We do have a point of departure on the public plan
which the tri-caucus is fully supporting, and which I think
this committee is bending over backwards to ensure that it does
not undermine our market-based system.
But I wanted to ask about the CER issue. I have joined with
other Members in legislation that goes so far as defining the
committee that will oversee it and ensuring that the membership
on that committee, representative of all of the stakeholders,
important to the tri-caucus as well. We directed that research
must be done on women and racial and ethnic minorities so that
we will really have the best science for everyone. And,
further, we direct that the outcome of that research would only
be used to provide clinical guidance.
Does this address some of the concerns that you raised, or
are there others that remain?
Ms. Buto. It sounds like your approach really does address
many of the concerns I have raised. And I think the other issue
that once you dig below the surface on minorities and women and
other subpopulations is as we get closer to personalized
medicine, I think we are beginning to realize we need a
different approach doing the clinical trials that actually
helps us sort so that we can provide and be more targeted in
the treatments we develop. And we are trying to figure out how
to do that in a way that gets those targeted treatments that,
again, will be better value for money in the system, but also
will get to subpopulations, minorities, women, and others who
will benefit. And we are still sorting through that. But I
think that is part of the equation as well, and it sounds like
your approach would allow for that kind of research to go on.
Mrs. Christensen. Thank you, Mr. Chairman.
Mr. Green [presiding]. Congressman Deal for 5 minutes.
Mr. Deal. Thank you.
Mr. Kelly, you are familiar, I think, with H.R. 3700 from
last Congress that was introduced by Chairman Pallone. I
believe you have generally been supportive of the language that
was in that piece of legislation. What is missing from this
draft that was in the bill Chairman Pallone introduced last
year, 3700?
Mr. Kelly. There are some differences. We certainly
appreciate that the committee in its draft bill has recognized
the importance of this issue and included improvements to the
existing law in the bill. We also appreciate your leadership
over the years in trying to be helpful in this issue as well.
As I understand it, H.R. 3700 defines AMP in a way that
reflected pharmacies' acquisition costs, which is our top
priority and really central to this debate. The committee's
draft currently does not include that, and that is an important
priority of ours, and we look forward to continuing to talk to
the committee about that. That is reflected in our written
statement. That is one of the major issues.
Mr. Deal. You mentioned that States should consider both
components of reimbursement when determining what they are
going to pay pharmacists for. What are those two components?
And would you explain why it is important to consider both
components?
Mr. Kelly. Certainly. Thank you.
Historically, pharmacies have been paid for the drug
product itself and for dispensing the product; so reimbursement
here and then a dispensing fee here. In Medicaid, the States on
average reimburse the pharmacy $4.40 to dispense the products.
All the evidence indicates that it costs the pharmacy about
$10.50 to actually dispense a prescription drug when you
consider all the overhead that is involved with running a
modern pharmacy today. So it is important to make sure that
reimbursement for the drug product is right, which is why
getting the AMP definition is so important when it comes to
Medicaid product reimbursement, which the Federal Government
has sole jurisdiction over. The States control the dispensing
fees in the Medicaid program.
And I tell you, this committee and Congress could really
help us quite a bit with CMS on this issue of dispensing fees.
When DRA was passed, there was a ton of legislative history
which indicated the expectation was and the encouragement was
that States would allow for increased dispensing fees for
pharmacies. Well, about a half a dozen States have submitted
State plan amendments requesting just that, and CMS has shut
down every single one of them. In fact, just this week the
State of Washington submitted a State plan amendment that would
have increased fees by a nickel, and CMS shot it down. So to
the extent folks on the committee can be helpful in that
regard, CMS, we would sure appreciate it.
Mr. Deal. So the two products. One is control at the
Federal level, that being the payment for the drug itself,
which is the AMP issue that you alluded to, and you don't think
this draft addresses that issue as clearly as the Pallone
legislation did. And then the second component being the
dispensing fee, which is a State issue by and large, is still
left that way under this draft legislation. Is that correct?
Mr. Kelly. There is nothing in this draft that we have seen
that indicates any policy changes on dispensing fee. And you
are right, there is product reimbursement, and that relates
directly to how you define AMP and how you reimburse and
calculate the AMP.
Mr. Deal. I believe when we were dealing with the MMA, we
tried to make sure that seniors had a pharmacy that was going
to be close enough and accessible enough for them to handle
their pharmacy needs. I don't think there is any language of a
similar nature in this draft. Did you find anything that would
address that issue? And, if not, is that something we should be
concerned about?
Mr. Kelly. We have not seen that in this draft. And you are
right, that is a part of the Medicare drug benefit. They
actually use the TriCare health care program access standards
for community pharmacies, access to community pharmacies.
Look, seniors want access to pharmacies. Most citizens want
access to pharmacies. They want it to be convenient. That is
very important. As I said in my testimony, there is a pharmacy
within a couple miles of everybody, on average, in the country.
You know, I am not sure how those access standards would
fit into the context of this bill. It made sense for the drug
benefit when you were creating that, but I am just not sure at
this moment whether it would fit into the context of this
particular bill. It came up very recently, as you know, and we
are still kind of combing through it, quite honestly, to get a
sense for that.
Mr. Deal. Thank you.
Mr. Green. Congresswoman Schakowsky for 5 minutes.
Ms. Schakowsky. Thank you, Mr. Chairman.
I would like to start with Mr. Vaughan, and I welcome you.
And I don't know if I have seen you in this role before, but
you have been on the Hill for a long time, too.
In your written testimony, you identified as a cost-saver
legislation that I introduced with Representative Berry, H.R.
684, the Medicare Prescription Drug Savings and Choice Act,
which allows Medicare to negotiate for lower drug prices.
I am wondering if you could talk a little bit about how
that would reduce costs.
Mr. Vaughan. Yes, and thank you for that cosponsorship. And
it would probably be--you know, we have got good competition in
generics and stuff--this would be a place where in a biologic
that came in at one of those very, very, very high prices, if
the Secretary could work with it a little bit, bring the price
down--and I know it works.
I happened to work for the Chairman of the Ways and Means
Health Subcommittee in 1989 when the first big blockbuster
biologic came in, EPO for folks with kidney disease. And as I
recall, the company wanted a launch price, and the Chairman was
saying, whoa, we are the monopoly buyer, everybody in the
kidney program is in Medicare. And you have got a monopoly
company. Let's negotiate. The then-Secretary didn't
particularly want to do that, and it took a lot of press
releases and screaming and hollering and threats of hearings
and stuff.
But I do really believe that that jawboning by just one,
not just, by a subcommittee chairman on the Hill pushed the
Secretary enough that we got that price down $3, $4 a unit. We
should have gotten it down, 8 or 9, you know, if the Secretary
had been a little more gung ho on it. But that company
recovered its entire investment in that drug in 9 months, and
is making over a billion dollars a year in profit from Medicare
from that drug now. And we didn't do a very good job
negotiating, but we saved billions. But it can work.
Ms. Schakowsky. So we don't have to imagine it.
Yes, Ms. Buto.
Ms. Buto. Bill, I have to kind of disagree with your memory
on this. I was at HCFA at the time. I actually did negotiate
that price. And it was done way before the chairman got
involved, because the company came to us saying, this is an
ESRD drug. ESRD is a Medicare population. And we decided that--
I decided I couldn't do this alone. So I got the Inspector
General's Office and the Office of Management and Budget to sit
down with us, and we went through SEC filings. This was a
company with one drug and one drug in the pipeline, and we did
the best we could around the table to do that. I think you all
came along; and I think rightfully so, said, you know, can't we
maybe take another dollar off? You did that legislatively.
Ms. Schakowsky. So you can fight that out later. But the
point is it worked.
Ms. Buto. My point was this: In spite of the fact that it
was one company with one drug, we had a very difficult time
actually doing the negotiation. That was actually my point.
Mr. Vaughan. It is difficult, but you did get some money
out of it. And I stand corrected. Congratulations to you for
having started it all.
Ms. Buto. It wasn't about money. Can I just make the point?
It was about making sure that ESRD beneficiaries had it at the
moment that FDA approved it. We wanted to make sure because
there was no other market that there wasn't a huge delay before
they could get access, and that was the reason we needed to set
a rate. Because otherwise, Medicare waits for a year or so, and
the rates are set in the marketplace, right?
Mr. Vaughan. Yes.
Ms. Buto. It was about access.
Ms. Schakowsky. It is about access. But I think if we
institutionalize this notion of Medicare being a negotiator,
with the huge network that it represents, that we can do better
than we do right now.
Ms. Buto. I disagree that.
Ms. Schakowsky. You don't agree with that?
Mr. Vaughan. I do agree.
Ms. Schakowsky. Well, don't insurance companies regularly
negotiate for their subscribers?
Ms. Buto. They do, and they set formularies, and my
experience with Medicare is that it has been reluctant, shall
we say, to set formulary restrictions on what Medicare will
cover, because the notion is that--and we always had this
underlying our coverage policy--is that the beneficiary
population is very diverse and usually fairly chronically ill.
And so to exclude certain things just to get price down----
Ms. Schakowsky. Well, in our bill, in the bill actually
that we are talking about, we do set a formulary in the draft
for the public option, right?
Oh, in my bill we actually talk about a formulary so that
we can negotiate. I guess my time is up.
Mr. Green [presiding]. Out of time, thank you. Congressman
Pitts, 5 minutes.
Mr. Pitts. Thank you, Mr. Chairman. Thank you, panel, for
your wonderful testimony.
Mr. Miller, you said that a large part of imaging is done
without any association to the financial self-interest of the
ordering physician. You also said that the increases in use of
imaging are perhaps too often attributed to a financial
incentive in ordering the test.
Do you believe that one possible reason for the rise in
imaging could be the practice of defensive medicine? Do
physicians order tests to protect themselves from potential
medical liability?
Mr. Miller. I can only speculate that that could be the
case, in some cases. I can also state that if, when we speak to
our customers and ask them, because it is important when we
design machines we ask them, you know, why do you order tests?
What are you trying to look for, what are you trying to
discover? The great majority of time they are really telling us
we want to be able to see this disease process. We are having
difficulty because we don't know if the patient has X versus Y.
Now, in knowing if a patient has X versus Y before they
treat, if that is defensive, then I can only agree with you. It
is probably also good medicine.
Mr. Pitts. MedPac has given us clear indication that it
feels there is a tremendous overuse of medical imaging and that
we should rein in the use and reimbursement of such use.
Do you feel that there is overuse, and what do you feel is
the appropriate way to get at that issue?
Mr. Miller. I don't think that there is overuse, by and
large. Are there cases of overuse that might crop up in
someplace or another? Yes, probably. However, as I stated in my
testimony, what we really believe and support as an industry is
appropriate in this criteria. I do believe that we should have
guidelines which are physician-created and physician-
administered that guide people to say, for this type of
symptoms, this test is appropriate. For patients with this
background of illnesses, this test is appropriate.
Doing so may have, however, two consequences. There are
times when a test won't be ordered because it is inappropriate.
There are other times--and we see this just as often--that a
patient will be subjected to a slowly increasing series of
tests. They will come in with chronic headaches and then
something has been going on for a long time, and an X-ray of
the head will be ordered. An X-ray of the head will show you
the skull. Not many headaches caused by the skull.
So sometimes it could lead to actually an increase in the
type of imaging that is ordered, a temporary increase in cost.
But our argument has been and what I have tried to put forward
is that, knowing the patient's condition precisely,
characterizing the disease in detail before you start to treat,
is probably the best way to save cost in health care; because
there is nothing more expensive, more wasteful or more
unethical than treating a patient with the wrong treatment for
their disease or, even worse, starting the treatment for a
disease they don't have.
Mr. Pitts. I have just a couple of questions on the DRA.
You mentioned in your testimony the large reductions that the
DRA imposed to medical imaging, and that during the first year
of implementation, that growth in imaging was reduced to only
1.9 percent.
What do you think the reasons were for growth in previous
years? And do you feel that the DRA was the only factor in this
slowing of the growth? And what was the impact of the DRA and
the dissemination of new updated technologies to patients? What
would be the impact on future cuts to advanced imaging
technology, such as CT, MRI, PET, nuclear imaging, do you think
this would--what impact?
Mr. Miller. Well, we have an advantage that we do business
in about 180 countries of the world, so we can look at use
patterns not only in the United States, but in many other
countries and see trends and see changes. The DRA had a sudden
drop in imaging growth, which we didn't see in any other
countries at the same time. So, in other words, it must have
been the DRA. We didn't see it happen in Canada, we didn't see
it happen in China. We didn't see it happen in South Africa,
any country in Europe, et cetera. DRA happened, growth was
reduced.
In other countries where there has been no DRA and no
financial linkage that would cause overuse, we have seen
medical imaging increase year over year in almost every other
market we are in. It is increasing in China, it is increasing
in Australia, it is increasing in Germany. It is increasing
everywhere, because, as I said, we are substituting more
expensive physical and invasive tests with things that are
noninvasive, more comfortable for the patient and, frankly,
looked at as whole as cheaper.
I think the DRA did cause in some parts of the country,
some of our customers to, frankly, go out of business. I don't
think that it resulted in a sea change in care, but we start to
get it to limit. And therefore, what I would argue is in some
ways--I hate to phrase it this way--we gave once at the office.
We took a large cut in our industry and we are now at the point
where more reimbursement cuts to the supplies of a service will
definitely cause reduction in access.
Mr. Pitts. Thank you. Thank you, Mr. Chairman.
Mr. Pallone [presiding]. Thank you. Mr. Green.
Mr. Green. Thank you, Mr. Chairman. The Chair got back.
Otherwise I was going to recognize myself for 2 hours to
answer--ask questions, because I know we were all having so
much fun today. But I appreciate it, Mr. Chairman.
Let me first ask, Mr. Miller, you mentioned in your
testimony the large reduction that the Deficit and Reduction
Act imposed on medical imaging, and that during the first year
of implementation that growth in imaging was reduced by only
1.9 percent.
What do you think the reasons were for the growth in
previous years, and do you feel like that the DRA was the only
factor in slowing that growth?
Mr. Miller. The growth was starting to slow somewhat in
previous years. There were years in which the growth was
faster. It started to slow even before the DRA. But the DRA was
a quantum-step change in the growth of imaging. As I have
stated before, I believe the growth in imaging has simply to do
with its utility.
One of the best examples I can give is that we will
probably see a growth in the use of computer tomography in the
management of chest pain. That is going to grow. And it is
going to grow and, frankly, if it were my family members or me,
I would want it to grow, because right now the standard of care
in many places for chest pain is, you either sit for a long
time to get blood tests, the blood tests determine whether your
myocardium is dying. Or you get put in a cath lab for a very
invasive exam. A CT-scan for chest pain has an almost 100
percent negative predictive rate. In other words, if it doesn't
show you have disease, you can go home.
You are therefore avoiding two things. You are avoiding
either sitting around the ED, or if it is late at night,
getting checked into the hospital. Or you are avoiding a
$10,000 catheterization. Forget about the ethical issues. And I
believe, if people have informed me correctly, you have some
experience with this.
Mr. Green. I do. And I have to admit I joked a few years
ago that I got belt and suspenders when I was diagnosed for
having a heart problem. And it turned out, I did the catheter,
and then they said, well, why don't we see if we can do the
scan? And I sat there and watched it, and I felt like I was
getting lobbied with a hospital gown on, and paying for it at
the same time.
But I appreciate that because I know in this bill we are
concerned about that. I just don't want, and I don't think
members want to cut off some of the newer technologies we can
get that are less invasive and that actually can be cheaper
than, for example, a catheter.
Mr. Miller. I think that the point I want to make I can
best make by one also very personal experience, my father; 18
months ago my dad had a stroke. Amazingly, I was in the
neighborhood when it happened. I showed up at the emergency
room when he had it. The emergency room was outfitted with a
state-of-the-art CT-scanner, from us. And they were able to
rule out hemorrhage. He was a candidate for a clot-busting
drug. When he came to the ED he could barely speak. Part of his
face was paralyzed. After the drug, some hours later, he now
speaks perfectly with his grandchildren.
Now, I would ask you, was that expensive? Yes. But what
would be the cost of the rehabilitative care over the rest of
his life had that not been available? The real issue in looking
at these costs is we must look longitudinally over the entire
not only episode of care, but the entire sequence of care.
Mr. Green. Let me go on, because I have questions and only
limited time.
Ms. Buto, I have been working on a piece of legislation,
H.R. 1392, which removes the prompt-pay discount to extend it
to wholesalers from the average sales price of Medicare Part B
drugs. Most of these drugs are oncology therapies, including
chemotherapy, and are administered in physicians' offices or in
outpatient settings. As you know, many oncology practices have
been reimbursed for these Part B drugs at 2 percent under the
price they purchase the drugs because of the prompt-payment
discount.
One point of opposition to the bill is that some believe
the passage of this legislation and the removal of the prompt-
pay discount will result in higher costs to the government if
manufacturers raise drug prices, because the physicians will be
reimbursed at the proper rate of the drugs.
I believe the price increases in the Part B drug market are
largely a function of the level of competition for these drugs
rather than a result of the terms included or excluded from
methodology. Would you agree with that? And do you believe that
the removal of the prompt-pay discount will directly result in
drug manufacturers raising their prices?
Ms. Buto. I do agree with your position, and the prompt-pay
discount is really a factor in the average sales price that
recognizes the cost of doing business. So we really don't think
it is a legitimate factor that should go into the average sales
price.
I agree with you as well that it is the competition among
the different drugs in a class that are going to drive the
average sales price, not removal or adding of this factor to
the ASP.
Mr. Pallone. Mr. Green, as you can see, the time--the
electronic timing devices have ceased to exist.
Mr. Green. I promise not to take my 2 hours, Mr. Chairman
Mr. Pallone. You are almost at a minute over. From now on,
I am going to have to tell you manually what the time is.
Mr. Green. Oh. Can I just get one more question?
Mr. Pallone. Sure. Go ahead.
Mr. Green. Again, Ms. Buto, as a strong supporter of H.R.
1548, the pathway to biosimilars is sponsored by
Representatives Eshoo, Inslee and Barto, and I saw your
testimony in support of the bill as well.
I am particularly concerned with the patient safety, and
this bill allows for clinical trials and the approval of
biosimilars.
Could you elaborate for the committee on why clinical
trials for biosimilars are an important part of the approval
process for biosimilars? And I believe it is important to allow
innovator companies to have adequate time to make a return on
their investment. There is no incentive for these innovator
companies to develop these lifesaving treatments, if you don't
allow that. Can you discuss the data exclusivity provision of
H.R. 1548?
Mr. Pallone. Quickly, please.
Ms. Buto. Very quickly. And I can just say I am not an
expert on this, but I will tell you that our clinical experts
are available to the committee. And one of them was an official
in the Biologic Division at the FDA.
But briefly, the reason clinicals are so important is that
biologics are generally protein-based compounds and they are
not chemicals. So they are not, they can't easily be, in fact,
they cannot be replicated. And that is why the clinical studies
are so important.
Our own experience is, even when we changed the bottle
stopper on our biologic, it created an immunogenicity problem
that created some real adverse effects. So you can make a small
change. If you are not careful in doing the studies, you won't
know between the innovator and the biosimilar. So it is
important.
Mr. Green. Thank you for your time.
Mr. Pallone. Thank you. From now on I am going to have to--
oh, it is back up. All right. Here we go. Great. All right.
Next is Mr. Shadegg.
Mr. Shadegg. Thank you, Mr. Chairman. And I trust I will
get the same indulgence.
Mr. Miller, I want to begin with you. I have my own
experience. I had bypass surgery, I think 7 years ago now, and
I am a huge fan of the work that you and Ms. Buto do. I think
it is vitally important that we fund that kind of research and
that we fund both the development of drugs, cutting-edge drugs
and of cutting-edge biologics.
I believe I heard you, Mr. Miller, say that you like a
physician to manage your health care. Was that--is that what
you said?
Mr. Miller. Yes, that is.
Mr. Shadegg. And I take it you would agree with me that
some of us who have concerns that physicians won't be able to
manage health care if we have government-controlled single
payer, whatever you want to call it, health care--at least if
it put a bureaucrat between you and your physician, you would
be concerned about that, would you not?
Mr. Miller. I would be more than concerned.
Mr. Shadegg. OK. Great. I believe at one point you said
that something would cause access to plummet and especially in
rural areas. I take it that is any limitation on technology or
on the availability of analytic devices such as the type you
are advocating--imaging?
Mr. Miller. Here is the point I was trying to make. In many
rural areas if the reimbursement rates were driven by a formula
that insisted on a 95 percent--which is not in this draft--but
a 95 percent utilization rate, there will be rural medical
imaging centers that will just go out of business. I mean, we
know this. They will go out of business. You might say, well,
that is oK. They can just drive a little further to a hospital,
get imaged there.
Hospitals these days have capital constraints. They are not
ordering extra capacity because they can't afford it. And even
worse than that, I mean, populations are getting older. Imaging
exams are being dominated not by the technology, but getting
the person into the room, calmed down, on the table,
comfortable with the exam and getting back off. There is a
limitation to what you can do.
And frankly, one last point. The high-tech stuff supports
some low-tech stuff. Mammography, for example, gets supported
by some high-tech stuff. That will also go away.
Mr. Shadegg. I think your point is exactly right on; that
imaging has, in fact, in the long run brought down the cost of
health care, and I think restraints placed on imaging have been
a mistake.
You said that you support, and your company supports,
comparative effectiveness research so long as it is looked at
in the entire--I think you said longitude of care. I would
agree with that. But my concern is if that longitude of care is
looked at by a government bureaucrat only looking at dollars
and cents, as opposed to a physician or a group of physicians
looking at both cost and benefit, I am deeply concerned that
comparative effectiveness research could, quite frankly, put
the government in the position of devastating both drug
development or pharmaceutical development and device
development. If somebody is sitting in there kind of second-
guessing you guys, I don't know how it doesn't restrain your
capital.
Mr. Miller. We have the same fear. We have the fear that if
it is not done right, it can simply be a way to restrain
technology development, which would be horrible for the United
States. We are are a net exporter of health care technology.
That would be a huge mistake.
However, we look at all technology we develop and ask
ourselves a single question: Does it change the care of the
patient in cost, quality and time? All three factors must be
simultaneously considered. And if so, comparative effectiveness
research can be a good thing. If not, as you imply, and in the
way in which you imply it, I would be dead-set against it.
Mr. Shadegg. Ms. Buto, I believe you testified very
similarly. I believe in very carefully selected language you
said, in the hands of physicians, in the hands of people using
it for valuable purposes, comparative effectiveness research
can be very good; but that if it is, in fact, used to ration
care, as it perhaps has been done in other countries, that
would not be good. Am I correct?
Ms. Buto. You are correct. We have had the experience where
treatments for which there is no alternative have been denied
based on the application of a cost-effectiveness threshold that
most people would admit is kind of arbitrarily set. So I do
think it is valuable. I think in this country, people will use
it; physicians will use it and patients will use it. So I have
no doubt that it will--the value proposition will enter in, but
at the right level, rather than being set at a national level
by a national entity.
Mr. Shadegg. You also expressed concern about government
negotiation of drug prices. Do you fear that if we had a
single-payer system or if we get a public plan that has the
power of the government behind that?
Ms. Buto. Yes. I was reading the discussion draft and there
was government negotiation within the public plan section. That
has great concern for us, as I say. I think our concern really
comes from the cascade of public plan dominating, and then a
public plan really becoming more commodity-based in its
approach, trying to squeeze down cost by setting prices. That
will definitely inhibit innovation.
And again, we think this country has been a leader in
innovation, and we want to maintain that leadership as well as
the strong position in the economy that these biologic and
pharmaceutical and device companies play in making our economy
strong.
So there are a lot of reasons, but the real fear is that
you have a cascading effect that results in really a
commoditization and lack of incentive for the research to go on
to develop new treatments.
Mr. Shadegg. I want to thank all the witnesses for their
testimony. I want to thank the Chair for his indulgence. And I
just want to conclude by saying, for me, the single greatest
fear I have of either a public plan which would compete with
and, I believe, ultimately undermine and destroy private health
care insurance, or a single-payer insurance, is that it will
end innovation.
And I mean, right now we have clinical effectiveness
research done by the government. If you put forward either a
pharmaceutical, saying it will reduce John Shadegg's blood
pressure, or a device that will perform a prostate cancer
operation on him, you have got to prove that it is clinically
effective.
And I am all in favor of doctors or insurance companies
being able to use comparative effectiveness to look at the cost
effectiveness of my care. I want somebody to say look,
Congressman, this drug will be financially much better now for
you than that drug.
But putting comparative effectiveness authority in the
hands of a bureaucrat whose job it is to meet numbers criteria
rather than to assure, first and foremost, patients' care, I
believe is very dangerous and, I believe, for the world.
I mean, it seems to me--I happened to just drive down here
from New Jersey yesterday and passed Johnson and Johnson's
headquarters. And I know that that is a central part of the
economy of New Jersey. And I just pray that we don't do
something that will drive capital away from the cutting-edge
research that we have, because I am sitting here alive today
because of the work you all have done, and I would like America
to stay out front. And I fear that under any publicly
government-run program, we are going to inhibit that capital,
and we are not going to have the kind of cutting-edge medicine
that you get when free markets invest and explore for those
drugs or those biologics.
Mr. Pallone. Thank you. The gentleman from Ohio, Mr. Space.
Mr. Space. Thank you, Mr. Chairman. And I would like to
thank the witnesses for their indulgence. I know it has been a
very long day. And I may be the last member to question you. I
am sure you are happy to here that.
I come from Ohio's 18th Congressional District. It is a
very rural district. It is, for the most part, within
Appalachian proper. And one of the things that we suffer from
is a lack of access.
Mr. Kelly, I want to thank you for referencing my bill in
your testimony, which I have had a chance to review. This bill
is designed to exempt those pharmacists who have, in good
faith, practiced without fraud or abuse from the surety bond
requirements imposed by the last administration as a part of
the Medicare DME system.
And in our district, we have got--I have got one county
that has one pharmacist in the entire county. We have a
significantly higher-than-average incidence of diabetes, and
the diabetes we do have is not being properly managed. Many of
the people that I represent don't have the insurance to
purchase test strips, for example, which is a very critical
component of the management process for those who suffer from
diabetes, Type 1 diabetes in particular.
And I am interested in your thoughts on H.R. 1970--that we
dropped, concerning the exemption of those pharmacists--and as
to how it will affect those pharmacies that are really serving
as the primary interface with much of the health consumption
community, as well as how it may affect the ability of people
who are either uninsured or have policies that don't provide
significant coverage and their abilities to purchase things
like test strips or other DMEs.
Mr. Kelly. Certainly. I thank you, Mr. Space. And as to
your bill, H.R. 1970, we fully endorse it and support it and
appreciate your introducing it.
The cost of chronic care has been chronicled a lot in this
debate on health care reform, and it is very important to get a
handle on chronic care. Only 50 percent of the folks with
chronic conditions take their medications as they are
prescribed. And that is a problem. The people who can help them
with that are pharmacists in communities like yours and across
the country, in every community, low income and upper income,
across the country.
As it relates specifically to these new requirements, the
surety bond requirement that the last administration imposed,
CMS actually predicted--projected, I should say--that 25,000
DME suppliers would probably drop out of the program as a
result of this new surety bond requirement. And this surety
bond would apply to each and every pharmacy in a chain of
pharmacies. And that is a big deal, not just to members of mine
who have 6,000 pharmacies across the country, but half of our
members have 20 or fewer stores in their chain. So we have a
lot of small business people operating pharmacies across the
country. That is going to be a huge expense and a huge hassle
to them to obtain a surety bond just to continue to provide
diabetes testing supplies and testing strips and glucose
monitors to diabetic patients.
In Medicare, seniors overwhelmingly obtain their diabetes
testing supplies from their local neighborhood pharmacies. And
they are going in there to get their insulin already.
Mr. Space. All right. And many of these DMEs, glucose
monitors and test strips, for example, are over-the-counter
products. These are not prescriptive products, correct?
Mr. Kelly. That is absolutely right. The patient is able to
walk in and obtain that equipment from the local pharmacist.
Our concern, as you have articulated, is that this new
requirement and others would really hassle pharmacies out of
this program. And that destroys continuity of care. And we are
talking a lot in the health care reform debate about the
importance of continuity of care. It is especially true with
chronic conditions like diabetes. If a patient can't get their
diabetes testing equipment at the same place where they are
already getting their insulin, it doesn't make a lot of sense
to us, and you are going to break that bond that is so
important right now for good care.
Mr. Space. Thank you, Mr. Kelly. And I yield back the
balance of my time, all 12 seconds.
Mr. Pallone. Thank you Mr. Space. Unfortunately for the
panel, I still have questions to ask. Hopefully, I will be the
last one, unless someone else shows up.
I wanted to start with--I wanted to ask Ms. Buto a
question; then I wanted to ask Mr. Miller. I will try to get
both of these in in the 5 minutes or so.
Ms. Buto, the President reported 2 days ago that the White
House had reached a deal with pharmaceutical manufacturers to
cut costs for seniors, with incomes up to $85,000, in the donut
hole by 50 percent for brand-name drugs. AARP CEO Barry Rand,
along with Senators Baucus and Dodd and representatives of the
pharmaceutical community were involved in reaching the deal.
We agree with the importance of rectifying this major flaw
in the prescription drug bill that left seniors with no
coverage between $2,700 and $4,350. And the discussion draft
fills about $500 of this cost immediately and then phases out
the donut hole for all Medicare beneficiaries over time. And
the discussion draft reinstates the ability of the Federal
Government to get the best price for prescription drugs for the
most vulnerable low-income Medicare beneficiaries. Those
savings are used to fill the donut hole for all Medicare
beneficiaries.
And my question is--and I asked AARP the same question
yesterday--can you clarify for me, do you see this proposed
provision in the draft as working together with the commitment
by the pharmaceutical manufacturers, thereby filling the donut
hole for seniors; or do you view your agreement with the White
House in lieu of that discussion draft provision?
Ms. Buto. First let me just clarify something and make sure
that I have your question correct. You know, we feel that the
50 percent discount will provide immediate relief, obviously. A
provision that we like in the discussion draft is closing the
donut hole over time. A provision that we don't like is
applying Medicaid rebates to Medicare. So I don't know if that
answered your question.
But I want to be really clear that we do think that closing
the donut hole over time in the immediate term, being able to
provide these 50 percent discounts, will help a lot in making
that more possible. We are hoping it will reduce the cost for
the committee of getting to that closure. But we don't support
the transfer of Medicaid rebates to Medicare.
Mr. Pallone. OK. Well, I understand where you are coming
from. I just wanted to make sure, because of course AARP said
that they would like to see us go all the way in the way that
the discussion draft proposes. And obviously I agree with the
discussion draft. I just wanted to get your opinion on that.
Let me get to Mr. Miller. And I am going back to the point
that Mr. Shadegg touched on about the comparative effectiveness
research, you know, in the context of the health reform effort.
The discussion draft would create a permanent center for
comparative effective research. And the purpose of the center
is to support research to determine, and I quote, the manner in
which diseases, disorders, and other health conditions can most
effectively and appropriately be prevented, diagnosed, treated
and managed clinically.
In my opinion, it is simply about arming doctors with the
best info possible to help them make decisions with their
patients. It says nothing about insurance or cost
effectiveness. In fact, the draft would prohibit the center
from mandating coverage policies.
But even with all that, you know, we get the attacks from--
that this research somehow is going to ration care or reduce
access to new technology.
So I have two questions. Do you believe that thoughtful,
methodologically appropriate comparative effective on this
research focused on patient outcomes will help or hurt
patients? And secondly, Siemens, I know, is on the cutting edge
of medical imaging technology because it is, you know, it is
basically a revolutionary company. Won't this research simply
validate the quality of your products?
Mr. Miller. In both my written and oral testimony, I said I
am for comparative effectiveness research, with a caveat. And
the caveat was that it looks longitudinally across care, and it
looks to validate which technologies result in ultimately, as I
mentioned before, the lowest cost, lowest time, and the best
quality for the entire episode of patient care.
We engage in competitive effectiveness research all the
time in the company. We will have people come to us and say,
every year we have budget time, and our engineers all want to
spend all of the money on everything. And we are big, but we
still have limited budgets like everyone does. So we have to
decide do we invest in this new MR, do we invest in this new
CT, or this new ultrasound, or this new thing that no one's
ever thought of yet?
To do this we engage in our own form of comparative
effectiveness research. It may be done more or less well, but
these are exactly the same kind of questions that we actually
ask when we decide where we invest our innovation dollars. So
therefore, we can't be against it in truth. And plus, if all of
the statements I made in both written and oral testimony are
true, if I truly believe them, I have nothing to fear. In fact,
what should happen, if I am right, is that you will end up
spending more money on my technology because it improves
patient outcomes. So I support it. It must be done the right
way. The devil is in the details, but the concept is absolutely
supportable.
Mr. Pallone. All right. That is what I wanted to find out.
And I appreciate it. And I think that----
Ms. Buto. Mr. Chairman, if I could just add just one other
point to what Mr. Miller said.
Mr. Miller. You are not going to fight with me.
Ms. Buto. No, no. I am not going to fight with you.
I think the other thing, too, to talk a little bit about is
the fact that I think the appropriate comparisons are really
across--in dealing with the condition across the different
modalities. One might be a device, one might be a drug, one
might be watchful waiting. So I think people tend to think drug
to drug, device to device.
And the other thing that has recently come in is the
geographic variation in the costs are actually being driven by
variation around process of care. So more visits, more testing
around a treatment can make a big difference. So I think, you
know, as the committee considers this, just the complexity of
the issues and going beyond just the notion of drug-to-drug,
device-to-device, to get that bigger picture of what
comparisons were really after.
Mr. Pallone. I understand. And that certainly makes sense
to me. I think we are done with the questions and done with the
whole hearing. But really, thank you again. Because I think,
again, your panel as well as the others were very helpful in
terms of what we are trying to achieve here with health care
reform and so we certainly appreciate it.
You may get written questions within the next 10 days. We
would ask you to respond to them and get back to us as quickly
as possible.
Now, again, as yesterday, the committee is going to
recess--the subcommittee, I should say, is going to recess and
reconvene tomorrow morning at 9:30 to continue our review of
the discussion draft. So the committee stands in recess. Thank
you.
[Whereupon, at 7:24 p.m., the subcommittee recessed, to
reconvene at 9:30 a.m. Thursday, June 25, 2009.]
[Material submitted for inclusion in the record follows:]
COMPREHENSIVE HEALTH CARE REFORM DISCUSSION DRAFT--DAY 3
----------
THURSDAY, JUNE 25, 2009
House of Representatives,
Subcommittee on Health,
Committee on Energy and Commerce,
Washington, DC.
The Subcommittee met, pursuant to call, at 9:35 a.m., in
Room 2123 of the Rayburn House Office Building, Hon. Frank
Pallone, Jr. [Chairman of the Subcommittee] presiding.
Members present: Representatives Pallone, Dingell, Gordon,
Eshoo, Green, DeGette, Capps, Schakowsky, Baldwin, Matheson,
Harman, Gonzalez, Barrow, Christensen, Castor, Sarbanes, Murphy
of Connecticut, Space, Braley, Deal, Whitfield, Shimkus,
Shadegg, Buyer, Pitts, Murphy of Pennsylvania, Burgess,
Blackburn, Gingrey, and Barton (ex officio).
Staff present: Karen Nelson, Deputy Committee Staff
Director for Health; Any Schneider, Chief Health Counsel; Jack
Ebeler, Senior Advisor on Health Policy; Brian Cohen, Senior
Investigator and Policy Advisor; Robert Clark, Policy Advisor;
Tim Gronniger, Professional Staff Member; Anne Morris,
Professional Staff Member; Stephen Cha, Professional Staff
Member; Allison Corr, Special Assistant; Alvin Banks, Special
Assistant; Jon Donenberg, Fellow; Karen Lightfoot,
Communications Director, Senior Policy Advisor; Caren Auchman,
Communications Associate; Lindsay Vidal, Special Assistant;
Earley Green, Chief Clerk; Mitchell Smiley, Special Assistant;
Brandon Clark; Ryan Long; Marie Fishpaw; Aarti Shah; William
Carty; Chad Grant; Abe Frohman; Melissa Bartlett; Clay Alspach,
and Nathan Crow.
Mr. Pallone. The Subcommittee on Health will reconvene our
hearing on comprehensive health care reform on the discussion
draft, and we have actually four panels today, and we are going
to get started. So our first panel is on Medicare payment, and
let me introduce our two witnesses. First, on my left, is Glenn
M. Hackbarth, who is the chair of the Medicare Payment Advisory
Commission, better known as MedPAC. And then next to him is the
Honorable Daniel R. Levinson, who is the Inspector General for
the U.S. Department of Health and Human Services.
We are starting fresh today. If you had been here at seven
o'clock last night, it wouldn't have been as--we would have all
looked very tired, but now we are all fresh, so--you know the
drill. We ask you to talk about 5 minutes, and your complete
testimony becomes part of the record, and then we will have
questions, and so we will start with Chairman Hackbarth.
STATEMENTS OF GLENN M. HACKBARTH, CHAIR, MEDICARE PAYMENT
ADVISORY COMMISSION; AND HON. DANIEL R. LEVINSON, INSPECTOR
GENERAL, U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
STATEMENT OF GLENN M. HACKBARTH
Mr. Hackbarth. Thank you, Chairman Pallone, and Ranking
Member Deal, members of the Subcommittee. I appreciate the
opportunity to talk about the Medicare Payment Advisory
Commission's recommendations for improving the Medicare
program.
As you know, MedPAC is a non-partisan Congressional
advisory body. Our mission is to support you, the Congress, in
assuring Medicare beneficiaries have access to high quality
care, while protecting the taxpayers from undue financial
burden. MedPAC has 17 commissioners. Six of the Commissioners
are trained as clinicians. Seven of the commissioners have
experience either as executives or Board members of health care
providers or health plants. Three commissioners have high level
experience in Congressional support agencies, or CMS, and we
have four researchers who add intellectual rigor to our work.
And some commissioners have more than one of these credentials.
In addition to that, we have a terrific staff, headed by Mark
Miller, the executive director.
I want to emphasize the credentials of the commissioners,
to emphasize that we are from the health care system in no
small measure. As such MedPAC commissioners recognize the
talent and commitment of the professionals who serve within the
health care system. We are not outsiders, critics who have no
appreciation of the challenges of being on the front line.
MedPAC recommendations may be right, they may be wrong. The
issues are complex, and rarely are they clear cut. But if we
are wrong, it isn't because we are inexperienced, or lack a
stake in the success of the system. We also take pride in our
ability to reach consensus on even complex and sensitive
issues. For example, in our March 2009 report, we voted on 22
different recommendations. On those 22 recommendations, there
were roughly 300 yes votes and only 4 no votes, and 3
abstentions.
All of the MedPAC commissioners agree that Medicare is an
indispensable part of our health care system. Not only is it
financed care for many millions of senior citizens and disabled
citizens, it has helped finance investments in health care
delivery that have benefited all Americans. But we also know
that Medicare is unsustainable in its current form. We must
slow the increase in costs, even while maintaining or improving
quality if care and access. We believe accomplishing that task
will in turn require both restraint and payment increases under
Medicare's current payment systems and a major overhaul of
those payment systems.
Medicare's payment systems, and, I would add, those used by
most private payors, reward volume and complexity without
regard to the value of the care for the patient. Moreover,
those payment systems facilitate siloed or fragmented practice,
whereby provides caring for the very same patient to often work
independently of one another. When care is well integrated and
coordinated, it is usually testimony to the professionalism of
the clinicians involved. That coordination and integration is
too rarely support or rewarded by our payment systems.
The resulting fragmented approach to care is not only
expensive, it is dangerous, especially for complex patients, of
which there are many in the Medicare program. It is MedPAC's
belief that we need payment reform that rewards the efficient
use of precious resources and the integration and coordination
of care. But it is not enough to simply change how we pay
health care providers. We also must engage Medicare
beneficiaries in making more cost conscious choices, or being
sensitive to the complex nature of the decisions that must be
made, and the limited financial means of many beneficiaries.
It is our belief that the cost challenge facing the
Medicare program, and indeed the country, is so great that we
need to engage everyone, patients, provides and insurers, in
striving for a more efficient system. In the last several
years, MedPAC has recommended a series of changes in the
Medicare program that we believe would help improve the
efficiency of the care delivered, while maintaining or
improving quality. Let me just quickly mention a few of those
recommendations.
First is increase payment for primary care services, and
perhaps a different method of payment as well. Abundant
research has shown that a strong system of primary care is a
keystone of a well functioning health care system.
Second, we have recommended that the Congress take a number
of steps to increase physician and hospital collaboration,
including gain sharing, that would encourage collaboration
between physicians and hospitals in reducing cost and improving
quality.
Third, we have recommended reduced payment for hospitals
experiencing high levels of potentially avoidable re-
admissions. As you know, about 18 to 20 percent of all Medicare
admissions are followed by a re-admission within 30 days, at a
cost of roughly $15 billion a year to the Medicare program.
Next, we have recommended a pilot of bundling, whereby
payment for hospital and physician services provided during an
admission would be combined into a single payment, and perhaps
combined with payment for post-acute services as well.
Next, we have recommended reform of the Medicare advantage
program so that participating private plans are engaged in
promoting high performance in our health care system, instead
of offering plants that mimic Medicare----
Mr. Pallone. Mr. Hackbarth, I want you to finish, but I
just want you to know you are minute over, so----
Mr. Hackbarth. OK. I am to the last step, Mr. Chairman. Let
me just close with two cautionary statements. One is changing
payment systems, and we must change them, and doing so with
some speed is going to require more resources and broader
discretion for CMS than it now has.
The second caution is that, while we need to reform
payment, it is going to take some time, and in the meantime, we
need to continue pressure on the prices under our existing
payment systems in the Medicare program. Thank you.
[The prepared statement of Mr. Hackbarth follows:]
Mr. Pallone. Thank you very much for what is really
important in terms of what we are trying to accomplish here. I
appreciate it.
Mr. Levinson?
STATEMENT OF HON. DANIEL R. LEVINSON
Mr. Levinson. Good morning, Chairman Pallone, Ranking
Member Deal, and members of the Subcommittee.
Mr. Pallone. Your mike may not be on, or maybe it is not
close enough. Try to move it--no, I think you have got to
press--you have to--when the green light is on, it--green light
on?
Mr. Levinson. It is.
Mr. Pallone. Now you are fine.
Mr. Levinson. OK. Thank you. Chairman Pallone, Ranking
Member Deal, members of the Subcommittee, good morning. I thank
you for the opportunity to discuss the Office of Inspector
General's work at this very important time of deliberations
over health care reform.
Based on our experience and expertise, our office has
identified five principles that we believe should guide the
development of any national health care integrity strategy. And
consistent with these principles, OIG has developed specific
recommendations to better safeguard Federal health care
programs. My office has provided technical assistance, as
requested, to staff from the Committee, and we welcome the fact
that many of OIG's recommendations have been incorporated into
the House Tri-Committee health reform discussion draft.
Principle one, enrollment. Scrutinize those who want to
participate as providers and suppliers prior to their
enrollment in the Federal health care programs. Provider
enrollment standards and screening should be strengthened,
making participation in Federal health care programs a
privilege, not a right.
As my written testimony describes, a lack of effective
provider and supplier screening gives dishonest and unethical
individuals access to a system that they can easily exploit.
Heightened screening measures for high risk items and services
could include requiring providers to meet accreditation
standards, requiring proof of business integrity or surety
bonds, periodically certification and on site verification that
conditions of participation have been met, and full disclosure
of ownership and controlled interests.
Principle two, payment. Establish payment methodologies
that are reasonable and responsive to changes in the
marketplace.
Through extensive audits and evaluations, our office has
determined that Medicare and Medicaid pay too much for certain
items and services. When pricing policies are not aligned with
the marketplace, the programs and their beneficiaries bear the
additional cost.
In addition to wasting health care dollars, these excessive
payments are a lucrative target for unethical and dishonest
individuals. These criminals can re-invest some of their profit
in kickbacks, thus using the program's funds to perpetuate the
fraud schemes.
Medicare and Medicaid payments should be sufficient to
ensure access to care without wasteful overspending. Payment
methodology should also be responsive to changes in the
marketplace, medical practice and technology. Although CMS has
the authority to make certain adjustments to fee schedules and
other payment methodologies, some changes require Congressional
action.
Principle three, compliance. Assist health care providers
in adopting practices that promote compliance with program
requirements.
Health care providers can be our partners in ensuring the
integrity of our health care programs by adopting measures that
promote compliance with program requirements. The importance of
health care compliance programs is well recognized. In some
health care sectors, such as hospitals, compliance programs are
widespread and often very sophisticated. New York requires
provides and suppliers to implement an effective compliance
programs as a condition of participation in its Medicaid
program. Medicare Part D prescription drug plan sponsors are
also required to have compliance programs.
Compliance programs are an important component of a
comprehensive integrity and strategy, and we recommend that
providers and suppliers should be required to adopt compliance
programs as a condition of participating in Medicare and
Medicaid.
Principle four, oversight. Vigilantly monitor the programs
for evidence of fraud, waste and abuse.
The health care system compiles an enormous amount of data
on patients, providers and the delivery of health care items
and services. However, Federal health care programs often fail
to use data and technology effectively to identify improper
claims before they are paid and to uncover fraud schemes. For
example, Medicare should not pay a clinic for HIV infusion when
the beneficiary has not been diagnosed with the illness, or pay
twice for the same service.
Better collection, monitoring and coordination of data
would allow Medicare and Medicaid to detect these problems
earlier and avoid making improper payments. Moreover, this
would enhance the government's ability to detect fraud schemes
more quickly.
As fraud schemes evolve and migrate rapidly, access to real
time data and the use of advance data analysis to monitor
claims and provider characteristics are critically important.
OIG is using innovative technology to detect and deter fraud,
and we continue to develop our efforts to support a data driven
anti-fraud approach. However, more must be done to ensure that
we and other government agencies are able to access and utilize
data effectively in the fight against health care fraud.
Final principle, response. Respond swiftly to detected
fraud, impose sufficient punishment to deter others, and
promptly remedy program vulnerabilities.
Health care fraud attracts criminals because the penalties
are lower than those for other criminal offenses, there are low
barriers to entry, schemes are easily replicated, and there is
a perception of a low risk of detection. We need to alter the
criminal's cost/benefit analysis by increasing the risk of
swift detection and a certainty of punishment.
As part of this strategy, law enforcement is accelerating
our response to fraud schemes. The HHS/DOG Medical Fraud Strike
Force model describe in my written testimony is a power anti-
fraud tool, and represents a tremendous return on investment.
These strike forces have proven highly effective in prosecuting
criminals, recovering payments for fraudulent claims and
preventing fraud through a powerful sentinel effect.
In conclusion, our experiences and results in protecting
HHS programs and beneficiaries has applicability to the current
discussions on health care reform. We believe that our five
principle strategy provides the framework to identify new ways
to protect the integrity of the programs, meet the needs of
beneficiaries, and keep Federal health care programs solvent
for future generations.
We appreciate the opportunity to work with the Committee,
and welcome your questions. Thank you.
[The prepared statement of Mr. Levinson follows:]
Mr. Pallone. Thank you. Thank you both. I am going to ask
my questions of Mr. Hackbarth, but not because what you said is
not important, Mr. Levinson. I think this whole issue of
enforcement and fraud and abuse is really crucial.
But I--yesterday, Mr. Hackbarth, I asked basically the same
question of Secretary Sebelius. In other words, you know, on
the one hand we are talking about reductions in payments for
certain Medicare and Medicaid programs. On the other hand, we
are talking about enhancements and, you know, actually spending
more on other aspects of Medicare and Medicaid, for example,
Medicare Part D, filling up the doughnut hole, and you do both.
In other words, my understanding is that, you know, your
recommendations, which we--many of which are incorporated in
this discussion draft, accomplish both purposes.
So--what I wanted to do, though, is--I think there is more
media attention on cuts than there is on what you do to enhance
programs, so I wanted you to talk a little bit about what
motivates MedPAC to propose some of the reductions we are
contemplating, you know, like the Medicare Advantage, the home
health rebasing, productivity into payments updates and the
rest. But why is it that MedPAC sees these as important policy
proposals on their own terms, not because of, you know, cost
savings?
Mr. Hackbarth. Um-hum. Well, Mr. Chairman, we believe that
pressure on the prices in the Medicare payment system is
important to force the system towards more efficiency. As you
and the other members of the Committee know, Medicare has
administered price systems. They are set through a government
process, as opposed to market prices.
We believe that what we have to do with that administered
price system is mimic, so far as possible, the sort of pressure
that exists in a competitive marketplace. The taxpayers who
finance the Medicare program face relentless pressure, often
from international competition, for example, forcing the firms
that they work for to lower their costs, day in and day out. We
think the health care system must experience the same sort of
pressure.
Mr. Pallone. And then the solvency of the trust fund is
extended, and premiums are reduced, and the program is
maintained for future generations, so that is the ultimate
goal?
Mr. Hackbarth. Absolutely.
Mr. Pallone. And let me ask you another question about--you
know, we get this argument from some--not too many, but some
employers and providers complain about alleged cost shifting
from Medicare to the private sector. The argument is, like--
something like if Medicare would pay more, private plans could
pay less, and so health care would be cheaper for employers and
others. I don't understand how increasing Medicare payment
rates would lead a private hospital to decrease the prices it
charges private insurers, and--can you explain this to me? You
know--I mean, I know I am asking you the opposite of what you
believe, but----
Mr. Hackbarth. Yes.
Mr. Pallone [continuing]. I mean, what----
Mr. Hackbarth. Yes. Well, let me start by saying that we
believe that Medicare payment rates are adequate. We don't
believe that they are too low. We don't believe that they
should be increased. And we--let me focus on hospital services
as an example of that. We look at the data in several different
ways. We have looked at time series data, and you see there is
a pretty consistent relationship in periods where private
payments are generous, Medicare margins become negative. And it
is our belief that that is because when the private payments
are generous, hospitals have more money to spend, and they
spend it. It is a largely not-for-profit industry. If they get
revenue, they will spend it.
And--then we see the same pattern when we look at
individual hospitals, so what we have identified is a group of
hospitals that don't have a lot of generous payment from
private payers. They have constrained resources. Those
institutions lower their costs and actually have a positive
margin on Medicare business. They don't have the luxury of
additional private money flowing into their institutions. They
are forced to control costs, and they do control costs as a
result.
Mr. Pallone. And so you disagree with claims that Medicare
is responsible for high health insurance premiums?
Mr. Hackbarth. No. I--if institutions--clearly the rates
paid by Medicare and private payers are different. Private
payers pay higher rates. It does not follow from that, however,
if you increase Medicare rates that the private rates would
fall.
Mr. Pallone. OK. Now, let me just--one more thing about
access. You know, we hear about, in some parts of the country
that, you know, Medicare enrollees say that they can't find a
doctor willing to accept new patients. Based on your research,
do you have any reason to believe that we have a crisis of
access in Medicare, that--basically providers not taking
Medicare in a significant way?
Mr. Hackbarth. Each year we do a careful study of access
for Medicare beneficiaries, asking both patients and
physicians. Our most recent patient survey, which was done in
the Fall of 2008, found that Medicare beneficiaries are most
satisfied with their access to care than private patients,
privately insured patients, in the 50-64 age group.
The one area of concern that we do have is around access to
primary care services, especially for Medicare beneficiaries
looking for a new physician, for example, because they have
moved. That is the area where we see Medicare beneficiaries
reporting the most problem, but we also see privately insured
patients in the same circumstance reporting problems as well.
So we don't think the issue is a function of Medicare payment
rates, but rather too few primary care physicians.
Mr. Pallone. Which was one of the things we were trying to
address in this discussion draft. Thank you.
Mr. Deal.
Mr. Deal. Mr. Hackbarth, let me follow up on one of your
comments about your look at those hospitals that have higher
ratios of Medicare patients and lower ratios of private paying
patients.
Mr. Hackbarth. Um-hum.
Mr. Deal. And I believe your statement was that they are
able to make a profit and, in fact, be more profitable than
some of the ones who have lower volume of Medicare patients.
Don't those hospitals receive dish payments, as a general rule?
Mr. Hackbarth. Some of them may, yes.
Mr. Deal. Does your recommendation in any way address
whether dish payments should continue or be abolished?
Mr. Hackbarth. We have had some discussion, Mr. Deal, about
refocusing dish payments. We have not recommended abolishing
them.
Mr. Deal. OK. Mr. Levinson, the draft talks about expanding
Medicaid coverage and providing Federal payment of 100 percent
for some of this expansion of new populations so that the
states don't have to pick up even their matching share in their
Medicaid formula. If that is the case, if the Federal
government picks up 100 percent of this cost, are you concerned
that states will no longer have the incentive to look for the
waste and the fraud and the abuse because they don't really
have any stake dollars in that pot? Is that a concern, from
your standpoint?
Mr. Levinson. Well, it is certainly always a concern about
what is occurring with the Federal share of Medicaid, and
indeed, as we look for a larger share of that on the Federal
side, it becomes of greater interest to us at the Federal
level. It is an issue, actually, that I, as a member of the
Recovery Act Accountability and Transparency Board, is already
dealing with, with my colleagues on the Board, because the ARA
does include a significant increase in the Federal share
funding to alleviate states of some of the Medicaid burden. And
in some of the states, particularly in the south central part
of the United States, we are approaching a level where states
give little, if any, contribution to Medicaid. So we are
focusing on ensuring that there are controls in place to make
sure that the, you know, the Medicaid dollar is protected, but
as the Federal involvement becomes greater, the need for more
Federal monitoring of those dollars also becomes greater.
Mr. Deal. Because the states have been the primary
enforcement--first line of enforcement against fraud and abuse,
with oversight from the Federal. So you are saying that there
may be a need for more Federal oversight?
Mr. Levinson. That is correct. Historically the Medicaid
Fraud Control Units, which exist in nearly every state of the
union, have been really the first protectors, as it is, of the
Medicaid program. We have provided oversight. In the last
several years, though, Congress has provided additional funding
to be more involved in the monitoring of those Medicaid dollars
as the Federal share has increased.
Mr. Deal. Mr. Hackbarth, in your testimony, you make
reference, I think, to the fact that about 60 percent of
beneficiaries now buy supplemental policies to cover part of
their Medicare cost. That seems, to me, a little bit
inconsistent with your conclusion that the Medicare
reimbursement rates are adequate. I know one is from the
provider standpoint and the other being from the patient
standpoint.
Do you foresee, from the patient standpoint, that if we
model everything after the Medicare reimbursement rates and the
Medicare model, that there is going to be a need for even more
purchasing of supplemental insurance by the individual
patients?
Mr. Hackbarth. Well, as you say, Mr. Deal, there are two
distinct issues. One is the adequacy of payments rates to
providers, and we believe those payment rates are adequate. The
Medicare benefit package is probably not designed the way any
of us would design it if we were starting with a clean piece of
paper. The design could be streamlined, and that process may
reduce the need for beneficiaries to buy supplemental coverage.
For example, if we were to add catastrophic coverage, a key
missing component on Medicare, that might reduce the perceived
need for supplemental coverage.
Mr. Deal. OK.
Mr. Hackbarth. We have begun looking at that redesign
issue.
Mr. Deal. Real quickly, you were going through your
principles that you have recommended, and you got through most
of them, I think. In the very short time that I have left, are
there any of those principles that you are concerned that are
not being addressed in this discussion draft, in particular any
that you have great concern about?
Mr. Hackbarth. Off the top of my head, Mr. Deal, I can't
think of one.
Mr. Deal. OK. Thank you, Mr. Chairman.
Mrs. Capps. The chair now recognizes Mr. Murphy for his
questions.
Mr. Murphy of Connecticut. Thank you very much, Madam
Chair, and Mr. Hackbarth, thank you so much for all the work
that you have done guiding this Congress on this issue of
moving away from a volume based system to a system that
attempts to really reward outcome and performance.
And I think--I, for one, am worried that if don't take
advantage of this moment in time, with this health care reform
debate, to make those changes, that we may never be able to
make them. And so--I know Mr. Deal just asked you a general
question about whether there were points of reform that you
have pushed that aren't in this bill, but I wanted to ask
specifically on this issue of payment reform.
Mr. Hackbarth. Um-hum.
Mr. Murphy of Connecticut. Have you taken a look at this
bill with regard to payment reform, and how do you think it
measures up versus what you think could be potentially done
through this Reform Act, with regard to transforming our
payment system?
Mr. Hackbarth. Yes. As I indicated to Mr. Deal, I think
that the bill's provisions on Medicare are pretty
comprehensive, and address the major issues that MedPAC has
raised about the Medicare program. Having said that, some of
the provisions--let me take an example, accountable care
organizations rebuttalling. You know, the bill provides for
pilots of these new ideas, and, in fact, that is what MedPAC
has recommended. These are complex ideas that will take time to
develop and refine. So, the bill includes provisions. We
shouldn't assume from that that, oh, it is a done deal. There
is lots of work that needs to be done in CMS, in particular, to
make these things a reality.
Mr. Murphy of Connecticut. Well--and that was going to be
my second question. You have had a lot of experience in pilot
programs, and I think one of the things that some of us worry
about is that it is--that there has been a lot of research done
on, for instance, the issue of accountable care organizations
and bundling, and I think the majority of evidence is that they
work. That they get good outcomes, and they can reduce costs.
And so if we are going to go into a bill that pilots these, how
do we make sure that if the pilots turn up with the outcomes
that pretty much every other--all other work on these payment
reforms have done, how do we make sure that then that becomes a
system-wide reform?
Mr. Hackbarth. Yes. This is an issue that I think we
discussed last time I was with the Committee. The pace at which
we make changes, reform the Medicare payment systems, is way
too slow, and one of the things that we have recommended is
broader use of pilots, as opposed to demonstrations. And the
difference, in our mind, is that under a pilot, the Secretary
has the authority to move to implementation if the pilot
achieves stated objectives. It doesn't have to come back
through the legislative process. We think that is a very
important step.
And again, I would emphasize CMS needs more resources to do
these things both quickly and effectively. They are operating
on a shoestring, and the work is too important, too complex, to
allow that to continue.
Mr. Murphy of Connecticut. And let me ask specifically
about this issue of accountable care organizations. And--it
seems to me that one of the ways that you expand out to a
system of outcome based performance is that you try to
encourage physicians to join in and collaborate.
Mr. Hackbarth. Right.
Mr. Murphy of Connecticut. We have put an enormous amount
of money in the stimulus bill into giving physicians and
hospitals the information technology to create those
interaction and that coordination. And I guess I would ask you
what are the ways that we need to be looking at in order to try
to provide some real incentives for physicians to coordinate,
become part of multi-specialty groups, enter into cooperative
agreements? And then should we be looking at only incentives,
or should we be looking at something tougher than incentives to
try to move more quickly to a system by which physicians aren't
operating in their own independent silos?
Mr. Hackbarth. Yes. Well, the fact that we have a
fragmented delivery system, I believe, is the result of how we
have paid for medical care not just in Medicare, but also in
private insurance programs for so many years. We basically
enabled a sort of siloed, independent practice without
coordination. The most important step we can take is change the
payment systems so that services are bundled together, and
physicians of various specialties and the various types of
providers must work together. And there is abundant evidence
that when they do that, we not only get lower costs, we get
better quality.
Mr. Murphy of Connecticut. Thank you very much, Madam
Chair.
Mrs. Capps [presiding]. Thank you. The Chair now recognizes
Congressman Burgess for his questions.
Mr. Burgess. Thank you, Madam Chair. Mr. Hackbarth, always
good to see you, and I have several questions that I am going
to submit in writing because time is so short during these
Q&As, and I was going to reserve all my questions, in fact, for
the Inspector General, but I just have to pick up on a point
that we just expressed.
And under accountable care organization within Medicare,
just within the Medicare system, with Medicare being an
entirely Federal system--it is not a state system, it is a
Federal system, so we don't have state mandates in Medicare. It
functions across state lines.
If we were to provide an incentive, that is a backstop on
liability under the Federal Tort Claims Act for doctors
practicing within the Medicare system who practice under the
guidelines of whatever we decide the accountable care
organization--the proper accountable care organization should
be, would that not be the types of incentive that we could
offer to physicians that would not require increase in
payments, but yet would bring doctors--increase their interest
in practicing within these accountable care organizations?
Mr. Hackbarth. Yes. Dr. Burgess, MedPAC has not looked
specifically at the malpractice issue. We principally focus on
Federal issues. You know, that is our----
Mr. Burgess. But, if I could, we could make liability a
Federal issue within the Medicare system because defensive
medicine does cost the Federal system additional dollars, as
Dr. McClellan's great article from 1996 showed.
Mr. Hackbarth. Right. And my point is that there's no
MedPAC position on malpractice issues. As you know, though, I
am formerly a CEO of a very large medical group, so I have lot
of experience working with physicians, and I know how large
malpractice looms in the minds of physicians. Because I have
not studied the issue in detail, I don't have a specific
recommendation, but I think addressing physician concerns about
malpractice is a reasonable thing to do.
Mr. Burgess. Well, one of the things that really bothers me
about these discussion in this Committee, you have so many
people here who have never run a medical practice, as you have,
and as some of us have. Doctors tend to be very goal directed
individuals. That is why the fee for service system has worked
for so long, because you tell us what to do and what the rules
are, and we make a living at it. I am not a big fan of
bundling. I don't trust hospital administrators, as a general
rule, and I would not trust them to appropriately apportion out
the payments, so not a big fan there. But are there--there
ought to be other ways to tap into the goal directed nature of
America's physicians to achieve the goals that you are trying
to get, and right now I don't think, at least from what I have
seen, we are quite there.
I am going to actually go to Mr. Levinson, because what you
have talked about is so terribly important, and--let me just
ask a question. Right now, within the discussion draft we are
talking about, I don't think the numbers are filled in as far
as the budget, the numbers--the dollar numbers that are going
to be there. What do you need today in order to do your job
more effectively?
Mr. Levinson. Well, we certainly need the resources that we
have been given by the Congress and by the Executive, and it is
certainly being used, I think, in an optimum way. But as the
mission gets larger, the need for greater resources also is
there.
Mr. Burgess. And I am going to interrupt you, that is an
extremely important point, because we have increased the FMAP
on--in the stimulus bill and some of the other things that we
are talking about doing. Is that not going to increase the
burden, the pressure, that is placed on you and your
organization in order to provide the proper oversight?
Mr. Levinson. Certainly our mission has been heading north
for the last few years, and we are really pressed to enlist
really the best investigators, evaluators, lawyers and auditors
we can find to handle, you know, a much larger budget than
historically we ever have had before.
Mr. Burgess. And it is not just you, because my
understanding, from talking to folks back home in the Dallas/
Fort Worth area, from--within the HHS Inspector General's shop,
and within the Department of Justice's jurisdiction, there is
actually a deficit of prosecutorial assets, or, actually,
assets have been--been had to use for other things, Homeland
Security, narcotics trafficking, and there is not the
prosecutors to devote to the cases that you all develop, to
bring those cases to trial.
Mr. Levinson. That is a very important point, and sometimes
it is overlooked how key it is to understand that the resources
that are used to fight health care fraud really require a
collaborative effort across several different government
entities. And if you have the Justice Department personnel, but
don't have the IG personnel----
Mr. Burgess. Right.
Mr. Levinson [continuing]. And vice versa, you really have
a significant problem.
Mr. Burgess. And just one last point--I will submit several
questions in writing--on the issue that we are hearing so much
about in McAllen, Texas, where the--McAllen appears to be an
outlier. Many physicians from the Texas border area were in
town yesterday. I don't represent the border area, but they
discussed it with me. They are concerned, obviously, about the
negative press that they have been getting over the report by
Dr. Guande in the New Yorker magazine. Is there any special
focus that you are putting on that area because of the
possibility of diversion of Medicare/Medicaid dollars within
other ancillary agencies, imaging, drugs, home health? Are--is
the possibility that this number is skewed not because of
practitioners in the area, but because, in fact, the--we don't
have the resources to devote to the investigation of fraud, the
prosecution of fraud when it is uncovered?
Mr. Levinson. Well, there are a number of high profile
areas that we oversee that we do need to concentrate on,
because they do tend to be areas where fraud, waste and abuse
tends to become a lot more serious than perhaps others. The
durable medical equipment area, for example, especially in
South Florida, has triggered our need to develop a strike force
that is specifically devoted to trying to uncover and, to the
extent possible, eliminate DME fraud in South Florida. We have
had very good results there, actually, in being able to clean
up many of the problems areas. I can point to other parts of
the country where other kinds of issues have arisen that really
require a concentrated effort by us, working with our law
enforcement partners. I can't speak specifically to McAllen,
Texas.
Mr. Burgess. Are--is that on your radar screen to pull that
into the investigative process?
Mr. Levinson. I can only say that the entire nation is on
our screen, because we have such an extensive jurisdictional
requirement.
Mr. Burgess. All right. Thank you, Mr. Chairman.
Mrs. Capps. The Chair now recognizes Mr. Green for his
questions.
Mr. Green. Thank you.
Mr. Hackbarth, in your testimony, you cited lack of care
coordination and lack of incentive of providers to actually
coordinate care as a cost burden, and I agree, and we have
several coordination bills pending before our committee. One is
the Realigning Care Act, which focuses on geriatric care
coordination. Your testimony cites geriatrics as an area in
which care coordination is especially necessary. Can you
elaborate on how geriatric care coordination could help lower
health care costs? And again, we are dealing with Medicare, but
maybe we could also deal with whatever we create as a--in the
national health care.
Mr. Hackbarth. Yes. Geriatricians, as you know, tend to
focus on elderly patients who have very complex multiple
illnesses. And for those patients, not only is the potential
for inappropriate, unnecessary care large, the risk to the
patient of uncoordinated care is very large indeed. And so such
patients really need somebody who is going to follow them at
each step, not hand them off to specialists, and then they are
handed to another specialist and another. They need somebody as
that home base to integrate and coordinate the services.
Mr. Green. And I know that is our goal, is to talk about a
medical home, you know, where someone could--any of us--a
number of us had elderly parents who we have had to monitor the
number of doctor's visits simply because they also take lots of
different medications, and there is nobody coordinating that,
except maybe a family member.
Mr. Hackbarth. And the problem, as you well know, Mr.
Green, is that Medicare really doesn't pay for that activity,
outside of the patient visit, the phone calls that need to be
made to pull together the services of the well integrated. So
we have made a series of recommendations to increase payment
for primary care and the medical home, which in addition to the
fee based payments, has a per patient sum to support that sort
of activity.
Mr. Green. And since we are all so concerned about the
scoring, did MedPAC look at--by creating this benefit of
coordinated care, could we save on the back end? Is there
something we could quantify, say, to CBO, or someone could say,
we--over a period of time, let us-- we think we can save
ultimately?
Mr. Hackbarth. Yes. Well, it is our hope, and perhaps even
our expectation, that there would be savings. But what we have
recommended, and what the Congress has done, is a large scale
pilot, so that, in fact, we can hopefully document those
savings and to have a resulting CBO score from it.
Mr. Green. OK. And I know we have your--under current law
we have your welcome to Medicare exam. That--do you think that
could fit in there with what we would call a geriatric
assessment initially, and then build on using that primary
care?
Mr. Hackbarth. Well, potentially, because it gives the
physician, hopefully a strong primary care physician, an
introductory assessment of all of the patient's problems right
from the outset.
Mr. Green. OK. And again, I know there is a provision in
the bill, and a lot of us have that interest, and that is one
of the good things about this bill that we are dealing with,
but, again, since we are looking at scoring, say, you know--and
it is hard to get CBO to say at the end we can save money. Not
only save money, but almost--much more humane dealing Medicare,
or any patient, in all honesty.
Mr. Hackbarth. Well, what I can say, Mr. Green, is that--as
I said in my opening comment, there is abundant evidence that
systems that have strong primary care have lower costs and
higher quality than systems that don't have strong primary
care. You see that in international comparisons. You see that
in studies within the United States that compare regions with
one another. You see that within health systems. So there is
lots of evidence of that sort. Whether CBO considers that
strong enough to score is----
Mr. Green. Well----
Mr. Hackbarth [continuing]. A CBO issue, not a----
Mr. Green [continuing]. Maybe by your testimony we can
encourage CBO to look at other countries that have a primary
care emphasis, and how that can reduce the cost. So maybe the
bean counters can actually say, this works, and so--I
appreciate your testimony, and hopefully we will get that in
our response when we are--when we get that score, so--thank
you.
Chairman--Madam Chairman, I yield back my time.
Mrs. Capps. Congressman Gingrey is now recognized.
Mr. Gingrey. Madam Chairman, thank you. And I am going to
direct my questions to Mr. Hackbarth.
Mr. Hackbarth, one of the barriers to achieving value in
Medicare cited in your testimony--you state that Medicare
payment policies ``ought to exert physical pressure on
providers.''
Mr. Hackbarth. Um-hum.
Mr. Gingrey. You go on to state that in a fully competitive
market, which I am guessing infers that Medicare does not
compete in a fully competitive market, that this physical
pressure happens automatically in a fully competitive market.
In the absence of such a competitive market, you suggest that
Congress must exert this pressure by limiting payment updates
to Medicare physician updates.
When created Medicare Part D, Congress considered
instituting a set payment rate in lieu of creating a
competitive market, where competition among the pharmacy
benefit plans might automatically keep the cost down. In the
end, this Congress elected to go with that competitive model
and forego payment rates set in statute, some of those that
exist under current Medicare fee for service. The results, as
we all now know, is that, due to the private market pressure,
rather than government price setting, Part D premiums are much
lower than anticipated, and drug prices have gone down.
So, instead of exerting the physical pressure on providers
that you suggest must be exerted due to the lack of a
competitive market to do it automatically, I am curious as to
your thoughts on how using a competitive bidding process, like
what we did in Medicare Part D, might achieve the same sort of
efficiencies you suggest are required in traditional Medicare,
but without having to resort to restricting of payments.
Mr. Hackbarth. Um-hum. Well, let me approach it from two
directions, Dr. Gingrey. If we look at private insurers, and
the private insurance marketplace, and we compare the costs of
those programs with Medicare costs, what we see is that, on
average, and my evidence here is from the Medicare Advantage
Program, is that the bids submitted by the private plans are
higher than Medicare's costs, they are not lower. Now, there
are some plans that bid lower, but on average, the private bids
are higher.
So that is an opportunity for private plans to come in and
compete and show that they can reduce costs, and by their own
bids, they have not done that.
Mr. Gingrey. You are talking Medicare Advantage?
Mr. Hackbarth. Medicare Advantage.
Mr. Gingrey. But, of course, they--Mr. Hackbarth, they do
provide something that these three committees that have come up
with this draft legislation, if you will, really want, and that
is, of course, emphasis on things other than just episodic
care, treatment of pain and suffering, but also wellness
prevention and that sort of thing.
Mr. Hackbarth. Yes. Some do, some don't. The private plans
are quite variable in their structure, how they deal with
providers, what sort of care coordination programs they have,
and most importantly, they are quite variable in their bottom
line results. Some are outstanding, some are not.
Mr. Gingrey. Yes. Let me go on to another question. I thank
you for that response. One of the foundations of your testimony
today is that the American health care system has serious
quality problems. You--``At the same time that Americans are
not receiving enough of the recommended care, the care they are
receiving may not be appropriate.'' And then you go on to cite
the Dartmouth Center for the Evaluative Clinical Services as
proof of a wide variation in Medicare spending and rates of
service used.
Just to be clear, when you say the American system, Mr.
Hackbarth, are you referring to the American Medicare system,
and not the entire American health care system? Am I correct in
that assumption, given that the Dartmouth study used only
Medicare data for its findings? We are talking about the
American Medicare system and not the entire health care system?
Mr. Hackbarth. Well, in fact, the Dartmouth study is done
using Medicare data because it is the most readily available
comprehensive database. I don't think there is any reason to
believe that physicians are practicing different for Medicare
patients and private patients, but my personal experience in
working closely with physicians is that it is a matter of
principle that they don't vary their care based on the
insurance coverage of the patient. They treat the patient based
on what the patient needs.
So I think it is a reasonable inference, if you see this
variation of Medicare, likely you have the same variation----
Mr. Green. Well, I know my time is up, Madam Chairman, but
I--the reason I ask you this question, Mr. Hackbarth, because
we are going to have another panel, probably several more
panels today, but I think there are going to be some physicians
that are practicing in the private market that might want to
dispute what you just said. But thank you so much for your
response, and I yield back, Madam Chairman.
Mrs. Capps. Thank you. I now yield myself my time for
questions, and I thank you both for your testimony today. Mr.
Hackbarth, we are sort of picking on you, I think, but you can
tell from the questions that Medicare payment reform seems to
be a very pressing issue for many of us. And one of the
Medicare payment reforms that we are suggesting in this
legislation is a change to the Gypsy formula in California so
that it is now based on MSAs, Metropolitan Statistical Area.
Two of the counties I represent in California are
negatively impacted by the current payment formula. Physicians
in both San Luis Obispo and Santa Barbara Counties are paid
less, much less they would say, than the actual cost of
practicing medicine. My question to you is in general, but also
specifically toward California. Will the Gypsy provisions
improve the accuracy of payments in the new fee schedule areas
that you--across the country, as you have envisioned them?
Mr. Hackbarth. Yes. The provision related to California in
the bill is based on one of two options that MedPAC developed
for CMS back in--I think it was 2007. So approach in the bill
is consistent with the advice that we have given CMS.
Mrs. Capps. Excellent. And then maybe you could elaborate a
little bit on the benefit, obviously, that you are seeing from
having physician payment areas aligned with hospital payment
areas, and is that, again, consistent around the nation, once
we get our alignment correct in California?
Mr. Hackbarth. Well, the issue that we focused on was
specific to California. As you know, the Gypsies work
differently in different states, and so our recommendation
wasn't that this approach be applied everywhere, but we saw it
as a reasonable solution to the California issues that you and
other members have raised.
Mrs. Capps. Now, we have seen that other area of the
country have this disparity as well, but you think those are
best resolved on a regional basis?
Mr. Hackbarth. Yes. Different states have elected to
resolve it differently, and we think the problems are not
national in scope, but more isolated, and more tailored
approaches are the best way to go.
Mrs. Capps. And that would be a pattern that you might
suggest in other areas as well, that we look at regional
issues, particularly--at least in the payment schedules?
Mr. Hackbarth. Yes. Well, you know, that is a big
statement, and I----
Mrs. Capps. Well, I am just wanting to see how far you want
to go----
Mr. Hackbarth. Yes. I would like to take a look at--
consider the issues one by one, as opposed to make that as a
broad policy statement.
Mrs. Capps. Well, I know our--my California colleague said
this has been a real serious detriment to Medicare, and the
practice of Medicare in our state. In many of the regions that
the cost of living has been----
Mr. Hackbarth. Right.
Mrs. Capps. [continuing]. Very different from what the
allotment has been, so this becomes, for us, a really vital
component of Medicare reform----
Mr. Hackbarth. Yes.
Mrs. Capps [continuing]. Under this bill.
Mr. Hackbarth. Yes. And to say we think the approach in the
bill is a reasonable one, and it is one of the options that we
recommended to see in this.
Mrs. Capps. OK. I am going to yield back my time, and
recognize Mr. Buyer for his questions.
Mr. Buyer. I see a company in Tampa just shut their doors
to 500 jobs due to the S-CHIP bill. They are going to send the
tobacco--those cigars to be made offshore. Just thought I would
let everybody know who really cares, I guess.
This has been a challenge to get my arms around this in a
short period of time, just to be very honest with you, so--I am
trying to understand--I just went through that tobacco bill,
where the majority froze the market, so they are--now they love
this talk about competition, and they love to freeze the market
in place, and I am getting a sense that that is what you are
doing in this bill also, freezing the market. So those of whom
had existing plans, you freeze it, grandfather it, and then you
have got to figure out how you move people into the exchange,
and if you--and when we freeze that market--so help me here
with my logic, because I am trying to figure out what you are
trying to do. We freeze that market, and you want to move a
population into an exchange. You can--we will grandfather, so
people can keep their existing coverage, but if, at some point
in time, that employee chooses to move to a government plan,
then the employer has to be an eight percent tax on it. Is that
right?
Mr. Hackbarth. Is that----
Mr. Buyer. Yes.
Mr. Hackbarth [continuing]. Mr. Buyer?
Mr. Buyer. Congressman Buyer.
Mr. Hackbarth. Buyer, I am sorry.
Mr. Buyer. OK.
Mr. Hackbarth. Our focus is on the Medicare provisions of
the bill, and the bill is not our bill. We--our advisory----
Mr. Buyer. OK. So you----
Mr. Hackbarth [continuing]. Our body----
Mr. Buyer [continuing]. Can't answer that question?
Mr. Hackbarth. Absolutely----
Mr. Buyer. Right
Mr. Hackbarth [continuing]. Not. That is beyond our
jurisdiction.
Mr. Buyer. No, that is oK. Well, let me ask a question,
then, that is within your jurisdiction. You had--sir, you had
suggested that encouraging the use of comparative effectiveness
information would facilitate informed decisions by providers
and patients about alternative services for diagnosing and
treatment of most common clinical conditions, is that correct?
Mr. Hackbarth. Um-hum.
Mr. Buyer. Uh-huh means yes?
Mr. Hackbarth. Yes, sir.
Mr. Buyer. Thank you. Following your line of reasoning,
could the Medicare program also use this research to exert
fiscal pressure on drug and device makers, or even restrict
certain procedures based solely on price?
Mr. Hackbarth. What MedPAC has recommended is that the
Federal government invest in comparative effectiveness
research, make it available to physicians, patients, insurers,
for them to make their own decisions about how to use the
information.
Mr. Buyer. Then how best do we, i.e. Congress--how best do
we make sure that this research is used to inform the consumer
and providers without being an excuse to exclude or ration
certain types of care? How do we best do that?
Mr. Hackbarth. Well, decisions about how Medicare would use
the information are issues on which Congress can legislate.
What MedPAC has recommended is investment in information to be
used in a de-centralized way by all of the participants in the
system.
Mr. Buyer. All right. Mr. Levinson, the--one of the great
concerns I have is--can you--would you be able to address a
comparison or an analogy on Medicaid? I know you are Medicare--
you guys are claiming lanes of jurisdiction here.
Mr. Levinson. Mr. Buyer, we actually--as an Office of
Inspector General, we oversee all 300 programs of----
Mr. Buyer. OK.
Mr. Levinson [continuing]. Of the Department, so----
Mr. Buyer. All right.
Mr. Levinson [continuing]. We also have----
Mr. Buyer. Most of the----
Mr. Levinson [continuing]. Side of Medicaid.
Mr. Buyer. All right, thank you. So most of the fraud
cases, with regard to Medicaid, are they discovered by the
states or are they discovered by the Federal government?
Mr. Levinson. Medicaid cases can be developed along a very
wide spectrum of possible sources.
Mr. Buyer. I understand, but are most cases discovered in
the states or by the Federal government?
Mr. Levinson. I would have to find out those numbers for
you. I suspect it would be mostly states in terms of absolute
number. But in terms of dollars, because some of the biggest--
--
Mr. Buyer. All right. Don't do it by dollars, do it by
cases.
Mr. Levinson. By the number of cases----
Mr. Buyer. I think common sense tells us--let me jump
ahead.
Mr. Levinson. Given the Medicaid fraud----
Mr. Buyer. I think common sense is going to tell us that if
states had a stake in the game, that they have an incentive,
then, to make sure they go after fraud cases. If the Federal
government picks that up at 100 percent, my concern is are we
disincentivizing states with this oversight responsibility,
which places more on you, and is that a concern to you?
Mr. Levinson. It is a--certainly a very important concern
that we make sure that every Medicaid dollar--and we, of
course, have responsibility for the Federal share of that
Medicaid--is accounted for as much as possible. And as the
Federal share, as the FMAP goes north, goes up, obviously our
reach needs to be greater, our concern needs to be elevated on
the Medicaid side, absolutely.
Mr. Pallone. Thank you. The gentleman from Iowa, Mr.
Braley.
Mr. Braley. Thank you, Mr. Chairman.
Mr. Levinson, to follow up on that point, all of us on this
Subcommittee are strongly opposed to fraud in any health care
delivery system, so let us start with that premise. I think the
real elephant in the room is that fraud is a small component of
what the real obstacle is to meeting full health care reform,
and that is waste. Because, according to many reliable
projections, there are $700 billion annually of waste in
Medicare delivery, which is a much greater problem. Because if
you take that number and multiply it over the 10 year period of
this health care bill we are talking about, you are talking
about $7 trillion of cost savings that would more than pay for
the entire cost of the program we are talking about. So isn't
it waste that is really the problem here?
Mr. Levinson. Mr. Braley, we try to identify and correct
issues of fraud, waste and abuse, and we do not have solid
figures in which to share with you exactly how that pie may be
divided specifically. But all of those kinds of issues are of
great concern to the office, and we have work that supports
recommendations on--in all of those areas.
Mr. Braley. And they should be of concern to American
taxpayers also?
Mr. Levinson. Absolutely.
Mr. Braley. OK. Mr. Hackbarth, I really appreciate the
effort that you and MedPAC have put into this. You mentioned
the objectives of health care reform being high quality care
and protecting taxpayers from undue financial burdens, and
getting back to my point that I just made, under the current
health care delivery system and reimbursement model, we are
wasting billions of dollars every year, aren't we?
Mr. Hackbarth. It is our belief that, yes, we can do better
with less, and there is lots of research to support that.
Mr. Braley. Well--and one of the problems that my health
care providers and I will have is that for years they
consistently rank in the top five in every objective quality
measurement, and at the very bottom of Medicare reimbursement.
Isn't that a summary of what is wrong with our health care
model today?
Mr. Hackbarth. Well, my home state of Oregon is also----
Mr. Braley. Exactly.
Mr. Hackbarth [continuing]. With you in Iowa, and--so that
is a type of evidence that we can do better for less in
Medicare. You know, I think it is good for Iowa, good for
Oregon, that we have got low health care costs and high
quality. Not only does it hold down Medicare expenditures, it
is good for our beneficiaries. It holds down their out of
pocket expenses, the Medigap premiums. So I don't want to
increase Iowa and Oregon to be more like some of the high cost
states.
Mr. Braley. Exactly.
Mr. Hackbarth. I want to bring the high cost states down to
Iowa and Oregon.
Mr. Braley. And isn't that the problem? Because under
Medicare's proposed pay for performance system, the modeling is
based upon improvement in efficiency. So if you are a state
like Oregon and Iowa, who is already delivering efficient, low
cost, high quality health care, you get no incentive from a
model of reimbursement that is based only on improvement, isn't
that true?
Mr. Hackbarth. Well, as we move to new payment systems,
move away from our siloed fee for service system to bundle
payment systems or ACOs, one of the critical decisions that is
going to have to be addressed is how to set those initial rates
for these new types----
Mr. Braley. Right.
Mr. Hackbarth [continuing]. Of payment systems. And in that
is an opportunity to address some of these regional inequity
issues that have come up in the program.
Mr. Braley. But if you are going to base a public health
insurance option on a Medicare model that already has built-in
inefficiencies and inequities in reimbursement, what reform
hope does that give to this country?
Mr. Hackbarth. Yes. We need to change the Medicare model.
Independent of the public plan issue, for Medicare's own sake,
for the taxpayers' sake, for the beneficiaries' sake, we have
to change the Medicare model.
Mr. Braley. Well--and I am glad you mentioned that, because
Congressman Ron Kind and I have introduced the Medicare Payment
Improvement Act of 2009, H.R. 2844, that attempts to do just
that by identifying clear, objective quality measurements that
are highly recommended by a number of health care organizations
that are looking to improve efficiencies and increase quality.
It examines things like health outcomes and health status of
the Medicare population, patient safety, patient satisfaction,
hospital readmission rates, hospital emergency department
utilization, hospital admissions for conditions, mortality
related to health care, and other items determined by HHS.
Isn't it true that until we move to some transformational
type of health care reimbursement we are ignoring the real cost
opportunities to transform health care and provide expanded
access to coverage?
Mr. Hackbarth. Yes. We believe that we need to adjust
payment to reflect the quality of care. That is one type of
change. But we also believe that we need to move away from
fragmented fee for service payment to paying for larger
bundles, paying for populations of Medicare patients.
The big difference between Iowa and the high cost states is
on the utilization of services. How many hospital days per
1,000, how many referrals to specialists and the like. Iowa
tends to be low on those things, and the high cost states tend
to be high on those things. If we move towards a payment system
that advantages places with lower utilization, like Iowa, that
will begin to address these regional inequity issues that you
are focused on.
Mr. Braley. Thank you.
Mr. Pallone. Thank you, Mr. Braley. Mr. Shimkus?
Mr. Shimkus. Thank you, Mr. Chairman, and I appreciated the
little comments we had before my questioning.
I am going to follow up on something I addressed last
night, and--addressing just the basic FMAP formula, which has
been a bone of contention for me for many years, because I
believe it has been flawed, and does not accurately reflect a
given state's need to meet its Medicaid obligations. So that is
kind of where I am coming from.
The formula does not accurately reflect the difference
between a state's fiscal earnings, low income citizens, or cost
of delivery of service. This results in states like mine, and I
think other states, if my colleagues would do some research,
which--only having a match of around 50 percent. We know in the
testimony yesterday we had New Jersey here, we had California.
They are also 50 percent match states, and I have got the list
here where every state falls. But it falls short of its needs,
yet other states have matches as high as 75 percent.
Overall, the FMAP formula has resulted in the Federal
government's financing remaining around 57 percent across the
board, yet the discussion draft seeks to have states enroll
childless adults ages 19 to 64, up to 137 of poverty line, and
have the Federal government finance 100 percent of this new
Medicaid population. That was part of the discussion we were
having offline. Do you think it is fair that we continue to
have these inequities among states when it comes to FMAP, given
we aren't meeting the needs of many states, especially those
with low matches?
Mr. Levinson. Mr. Shimkus, would you like me to respond to
that----
Mr. Shimkus. Both.
Mr. Levinson [continuing]. Question?
Mr. Shimkus. It is a question to both.
Mr. Levinson. Because I would have to say that our office,
not being a policy office, we don't actually establish the FMAP
rates. We certainly audit those among our auditors, but we are
not a program office. We oversee that. So I can't----
Mr. Shimkus. So as an auditing office, you wouldn't
disagree with that analysis that I have given?
Mr. Levinson. Well, actually, the rate is higher now in
some of the states as a result of the American----
Mr. Shimkus. Yes, and that is----
Mr. Levinson [continuing]. Recovery----
Mr. Shimkus. That is--yes, that is true, but there are
still percentage inequities. So you have a 75 percent state
that is now up to 83 percent. You have a 50 percent state that
is up to maybe 60 percent, but, of course, there is no
assumption--I mean, depending upon what we do on a bill, there
is no assumption that those amounts remain, because the
stimulus bill was a short term bill, and there is no certainty
that that input of money will remain.
Mr. Levinson. Mr. Shimkus, we work with the numbers that we
are given, as opposed to----
Mr. Shimkus. OK. That is----
Mr. Levinson [continuing]. The numbers ourselves.
Mr. Shimkus. Mr. Hackbarth?
Mr. Hackbarth. Mr. Shimkus, we focus exclusively on
Medicare issues, not Medicaid. That is our jurisdiction under
the statute.
Mr. Shimkus. OK. Let me just--then let me go with a few
other questions, just to put it--you know, our frustration with
this process of rushing through and having a draft is we have
got to ask these questions when we have--and I want to get
these out. Would it be appropriate, in the context of health
reform, to address the inequity of FMAP by recalculating the
FMAP to accurately reflect needs, or, at the very least, level
the playing field for every state? Mr. Levinson, do you want
to----
Mr. Levinson. Mr. Shimkus, that is really beyond my
charter.
Mr. Shimkus. Good. OK. Mr. Hackbarth, same answer?
Mr. Hackbarth. Yes.
Mr. Shimkus. OK. So what I am trying to establish is this.
Illinois is a 50/50 match state, which means that for every
dollar spent on Medicaid, we will write a check to the state
for 50 cents, OK? There are states out there that for every
dollar they spend on Medicaid, the Federal government sends
them 75 cents. If we are doing health care reform, and the
premise of this bill is when we add people to Medicaid, 100
percent of that will be spent, but it still does not affect the
basic fundamental inequity of the FMAP. So what states have to
do is they have to game the system. They have to go to HHS,
they have to find past additional tax incentives to get
additional rebates. We have the tax increase on beds in
hospitals that we passed, so they pass a tax. They remit the
tax back to the Federal government, the Federal government
gives the tax back to them, plus some additional revenue.
So I would encourage folks to look--my colleagues to look
at their FMAP percentage. And if we are going to move on
streamlining health care and reimbursement that--even as we
increase the amount for the new Medicaid people we bring on, we
really bring some clarity and equality across the state lines
and FMAP.
And Mr. Chairman, thank you for letting me go 13 seconds
over, and I yield back my time.
Mr. Pallone. Thank you. The gentlewoman from Florida, Ms.
Castor.
Ms. Castor. Thank you, Mr. Chairman. Good morning. Mr.
Hackbarth, you state in your testimony that the payment system
for Medicare Advantage plans needs reform. Medicare Advantage--
the Medicare Advantage program continues to be more costly than
traditional Medicare health services. The Medicare Advantage
government payments per enrollee are projected to be 114
percent of comparable fee for service spending in 2009. It is
up from 2008. The high Medicare Advantage payments provide a
signal to plans that the Medicare program is willing to pay
more for the same services in Medicare Advantage than it does
in traditional Medicare and fee for service.
Our discussion draft tackles the overpayment issue, but
what would happen if we did not do this?
Mr. Hackbarth. Well, let me begin by saying that MedPAC
very much supports giving Medicare beneficiaries the option to
enroll in private plans, so we are enthusiastic about that. Our
objections are to the current payment system, which, as you
say, pays significantly more on average for private plans that
it would cost traditional Medicare to pay for the same
patients. If we were to lower the rate, one of the effects of
that would be to send a marked signal to private plans about
what we want to buy as a Medicare program, and we reward plans
that take steps to be more efficient, more effective in the
care that they provide.
So long as we continue to pay more, the signal that we are
sending is mimicking Medicare, traditional Medicare, just at a
higher cost, is OK with us. And so long as we send that signal,
we will get more of that. We have got to change the signal to
get the market response that we desire.
Ms. Castor. And ultimately help us control costs across the
board?
Mr. Hackbarth. Absolutely. Even control costs for the
beneficiaries as well----
Ms. Castor. Um-hum.
Mr. Hackbarth [continuing]. ecause all beneficiaries, even
those who aren't enrolled in private plans, are paying part of
the additional costs for Medicare Advantage.
Ms. Castor. And I am afraid these overpayments have created
incentives for extensive unethical behavior by insurance
companies. Three-fourths of the states report marketing abuses
in Medicare, and I have some firsthand experience with this,
talking to seniors at retirement centers in my hometown, where
insurance salesmen have come in, targeted seniors with
dementia, who have--were on traditional Medicare and signed
them up for Medical Advantage, sometimes under the guise of
coming in and selling their Medicare Part D policies, and then
switching them out.
And what happens is that senior, who has a longtime
relationship with their doctor, oftentimes they lose access to
that doctor they had under traditional Medicare because their
Medicare Advantage plan doesn't have the same doctor. There
have been cases that--where cash incentives have been provided
to insurance salesmen, and this shouldn't be--we shouldn't have
these incentives for fraudulent behavior. They--I think it has
gotten out of hand, and unfortunately, CMS has all but
abdicated its oversight role.
The Congress, some years ago, took the states' ability
away, their ability to regulate and oversee these terrible
marketing abuses. Now, our discussion draft, it makes some very
subtle change in--with enhanced penalties for Medicare
Advantage and Part D marketing violations, but don't you think
we need to go back to having as robust a strike force as we
possibly can so--and give the states the ability--you know,
they are closer to the ground--the ability they had before to
tackle the marketing abuses? The National Associations on
Insurance Commissioner supports such a move.
Without it--unless we do this, we will continue to have
this huge regulatory gap, but what is your view?
Mr. Levinson. Ms. Castor, we certainly work with the states
to--as much as possible to protect the Medicare and the
Medicaid programs. We have a very good collaborative
relationship with our state auditors and state and local law
enforcement. There are jurisdictional divides, and we try to
respect those. But to the extent that we can actually
understand schemes that are broader than just one particular
matter, that really allows us to do our work more effectively
because the fact of the matter is, although we are one of the
larger Inspector General offices in government, given the size
of our programs, we are very stretched. We only have a few
hundred criminal investigators to handle, you know, billions
and billions of dollars stretched across the country in a
variety of health care contexts.
But I certainly would underscore the importance of being
able to work very much hand in glove with our state and local
partners.
Mr. Pallone. Thank you. Gentleman from Pennsylvania, Mr.
Murphy.
Mr. Murphy of Pennsylvania. Thank you, Mr. Chairman. I
thank the panelists for being here.
Some questions about Medicare. It was founded in 1965. In
the ensuing years, has there ever been a time when any
president or any Congress has really gone back and overhauled
the program, and--this program being established back inpre-CT
scan and MRI days. Has there ever been a comprehensive overhaul
of the system to modernize it, reform it, make it work more
effectively?
Mr. Hackbarth. Well, the payment systems have changed.
Medicare began with payment systems----
Mr. Murphy of Pennsylvania. Right.
Mr. Hackbarth [continuing]. Were based on cost
reimbursement.
Mr. Murphy of Pennsylvania. And in terms of how it--because
today you are talking about a number of interesting reforms,
and has that ever been attempted before?
Mr. Hackbarth. Well, the payment systems have been
reformed. They have changed substantially over the life of the
program.
Mr. Murphy of Pennsylvania. But I mean----
Mr. Hackbarth. We think more changes are warranted.
Mr. Murphy of Pennsylvania. You are talking about the
delivery--like, care coordination and preventing re-admissions
and things like that. That has never been attempted, right? I
mean, in terms of overall reforms in the system.
Mr. Hackbarth. In terms--there has not been payment reforms
focused on re-admissions, no.
Mr. Murphy of Pennsylvania. OK. I am assuming you are
talking about more than just payment reforms today, because
your report has a lot more than just how the money gets spent.
OK. And in that--I mean, I noted in the 110th Congress there
was 452 bills put in by Members of Congress to make some
reforms to Medicare and Medicaid, I think 12 passed, and some
13,000 co-sponsors of these bills came through members of
Congress. So I look upon this--and Members of Congress
themselves recognize there needs to be some changes in Medicare
and Medicaid, but it seems to come slow.
I am wondering in this process, where--some of the changes
you recommend here--and I applaud them, because they are things
I have been asking for for a long time too. Care coordination,
I mean, we will pay to amputate the legs of a diabetic, won't
pay to have some nurse call them with these cases. We will--we
recognize one in five chronic illnesses gets re-admitted to the
hospital, but we haven't been working at keeping them out.
Those are major changes to make here.
Mr. Hackbarth. Yes.
Mr. Murphy of Pennsylvania. My concern is the speed at
which the Federal government moves to make changes, number one,
and two, does the Federal government have to run its own
insurance plan, given its track record of not being very good
at coming up with timely changes? Can we come up with some of
these changes with the Federal government pushing for and
mandating some of these changes in the private market----
Mr. Hackbarth. Yes.
Mr. Murphy of Pennsylvania [continuing]. And in the
meantime Medicare pushing some within itself? Is that possible
to do that?
Mr. Hackbarth. Well, I think we need to do some of each.
The potential for Medicare Advantage is to invite private plans
to enroll Medicare beneficiaries, do things differently to get
better results for both the beneficiaries and the program.
Because of the way Medicare Advantage works, the way the prices
are set, it has not fulfilled that potential. It has allowed
private plans to enroll Medicare beneficiaries, essentially
mimic traditional Medicare, with all the same problems. So one
of the reasons we believe Medicare Advantage reform is so
important is to reward private plans that do it better.
Mr. Murphy of Pennsylvania. OK. So that is--so, in other
words, you know, they can just continue on with business as
usual, but Medicare Advantage, they should really be using
these things for what it was designed to be, and that is really
work at prevention, really working at care coordination, am I
correct on that?
There was something else mentioned, or you--a point that
was made earlier, encouraging use of comparative effectiveness
information, public reporting, provider quality, et cetera.
This also relates to the issue of evidence based medicine and
evidence based treatments that many people referred to.
Throughout medicine, there are many branches that have their
own standards and protocols, College of Surgeons, American
Academy of Pediatrics. Would those be things that Congress or
the FDA or HHS could look towards in terms of what these
standards might be, in terms of what is the best practices and
what would be the standards and protocols to use?
Mr. Hackbarth. Well, specialties are quite variable in how
they develop those standards, those protocols. It is difficult
to generalize about them. Let me focus on the area of imaging
as one example. We had as a witness before the MedPAC the
president of College of Cardiology to talk about imaging
issues, and one of the things that she called for was more
information so they can move from just consensus based
guidelines to evidence based guidelines.
The potential in comparative effectiveness research is that
we give physicians and societies the raw material to do a
better job at what they want to do.
Mr. Murphy of Pennsylvania. So--and this is a critically
important point, and one that we should not rush, because it is
going to have long term implications. So the College of
Cardiologists or Radiologists or whatever that is, we have to
make sure it isn't just they have all sat down and voted that--
best thing, but there really needs to be a demand, and this is
where a valuable role of government--the HHS or FDA to have
oversight to say, we want to see evidence based medicine here.
Is that what you are suggesting?
Mr. Hackbarth. That is the goal. We need information for
physicians, as well as patients, to guide that.
Mr. Murphy of Pennsylvania. I mean, this is a critical
thing, Mr. Chairman, and one I hope we continue dialogue on
because it is going to be a factor that I think makes or breaks
the budget, is how we go through there, and I think also deal
with the issue of who is making the decisions, and I think a
valuable place where this Committee can have tremendous
oversight in working with medicine, and with that, I yield
back. Thank you, sir.
Mr. Pallone. Thank you, Mr. Murphy. Gentlewoman from
Wisconsin, Ms. Baldwin.
Ms. Baldwin. Thank you, Mr. Chairman.
Mr. Hackbarth, welcome back to the Subcommittee. I recall
when you were here in March we had quite a dialogue about--as
we have today, about the difference between pilot projects and
demonstration projects, and you expressed then, as you have
here today, some hesitation about the administrative and
regulatory burdens associated with demonstration projects, and
how that affects the ability to scale those up, if they have
proven successful.
This draft health care reform legislation offers new pilot
projects in accountable care organizations and medical home
models, and I am wondering if it is your sense that these
pilots will provide us, the Congress, and MedPAC with
sufficient evidence to make broader payment reforms. And also,
if you have examined these provisions in the draft, if you have
any recommendations for further improvement.
Mr. Hackbarth. Well, on the issue of pilots, we welcome the
fact that the Committee is looking at pilots, and what MedPAC
has advocated, and we have talked about this before, is that
Congress give the Secretary discretion to test a new payment
method and to implement it, if the pilot is successful,
establish goals in advance, and then give the Secretary
discretion, plus the resources necessary.
And an important part of this, I think, is a much larger
budget for the Department to not just test ideas that come
through the Congress, but to generate new ideas independently
in the Department. Right now the demonstration budget is way
too small for that.
Ms. Baldwin. In your--in MedPAC's most recent reports,
there is an interest sidebar concerning the physician group
practice demonstration, which serves, really, as a foundation
for the accountable care organization pilot in the draft bill
that we are looking at. You noted that a surprising number of
the sites for the physician group practice demonstration
project had high cost growth, and it is linked to the risk
profiles of the patients at those sites. And it strikes me that
basically there is an inference that these demonstration sites
may be picking up more of their patients' medical issues,
resulting in more treatments, and increasing costs. What
lessons do you suggest that we take from this demonstration?
Mr. Hackbarth. Well, in setting payment rates for new
payments systems like ACO, the details are very important, and
how the targets are set, how the potential gains are shared
between the providers in the Medicare program, and how you
adjust for things like risk, the risk profile of the patients.
And so there are important steps that have to be taken from
endorsement of a broad concept, like ACOs, to making it an
operational effective idea. And this is part of why we think
the Secretary needs some flexibility and discretion and design
in the resources, to be able to do that quickly and
effectively.
On an idea like ACOs, we are unlikely to get it exactly
right the first time, so there needs to be ongoing cycles of
refinement and improvement. That requires discretion and
resources.
Ms. Baldwin. And we can certainly relate to the difficulty
to create a national program to rein in Medicare spending. And
on the ACOs, the idea is to set spending targets to hold the
providers accountable to the targets. If you tied spending
targets to national averages, I guess I would like to ask how
are we going to attain or incent participation in higher cost
areas, and do you have any ideas of how we would address that
challenge?
Mr. Hackbarth. Yes. Well, this goes back to the dialogue
that I had with Mr. Braley. One of the very important details
in these new payment systems, like ACOs, is how you set those
targets. If you take a group that has a very low historic level
of utilization, they have been very efficient, very high
quality, and say, oK, we are going to set your target at your
historic level of costs, it is going to be more difficult for
them to beat that and earn rewards than for a practice that is
in a very high cost state and performing very poorly. That is
not an equitable way to get to where we want to go, so setting
the target rate so that your reward historic performance, as
well as future performance is, for me, a goal in the target
setting.
Now, in order to do that, you are going to have to squeeze
someplace else. You are going to have to squeeze those high
cost places to offset the cost. So the--again, the details in
this are very important, and the Secretary needs to be given
the latitude to strike that balance.
Mr. Pallone. Thank you. Mr. Pitts is next.
Mr. Pitts. Thank you, Mr. Chairman.
Mr. Levinson, in your testimony, you mentioned Medicaid
specific services that--there are services unique to Medicaid
that could lead to significant savings, and one example you
cite is school based health services. You say that OIG
``consistently found that school had not adequately supported
their Medicaid claims for school based health services, and
identified almost a billion dollars in improper Medicaid
payments.'' Can you go into this further?
Mr. Levinson. Mr. Pitts, we do make audit recommendations
to the Centers for Medicare and Medicaid Services based on our
audit findings, as our auditors look at programs that are
supported by the program, and that is an area that the OIG has
identified over the last few years as one that CMS needs to
focus on more clearly to make sure that those dollars are
really spent appropriately.
Mr. Pitts. Well, what were some examples of these improper
payments? What was Medicaid paying for?
Mr. Levinson. Well, overall, they were paying for those
kinds of services that are not included in the program, but I
would need to provide more detail to you as a follow up to our
hearing.
Mr. Pitts. Now, the Bush administration proposed
regulations which would stop these fraudulent services and stop
wasting taxpayer dollars. However, the present Administration
has put a moratorium on these regulations. Do you believe that
this moratorium should be lifted?
Mr. Levinson. We do not comment on what the Executive
Branch decides to do with those kinds of regulations or not. We
certainly, you know, advance what we believe would be
appropriate ways of being able to account for the Medicare
dollars better, and our recommendations are given in the first
instance, in these kinds of cases, to the Centers for Medicare
and Medicaid Services.
Mr. Pitts. Do you have any idea how much money in total
might have been wasted in this way?
Mr. Levinson. Our audit findings will indicate the dollars
that we believe are not appropriately spent under the Medicare
program, and I don't have that dollar figure immediately at my
fingertips. We will certainly provide as much detail as we can,
based on the audit findings we already have.
Mr. Pitts. All right. In your testimony, you mention the
creation of the Health Care Fraud Prevention and Enforcement
Action Team. Can you give me some examples of what cases this
team is currently addressing?
Mr. Levinson. Well, the most recent example would be the
case that was publicized yesterday in Detroit, a Medicare
infusion drug fraud case that has resulted in 53 indictments.
There have been 40 arrests so far. 40 of our agents have been
involved in what is claimed as $50 million in false claims.
This is a strike team in which we are working with the FBI
and local law enforcement to clean up a significant Medicare
infusion drug problem that now infects the city of Detroit.
Some of these issues have actually migrated from South Florida,
so the strike force effort is to try to provide both national
and regional focus on those kinds of frauds that not only tend
to plague particular cities in the country, but that also have
regional impact. We already have strike forces in operation in
a number of cities, but the effort now will be to extend that
to more cities over the course of the next year.
Mr. Pitts. Mr. Chairman, I don't know----
Mr. Pallone. You want the time? You have a minute left.
Mr. Pitts. One minute left?
Mr. Pallone. I am sorry----
Mr. Pitts. How do you get the provider ID--the criminals
get the provider ID numbers?
Mr. Levinson. Well, obviously through a variety of
fraudulent means, but it is too easy at this point in our
system to get provider numbers, and that has been a constant
theme of our office over the years, that enrollment standards
have not been sufficiently rigorous to ensure that we are not
allowing, in effect, criminals to masquerade as health care
providers.
Mr. Pitts. Um-hum.
Mr. Levinson. And that has been a significant problem not
just in Detroit and Miami, but really throughout the country.
And one of the key principles we have in terms of our anti-
fraud fighting effort is to make more rigorous who actually
gets in the program, because historically there has been too
much a right to access, as opposed to the privilege of actually
being enrolled in the program.
Mr. Pitts. Mr. Buyer wants to follow up.
Mr. Buyer. I guess--to be responsive here. How are they--
are they relying on insiders within the system to get these ID
numbers, or you don't want to tell us so that others will know
how to--I mean, we can always--you can tell us offline.
Mr. Pallone. Mr. Buyer--let him answer the question, but
the time is expired. I have to apologize. The electronics have
gone off again, so I am going to just have to tell everybody
when their 5 minutes is up. But go ahead and answer your
question.
Mr. Levinson. Thank you. I think it probably would be
better to have an offline conversation, because the schemes are
varied, and some of them are rather sophisticated, and it is
probably better not to discuss in any detail what actually
occurs in a public hearing.
Mr. Pitts. Thank you, Mr. Chairman.
Mr. Pallone. Thank you. Next is Ms. Eshoo, and I will just
tell you when the 5 minutes are up.
Ms. Eshoo. Thank you, Mr. Chairman. Gentlemen, thank you
for your testimony today, and to the Chairman for this series
of hearings with many panels this week.
As we look to reshape America's health care system, we have
very clear goals that we have set down. We want it to be
universal, it needs to be affordable. We think that choice is
important. We believe that many of the rules that--need to be
rewritten that the insurers, the private insurers, employ,
amongst them knocking people out because they have pre-existing
conditions and gender based issues, et cetera. So that is on
the--kind of on the one side of the ledger.
The other side of the ledger, in my view, are two major
issues. One, that we be able to achieve this without raising
taxes, and number two--maybe I should have said number one.
Number one, that we reform Medicare and strengthen it. We have
read the report of the trustees. We know that they shaved off
two years, and that we have got until 2017. 2017, believe it or
not, is not that--it sounds like it is another century away. It
is a handful of years away. So my question to both of you is
what are the large ticket items that you can name today for us
that will strengthen Medicare?
Now, Mr. Levinson, I recall a hearing here many years ago
on waste, fraud and abuse and what--essentially the private
sector ripping off the public sector, and you have touched on
that today. In fact, we had testimony from someone whose case
had been adjudicated, and he was on his way to prison, and he
came here and explained how he had ripped Medicare off. And it
was, essentially, the private sector ripping off the public
sector. So what are the price tags that you can tell us about
in these efforts that will save us money, save Medicare money,
and overall strengthen Medicare as we come through this large
effort, this overall effort, to reform our nation's health care
system? Because I believe if we don't reform and strengthen
Medicare that we will not have accomplished what needs to be
accomplished.
Mr. Hackbarth. I am going to go first. I would name four
things. One is that we need to continue to apply pressure under
the existing payment systems of Medicare.
Ms. Eshoo. Can you speak a little louder, please? Can you
speak just a little louder?
Mr. Hackbarth. We need to continue to apply pressure to the
update factors in the existing payments systems.
Ms. Eshoo. And what is that going to--what do you think
that is going to save us?
Mr. Hackbarth. Well, you know, it depends on exactly what
the levels are, but it is, you know----
Ms. Eshoo. Has MedPAC done that work?
Mr. Hackbarth. Well, the CBO does the estimates of the
budget impact of different recommendations.
Ms. Eshoo. Do you have any idea what that might be?
Mr. Hackbarth. You know, we are--again, it depends on the
specific level, but tens of billions or more over a 10 year
horizon. A second area that I had mentioned is Medicare
Advantage. There, as I think you know, the CBO estimate is
higher than $150 billion over 10 years. A third area that I
mentioned is re-admissions, excess re-admissions, and off the
top of my head I don't know what the estimate is for that, but
there was a proposed one. President Obama's budget on that--a
fairly significant number. And the fourth area that I would
emphasize is assuring primary care. Now, that doesn't lead to a
direct savings, but I mention it here because if we allow
things to go as they are right now, our primary care base is
going to continue to erode away money.
Ms. Eshoo. You spoke to that earlier, so I appreciate that.
Mr. Levinson?
Mr. Levinson. Yes, Ms. Eshoo----
Ms. Eshoo. And thank you for your wonderful work as IG.
Mr. Levinson. Thank you very much.
Ms. Eshoo. We really can't function well and do oversight
without the IGs, and I just think that you all should be
canonized, so----
Mr. Levinson. Well, on behalf of----
Ms. Eshoo. Be interesting to have a Levinson canonized,
right? I am pretty ecumenical, though, so----
Mr. Levinson. Well, it so happens that, of course, Dante
was talking about fraud 700 years ago----
Ms. Eshoo. That is right.
Mr. Levinson [continuing]. So it is an issue that is both
timely----
Ms. Eshoo. Right.
Mr. Levinson [continuing]. And has a long----
Ms. Eshoo. Um-hum.
Mr. Levinson [continuing]. And very troublesome pedigree.
But on behalf of 1,600 very dedicated auditors and evaluators
and investigators and lawyers----
Mr. Pallone. Somebody want to tell her----
Mr. Levinson [continuing]. Thank you so much.
Mr. Pallone [continuing]. Time has----
Ms. Eshoo. Um-hum.
Mr. Pallone [continuing]. Expired?
Mr. Levinson. And just--as I look at some of the
recommendations that are in our compendium of unimplemented
recommendations, our auditors estimate that we could--the
program could save $3.2 billion over 5 years if we just limited
the rental time for oxygen equipment. I mean, I think that
there are specific areas where there are significant savings
that can be had.
As I look at just our most recent semi-annual report, in
terms of monies returned to the Treasury, we are expecting,
just in the first 6 months of the fiscal year, $275 million in
audit receivables and $2.2 billion in investigative
receivables. A lot of that has to do with pharmaceutical cases.
Pharmaceutical pricing, of course, is a very significant area
that can also, if properly addressed, can save significant
dollars.
It would be hard to come up with total figures on a list of
top ten, but certainly pharmaceuticals, DME, getting the dish
payments right. We think that it is important to clarify
exactly what Medicare should be paying, the Medicare and the
Medicaid dish payments, and how the states handle those
dollars. We need to avoid gaming the Federal dollar, so that it
is clear, it is transparent about who is actually paying for
what, and how the states account for the dollars that come from
Washington.
I would hesitate to put a dollar savings on it, but I think
that there is a great need for much more significant
transparency and accountability in our programs, and that is a
very helpful trend, from the standpoint of our office.
Ms. Eshoo. Do I have any time left, Mr. Chairman?
Mr. Pallone. No. I am trying not to----
Ms. Eshoo. OK. Thank you very much.
Mr. Pallone [continuing]. Interrupt now.
Ms. Eshoo. Thank you.
Mr. Pallone. Sure. Next is the gentlewoman from Illinois,
Ms. Schakowsky. I am going to just tell everybody when the 5
minutes are up, just so you know. Thanks.
Ms. Schakowsky. Mr. Levinson, one of the biggest single
expenditures out of Medicaid is for long term nursing home
care, and I have been working with Chairman Waxman and Chairman
Stark on a nursing home quality and transparency legislation,
which has been included in the draft bill. And I would like to
know what you have found, in terms of problems with nursing
homes, that would necessitate more transparency and oversight
of them.
Mr. Levinson. Yes. Congresswoman, it has been difficult,
actually, to find out who makes the decisions when we
investigate substandard care in nursing homes and try to locate
exactly who, financially, is in charge. So I think the effort
to create greater transparency in terms of ownership, in terms
of management, and get a clear understanding of actually who is
in charge would help our investigators and lawyers
significantly in being able to both investigate and resolve
some of the very serious quality of care cases that have
emerged in the nursing home area.
Ms. Schakowsky. We are going to hear some testimony a bit
later that disparages the notion that there is any substantial
fraud or wasteful spending on the part of some doctors that
participate in the Medicare program. Would you agree with that
assessment?
Mr. Levinson. Well, I can only point to individual cases
that we have actually worked on. We try not to generalize. Our
investigators and auditors are very focused, very anchored on
particular instances when it comes to either individual venues
or a larger corporate structure, and we do have an existing,
and unfortunately a growing, case load, work load.
Ms. Schakowsky. But let me ask this, though. Would you say
that some may be fraudulent, some may be wasteful, but that in
general the decisions about utilization are provider driven, as
opposed to the kind of fraud of--or wasteful spending that is
generated by individuals in the program?
Mr. Levinson. You know, I would hesitate, again, to make
any kind of generalizations because these individual cases are
very much focused on the facts as we find them. But there are
certainly cases in which we have found that we are frustrated
in our ability to actually understand who makes the decisions
in the nursing home chain.
Ms. Schakowsky. Let me ask Mr. Hackbarth about the Medicare
Advantage plans. It is great that, in the Medicare program,
consumers can actually go online and find out what Medicare
pays for health care services. To your knowledge, is there a
place where consumers can actually access rates that Medicare
Advantage plans pay providers, or other private insurers?
Mr. Hackbarth. The actual payment rates for----
Ms. Schakowsky. Uh-huh.
Mr. Hackbarth [continuing]. Providers? Not to my knowledge.
I think most private plans consider that information
proprietary business information.
Ms. Schakowsky. In your view, will Medicare Advantage plans
remain in the market if we eliminate overpayments?
Mr. Hackbarth. I believe that they will, many will. Some
will leave the market because they have a model that can't
compete with traditional Medicare. But, as I said earlier, we
would be sending an important market signal about the type of
plan we want to participate. We want plans that can help us
improve the efficiency of the system, not plans that just add
more cost to the system. And when you send that signal, I
believe, in the market, I believe that we will get more plans
that can compete effectively with traditional Medicare.
Ms. Schakowsky. What mechanisms will we need to ensure that
Medicare Advantage plans and private insurers in the exchange
meet a minimum loss requirement--a minimum loss ration
requirement?
Mr. Hackbarth. Yes. The minimum loss ratio, I think, is--it
is a tricky issue. As you may know, I used to work for Harvard
Community Health Plan, Harvard Pilgrim Health Care, two very
well regarded HMOs, and this was a big issue for us sometimes
with employers, how you calculate loss ratios. Our piece of the
organization, the one I ran, is an integrated pre-paid group
practice, and we have a lot of clinical programs that we
believe improve patient care that sometimes employers wanted to
characterize not as medical care, but as administrative cost,
so the--and that works against you, in terms of calculating the
loss ratio. So the details of this can be pretty tricky, in my
personal experience. I am always a little uneasy about just
having simple rules on loss ratios. How you define those loss
ratios is very important.
Ms. Schakowsky. Thank you.
Mr. Pallone. The time is expired. I am sorry. Thank you,
and next is the gentleman from Maryland, Mr. Sarbanes.
Mr. Sarbanes. Thank you, Mr. Chairman. Thank you all. I
have got a couple of quick questions at the outset.
Mr. Levinson, you talked about the--trying to step up
efforts to curb some of the fraud, and particularly you talked
about, in response to one question, the application process for
new provider numbers, and having that vet properly. Have
resources been an issue, in terms of the capacity of those
people that do the processing and the review? Has resource, in
terms of the number of folks that can do that, been an issue or
not an issue?
Mr. Levinson. Well, that is an important question, Mr.
Sarbanes, that, in the first instance, I think needs to be
addressed and responded to by CMS, which is the agency that
runs the program. And, as an office that looks to see where the
vulnerabilities, where the weaknesses are in the administration
of a program, we have identified for some years now that
enrollment standards are too lax, especially in specific areas
of vulnerability, like DME. And whether or not there are
resource issues, we find too many of the wrong kinds of people
are getting into the program, and, therefore, we have urged--we
have recommended, over the course of the last few years, that
enrollment standards be strengthened.
Mr. Sarbanes. Well, I would imagine--I mean, I used to do
some of that work, and I would imagine that the best way to vet
it on the front end is with a little more intensity of
resources applied. Actually going out and finding out who is
behind these applications that are being filed.
Let me shift gears. I was really intrigued by the
discussion on the school based health centers, and some of the
findings of fraud. In that discussion, there was an allusion to
the possibility that there were services being--that
reimbursement was being sought for services that were not
actually provided, but possibly there were other services being
provided that might--that one might view as important services,
they just aren't services that Medicare or Medicaid reimburses.
And I wanted to ask the question of whether this phenomenon--
and this is--in my view, the problem is whether you are talking
about fee for service or you are talking about capitation,
either one of those can work OK if you are paying for quality,
as opposed to paying for quantity, and if you are paying for
the right things, as opposed to not paying for the right
things. But maybe both of you could comment on whether the
potential for fraud is greater when you have a system that pays
for quantity versus quality, or is paying for the wrong things.
And while I don't want to excuse fraud, if somebody is
trying to find some payment for what they view as a very
important service that is not covered under Medicare or
Medicaid, that is a different kind of impulse than seeking to
get paid for a service that is not being provided at all. And
it seems to me the way the system is structured right now, and
it is so distorted, that it leads to that kind of thing,
because people say, this service is valuable, but Medicare
won't pay me for it. And if we can move in a direction where we
are paying smarter for things that make a difference, we might
actually make some progress on this fraud issue. So maybe you
could each----
Mr. Levinson. Well, I do think the facts that you have laid
out, Mr. Sarbanes, are important ones to focus on. The notion
that there can be monies spent that are just not appropriately
covered by the program, and in many instances we are really not
talking about fraud in terms of the legal definition of fraud.
We are talking about dollars that Congress--that the program
says should be directed in a particular way, and our audit
people, not our criminal investigators, find have not been
spent appropriately, and then we make the appropriate findings
and recommendations to CMS.
Not all of our recommendations are acted upon by CMS. There
unquestionably are judgments. Perhaps some of the kinds of
judgments you are talking about here and judgments that,
programmatically, are made by CMS over the course of looking of
our recommends, because--just by the fact that we make those
recommendations doesn't necessarily mean that the dollars will
actually be collected. And I do think that it is important to
distinguish, you know, between those who have an intent to take
advantage of the program and those who, unfortunately, are
simply not paying appropriate attention to our rules. But, of
course, given the precious resources, we take the rules as set
by Congress and the Department seriously, and we report
accordingly.
Mr. Pallone. Now the time has expired. I am sorry. Next is
Ms. DeGette.
Ms. DeGette. Thank you very much, Mr. Chairman, and thanks
to this Committee.
I know you have discussed some of the issues in general
that I want to talk about, I would like to hone in on them a
little more. My first question is you talked about--actually,
Mr. Hackbarth, the MedPAC has talked about changing the
Medicare payment system incentives by basing a portion of
provider payment on quality of care, and to do this, Congress
could establish a quality incentive payment policy for
physicians and other plans, Medicare Advantage plans, health
care facilities. I am wondering if you have some specific
recommendations you can make as to what kind of quality
measures people would have to include to be--or to develop to
be included in a quality incentive payment policy.
Mr. Hackbarth. Well, let me focus on a few different areas
of the program. For example, in the Medicare Advantage program,
we have long advocated that a piece of the payment be adjusted
to reflect the quality, and----
Ms. DeGette. How do you do that?
Mr. Hackbarth. There are well established industry measures
developed by NCQA that private employers use to assess health
plans. We believe Medicare should be doing the same and
adjusting payment accordingly. In the case of dialysis
services, again, there is a pretty strong consensus about what
the critical quality measures are. We have advocated that the
dialysis payments be adjusted to reflect those outcomes for
patients.
Likewise, in hospitals, we think there are some strong
consensus measures. In fact, Medicare requires, as you know,
specific measures be reported. We would like to see payment----
Ms. DeGette. Do you think that the current--and I do know
that, because my heroine, Patty Gabow from Denver Health, is
here on the next panel----
Mr. Hackbarth. Um-hum.
Ms. DeGette [continuing]. But do you think that we could--
do you think that the--that these quality measures that we have
in place now are sufficient as we move forward with a
comprehensive health care plan? Do we need some kind of
additional mechanism? Do we need additional quality measures?
What do we need----
Mr. Hackbarth. Yes, I think the measures need to evolve
over time. I think we have got starter sets, if you will, for a
lot of providers, but we need to invest in developing in the
long term.
Ms. DeGette. And who should do that?
Mr. Hackbarth. Well, Congress has invested some money now
in NQF, the National Quality Forum, which I think is a wise
investment to build infrastructure for ongoing improvement and
quality measures.
Ms. DeGette. And do you think some of these quality
measures that you talk about for Medicare Advantage can also be
used for physicians in other types of health care facilities,
like hospitals and community health facilities?
Mr. Hackbarth. Well, each provider group presents its own
challenges and will require unique measures. I mentioned three
areas, Medicare Advantage, ESRD and hospitals, but I think
there is a pretty strong consensus on a starter set of
measures. Other areas are more challenging. Physicians are more
challenging just because of the nature of a medical practice.
You often have small groups, or even solo physicians, so not a
lot of numbers to do measurement.
Ms. DeGette. But you know what, though, people like
Geisinger and Kaiser and others have been able to develop
quality measures for doctors, that it would seem to me you
could develop, and if you don't develop those for physicians,
then it is hard to see how you can get the improvement in
medical care at the same time that you get the cost containment
in our system.
Mr. Hackbarth. And I agree with that, that we do have
initial measures--they are not comprehensive measures for
physicians. They tend to be very focused process measures.
Ms. DeGette. Right.
Mr. Hackbarth. I think we can do a better job in assessing
physician performance as we move to bundle payment systems.
Where we get groups of physicians working together, we can
start to measure outcomes, not just----
Ms. DeGette. That was my next question. So to develop those
measures, again, what kind of mechanism do you think--would it
be the same one you talked about that Congress--there is a
group of us----
Mr. Hackbarth. Yes?
Ms. DeGette [continuing]. Senator Whitehouse and myself and
others who are very concerned that if we don't develop quality
measures throughout the system----
Mr. Hackbarth. Yes.
Ms. DeGette [continuing]. That we are really not going to
have----
Mr. Hackbarth. Yes.
Ms. DeGette [continuing]. Improvements in patient outcomes.
Mr. Hackbarth. So we need a process for forging consensus
and establishing a set of measures.
Ms. DeGette. Right.
Mr. Hackbarth. You don't want, you know, 12 different
ones----
Ms. DeGette. Right.
Mr. Hackbarth [continuing]. And everybody using different
measures.
Ms. DeGette. Right.
Mr. Hackbarth. That is a burden on providers.
Ms. DeGette. Right.
Mr. Hackbarth. And NQF can be that process. It can grow
into that process, where we have consensus. Then we also have
to invest in the research about what works----
Ms. DeGette. What works.
Mr. Hackbarth [continuing]. And that is where comparative
effectiveness comes in. That can provide raw material for
specialty societies and the like to develop guidelines on what
constitutes good care, and that can also feed, ultimately, into
the assessment process.
Ms. DeGette. Thank you. Thank you, Mr. Chairman.
Mr. Pallone. Thank you. Gentleman from Texas, Mr. Gonzalez.
Mr. Gonzalez. Thank you very much, Mr. Chairman. This will
go to the Chairman.
There are two major components of what we are considering,
and the experience gleaned from Medicare is going to be used
either by the proponents or the opponents. Just--again, it will
be the performance of Medicare in the eye of the beholder. One
is the public option, the other is the health insurance
exchange. So I am going to pose a couple of questions, and then
just let you respond, and that way the--it will be the Chairman
that will be advising you that my five minutes are over.
But first, I haven't met with a group of doctors in San
Antonio yet that have agreed with the compensation adequacy.
And what they are all saying is that you guys are basically
working with stale data and information, that it is at least
two years behind the times of what modern medicine, in its
practice, entails. That is the first question, and I know that
we have touched on it more or less, but that is going to be
very important as we go out there with a broader plan that,
again, has something that will mimic what we have been doing
under Medicare. So that is the first complaint that we get.
My colleague, Ms. DeGette, also touched on something, and
that was how do you establish proper protocols? What is
acceptable--practices and standards? On the Small Business
Committee, we had Governor Pawlenty who came up, and I asked
him that, because my doctors asked the same thing. Different
patient populations may dictate different practices and such.
Well, Governor Pawlenty told me, he says, we have got Mayo.
They establish the standards, pretty much, and no one is going
to argue with them. The question to you is how do we ever
really achieve nationwide standards that may address diverse
populations and such? The last question is somewhat
interesting, one, because it presents a real dilemma for me
back home. Texas has probably the greatest number of specialty
hospitals. The question really is how is modern medicine being
delivered in this country, and--to keep up with that?
There are portions of this bill that would discourage, of
course, specialty hospitals, yet we are looking at what we
refer to as bundling, and that is more centralization, more
coordination, medical home, all that that entails. But in
essence, isn't that what specialty hospitals and many of these
specialty practices provide? And that is, when a patient goes
into those settings, that there are many different services
that are being provided within that environment that otherwise
would be separated out to different locales, offices and other
doctors. And we even have different specialists that argue
among themselves as to what extent they should be able to do
that. And I would just like your views on those three points,
and again, thank you for your service.
Mr. Hackbarth. OK. That is a lot of ground to cover in just
a minute or two. Starting with the stale data, I imagine what
your physician constituents are referring to is Medicare claims
data, which, in fact, is a couple years old by the time it is
used in the policy process. That is a problem. That is an area
where I think some wise investments in Medicare infrastructure
would pay dividends. I am not sure, however, that the age of
the data would alter any of the recommendations we are talking
about for reforming the payment system.
With regard to standard setting, I do believe it is very
important to have a process that is coherent and credible from
the perspective of providers. I fear that sometimes we have
embarrassment of riches. We have a lot of different people
saying this is what constitutes quality of care. Some of it is
well-founded in research, other pieces of it are not. If we
want to send clear, consistent, signals to providers, not just
from Medicare but from private insurers as well, we need to
have a coherent standard setting process.
As I said a minute ago, Congress, I think, wisely has
invested some money in NQF to start building that
infrastructure.
On the last issue of specialty hospitals, roughly 2 years
ago now MedPAC at Congress' request invested a lot of effort in
analyzing specialty hospitals. Our basic findings were that
when physician-owned specialty hospitals enter the market,
costs tended to increase, not decrease. More procedures were
done. The evidence on the quality of care was there was not
definitive evidence one way or the other that it was better or
worse. It seemed to be about the same.
At the time we did our analysis, our big concern, our
immediate concern was that at least some physician-owned
specialty hospitals were exploiting flaws in the Medicare
payment system. They were focused on procedures where the
Medicare rates were too high. We made recommendations which
Congress adopted and CMS has now largely implemented to change
payment rates so there aren't those gaping opportunities to
exploit the system.
Mr. Pallone. Thank you.
Mr. Matheson is next.
Mr. Matheson. Thank you, Mr. Chairman.
I am sorry I was not able to be here for all your testimony
but I do appreciate your coming before the committee today. A
question I wanted to raise is, MedPAC has had the opportunity
to make a lot of recommendations about how we can achieve
greater efficiencies or greater value or good practices, and
often when it comes to implementation, Congress has not
necessarily followed through on that. Do you have suggestions
if there would be a better structure to help assist in allowing
these recommendations to be implemented in a more effective
way?
Mr. Hackbarth. Well, one of my themes this morning has been
that I think the Secretary of Health and Human Services and CMS
need both more discretion and more resources so they need the
flexibility to refine change, payment systems, overtime to
achieve goals established by the Congress. For every small
change to have to come back through the legislative process is
a very cumbersome process and it makes progress very slow and I
am not sure that is a luxury we can afford at this point, so
more discretion and more resources for the Department would be
my first recommendation.
Mr. Matheson. Do you have--in terms of making that
recommendation, is there a specific proposal about what the
resource needs might be or is that something that we can look
to maybe get some information?
Mr. Hackbarth. I would urge you to go to the Department for
that information. They are the best judges of exactly what they
need.
Mr. Matheson. Do you feel like the way MedPAC is structured
right now that you are adequately insulated from having Members
of Congress come in and tell you here is what we think you
really ought to be doing?
Mr. Hackbarth. Well, we welcome our exchange with Members
of Congress and the MedPAC staff works very closely with both
the committee and personal staffs to understand Congressional
perspective. I have never felt undue pressure from any Member
of Congress.
Mr. Matheson. Do you feel like you are adequately
structured to be an independent entity? I guess that is what I
am asking.
Mr. Hackbarth. Yes.
Mr. Matheson. OK. Thanks, Mr. Chairman. That will be it for
me.
Mr. Pallone. Thank you.
Mr. Barrow.
Mr. Barrow. Thank you, Mr. Chairman, and thank you
gentlemen for being here today. I too along with Jim had
several other meetings this morning so I apologize for being a
little late but I am glad to have the chance to visit with you.
Thank you for coming and offering your testimony.
You know, fixing what is broke with Medicare Part D is a
large part of comprehensive health care reform and a lot of
attention has been given to ways and means of trying to plug
the donut hole, among other things. I want to focus on a
problem with the Medicare Part D program that has bedeviled the
people I represent. I hear about it at every one of my town
hall meetings, and that is the excessive degree of discretion
and variety in the formularies that all of these various for-
profit insurers are paid by the public essentially to assume a
public risk and the incredible confusion. You know, there is
such a thing as too much of a good thing. When there is too
much variety and choice in the marketplace, you have a hard
time finding what you need and you have to do a lot of hunting
and trying to find the drug that you want and then with a
potential for bait and switch that can exist and the formulary
being changed on you. That just makes things so much worse.
My question to you is, and I guess Chairman Hackbarth, you
are probably in the best position to answer this, is any
thought being given, since this is a public financed plan, to
get the for-profit insurance industry to compete with each
other to make money trying to offer a benefits package to
assume a public risk in providing this benefit? Any thought
given to trying to make more--to have a centralized or more
standardized formula that is comprehensive in its scope but
provides all of the necessary flexibility and variety to allow
doctors to opt out when there is a medical necessity that they
know about, a generally good reason to do so, but to make it
clear that when folks go into this very confusing marketplace
with so many people competing for the customers' business that
they know that they are comparing apples to apples, they know
that the benefits package is substantially the same just as the
entity that is paying for this is substantially the same, just
as what you hope to get is substantially the same. Is any
effort being made to do that?
Mr. Hackbarth. Well, you are absolutely right, that the
choices that Medicare beneficiaries face are complicated and
choosing among plans because of, among other things,
differences in formularies. I would add that it doesn't stop
with the beneficiaries. You know, differences in formularies
also have a significant impact on practicing physicians and how
they deal with patients. What they prescribe needs to vary
according to the plan that the patient is covered by, and that
can be a real problem for physicians. There is a tradeoff here,
though. The flexibility around formularies and the exact
benefit structure, those are tools that private plans can use
to try to offer a better value for Medicare beneficiaries.
Those are the tools that they can use to reduce the cost of the
plan, and so there is a tradeoff to be made.
Mr. Barrow. If you have a plan that is designed to the
health profile of the patient, in theory you can get yourself
into a much smaller risk pool and be shopping for something
that is just tailored for you, but the point is, at least the
quality of the insurance and it takes on the quality of being
sort of a revolving loan program.
Mr. Hackbarth. And some people have expressed concern in
particular about specialty drugs, very high-cost drugs for
patients with serious illnesses.
Mr. Barrow. Well, there is a medical necessity for that.
The smaller the risk pool of folks buying into the program, the
more expensive that is going to be when it is absolutely
necessary to get it, so that sort of drives up the cost for
those folks who need it when they need it I guess what I am
getting at is, if you really have too much choice, you don't
know what you are choosing and the other party on the other
side of this deal can change the deal on you after you have
signed up. We make this thing much more complicated and much
user friendly than it has to be, and I want to make sure we are
not driving up the cost by having exotic stuff driving up the
cost for the ordinary, everyday stuff but there is a profile,
there is a comprehensive scope of conditions that we can treat
effectively, cost-effectively with medication, and it seems to
me the more we can eliminate the confusion in this, the more--
and make it genuinely available and comprehensive in its scope,
the better service we are providing all our customers. Because
after all, we are paying these folks to assume this public risk
and we ought to make sure that folks know what they are getting
when they go into the marketplace. What is MedPAC doing about
this? Are you all looking into this?
Mr. Hackbarth. Well, on the specific issue of the
complexity, we have looked at the choices that Medicare
beneficiaries have to make in choosing among plans, and looked
at the tools that beneficiaries have available to them. CMS
does have some tools, as you know, to try to help beneficiaries
compare plans and choices. We think here again this is another
area where some investment could pay dividends in helping
beneficiaries understand their choices. There is no way around,
though, the ultimate tradeoff that you are going to face
between complexity on the one hand and flexibility for plans to
manage the costs on the other. There is no answer on how to
strike that balance.
Mr. Barrow. I think doctors----
Mr. Pallone. Your time is expired, but if you want to say
something----
Mr. Barrow. I think doctors ought to be able to make those
calls. Thank you, Mr. Chairman.
Mr. Pallone. Thank you.
Unless anyone else has questions, we are going to proceed
to the next panel, so thank you very much. Your input is
obviously very important as we proceed on this and we
appreciate your being here this morning. Thank you.
I ask the next panel to come forward. Could we ask that
everyone be seated and that everyone else clear the room,
because we do have to get moving. We have three more panels.
Those who are talking and socializing, please leave the room.
OK. Our second panel is on doctor, nurse, hospital and
other provider views, and as you can see, it is a rather large
panel so we want to get started, and let me--I don't think I
have seen such a large panel. We will start on my left with Dr.
Ted Epperly, who is president of the American Academy of Family
Physicians, and then we have Dr. M. Todd Williamson, who is
president of the Medical Association of Georgia, and then is
Dr. Karl Ulrich, who is clinical president and CEO of the
Marshfield Clinic, and Dr. Janet Wright, who is vice president
of Science and Quality at the American College of Cardiology,
Dr. Kathleen White, who is chair of the Congress on Nursing
Practice and Economics at the American Nurses Association, Dr.
Patricia Gabow, who is chief executive officer of the Denver
Health and Hospital Authority for the National Association--
well, she will be speaking for the National Association of
Public Hospitals, Dan Hawkins, who is senior vice president of
public policy of research for the National Association of
Community Health Centers, and Bruce Roberts, who is executive
vice president and CEO of the National Community Pharmacists
Association, Bruce Yarwood, president and CEO of the American
Health Care Association, and Alissa Fox, who is senior vice
president of the Office of Policy and Representation for the
Blue Cross Blue Shield Association.
Now, before we begin, I just wanted to point something out
that I believe has been shared with staff but I think needs to
be repeated because of the panel. It would touch upon some of
the things particularly with regard to community health
centers. In several sections of the draft--well, I should say
in several sections of that part of the draft that deals with
the public health and workforce development, in that division,
a sentence that was supposed to be an addition to current
authorizations was instead drafted to take the place of them.
So instead of ``in addition'' it says ``to take the place of''
in that decision, and this is an error. It was caught on Friday
afternoon shortly after the draft was announced and we did
notify both Democrat and Republican committee staff of the
mistake and corrections have been sent to the Office of
Legislative Counsel, but I did want to point that out before I
started here today because I wasn't sure that all of you who
are testifying were aware of that. The mistake is particularly
glaring in the provision related to community health centers,
and I think Mr. Hawkins knows this, but just let me point it
out to everyone, that the draft is supposed to include an
additional $12 billion over 5 years in new money and that is
over and above the current appropriation. Again, that is why we
have drafts, I guess.
But let us start. As you know, we ask you to keep your oral
comments to 5 minutes and of course all of your written
testimony will be included in the record, and we will start
with Dr. Epperly.
STATEMENTS OF TED D. EPPERLY, M.D., PRESIDENT, AMERICAN ACADEMY
OF FAMILY PHYSICIANS; M. TODD WILLIAMSON, M.D., PRESIDENT,
MEDICAL ASSOCIATION OF GEORGIA; KARL J. ULRICH, M.D., CLINIC
PRESIDENT AND CEO, MARSHFIELD CLINIC; JANET WRIGHT, M.D., VICE
PRESIDENT, SCIENCE AND QUALITY, AMERICAN COLLEGE OF CARDIOLOGY;
KATHLEEN M. WHITE, PH.D., CHAIR, CONGRESS ON NURSING PRACTICE
AND ECONOMICS, AMERICAN NURSES ASSOCIATION; PATRICIA GABOW,
M.D., CHIEF EXECUTIVE OFFICER, DENVER HEALTH AND HOSPITAL
AUTHORITY, NATIONAL ASSOCIATION OF PUBLIC HOSPITALS; DAN
HAWKINS, SENIOR VICE PRESIDENT, PUBLIC POLICY AND RESEARCH,
NATIONAL ASSOCIATION OF COMMUNITY HEALTH CENTERS; BRUCE T.
ROBERTS, RPH, EXECUTIVE VICE PRESIDENT AND CEO, NATIONAL
COMMUNITY PHARMACISTS ASSOCIATION; BRUCE YARWOOD, PRESIDENT AND
CEO, AMERICAN HEALTH CARE ASSOCIATION; AND ALISSA FOX, SENIOR
VICE PRESIDENT, OFFICE OF POLICY AND REPRESENTATION, BLUE CROSS
BLUE SHIELD ASSOCIATION
STATEMENT OF TED D. EPPERLY
Dr. Epperly. Chairman Pallone, Ranking Member Deal and
members of the Energy and Commerce Health Subcommittee, I am
Ted Epperly, president of the American Academy of Family
Physicians, which represents 94,600 members across the United
States. I am a practicing family physician from Boise, Idaho. I
am delighted to say that your draft bill goes a long way
towards providing quality, affordable health care coverage for
everyone in the United States.
The AAFP has called for fundamental reform of our health
care system for over 2 decades. We commend you for your
leadership and commitment to find solutions to this complex
national priority. We appreciate efforts to improve primary
care through this draft bill. The Academy believes that making
primary care the foundation of health care in this country is
critical. Primary care is the only form of health delivery
charged with the long-term care of the whole person and has the
most effect on health care outcomes. Primary care is performed
and managed by a personal physician leading a team,
collaborating with other health professionals and using
consultation or referral as needed.
Many studies demonstrate that primary care is high quality
and cost-effective because it includes coordination and
integration of health care services. The Academy believes the
key to designing a new health care system is to emphasize the
centrality of primary care by including the patient-centered
medical home where every patient has a personal physician,
emphasizing cognitive clinical decision making rather than
procedures, and ensuring the adequacy of our primary care
workforce and aligning incentives to embrace value over volume.
Many of these key provisions are contained in your draft
legislation. Specifically, we applaud the committee for
including a medical home pilot program in Medicare as a step
towards a primary care system. Your definition of the patient-
centered medical home is consistent with the one established by
the AAFP and other primary care organizations. We also support
the PCMH demonstration project in Medicaid. Use of the medical
home will achieve savings and improve quality. We appreciate
the inclusion of a bonus of 5 percent for primary care services
and up to 10 percent for services provided in a health
profession shortage area. We urge you to make this bonus
permanent.
Medicare is a critical component of the U.S. health system
and must be preserved and protected. With this draft, you take
the first bold steps needed to remedy the Medicare physician
payment system. The AAFP appreciates your recognition of the
longstanding problems with the dysfunctional formula known as
the sustainable growth rate, or SGR. We thank you for proposing
that it be rebased. This is an important, necessary and welcome
step.
We also appreciate the bill's attention to workforce
issues. Numerous studies indicate that more Americans depend on
family physicians than on any other medical specialty. We are
deeply concerned about the decline in the number of medical
students pursuing a career in primary care at a time when the
demand for primary care services will only be increasing. The
majority of health care is provided in physicians' offices now
and will be in the future. We must revitalize the programs to
train the primary care physician workforce that will meet our
needs in those locations.
We thank you for reauthorizing and providing a substantial
investment in section 747 of the health professions primary
care medicine training program. The National Health Care
Workforce Commission in the discussion draft is needed to
recommend the appropriate numbers and distribution of
physicians.
The AAFP is also pleased that the Medicaid title provides
for a substantial expansion of coverage to the uninsured. In
particular, we support increases to the Medicaid primary care
payment so that it is equal to Medicare by 2012. The AAFP
supports a public plan option consistent with the principles
included in our written testimony. Patients should have a
choice of health plans and a public plan should be one of them.
However, the public plan should not be Medicare. We acknowledge
that for transition purposes, there may be some similarities to
the federal program but we urge Congress to delink the public
plan from Medicare by a date certain.
The AAFP strongly supports the inclusion of comparative
effectiveness research in the draft bill. We appreciate the
establishment of a center within the Agency for Health Care
Research and Quality. If we wish to improve the patient care
and control costs in this country, this type of research is
crucial. It is only with CER that we can provide evidence-based
information to patients and physicians for use in making health
care decisions.
Finally, we support a number of insurance market changes
that will help our patients in regards to the health insurance
exchange where they can one-stop shop for a health care plan, a
sliding-scale subsidy so that people can purchase meaningful
coverage, guaranteed availability and renewability of coverage,
prohibition of preexisting conditions exclusions and denials,
and benefit packages that allow consumers to select the one
that best meets their needs as well as a requirement for a core
set of benefits.
In conclusion, the Academy believes that health care should
be a shared responsibility and applauds the section of the bill
that requires all individuals have coverage. Now is the time to
provide affordable, high-quality health care coverage. The
status quo is not working. We urge Congress to invest in the
health care system we want, not the one we have. Thank you very
much, Mr. Chairman.
[The prepared statement of Dr. Epperly follows:]
Mr. Pallone. Thank you, Dr. Epperly.
Dr. Williamson.
STATEMENT OF M. TODD WILLIAMSON
Dr. Williamson. Good morning, Chairman Pallone and Mr.
Deal. My name is Todd Williamson, and I want to thank you for
the opportunity to speak to you today. I am a neurologist from
Atlanta and I serve as the president of the Medical Association
of Georgia, and I am speaking on behalf of that association.
I recently had the privilege on speaking on behalf of a
coalition of 20 State and specialty medical societies
representing more than 100,000 physicians, which is nearly half
of the practicing physicians in the United States. This
coalition believes that ensuring the patient's right to
privately contract with their physician is the single most
important step we could take to reform our medical care system.
I would like to begin by addressing three assumptions that
underpin the discussion draft. The first relates to geographic
disparities in spending. Peter Orszag recently said that nearly
30 percent of Medicare's costs could be saved without
negatively affecting health outcomes of spending in high- and
medium-cost areas could be reduced to the level in low-cost
areas. We do not agree. This flawed claim was first made by the
Dartmouth Group, which used only Medicare data to analyze
spending and quality. Please consider the work of Dr. Richard
Cooper, which shows that an examination of total medical
spending per capita reveals that quality and cost are indeed
connected. He also demonstrates that Medicare payments are
disproportionately higher in States with high poverty levels
and low overall medical care spending. The suggestion that our
medical care expenditures are greater than other countries is
also misleading, countries that account for expenditures such
as out-of-pocket payments and the cost of long-term care in
different ways. Some countries drive down costs by rationing
care. The cost of research and development distorts our
expenditures as well.
A third faulty assumption is that medical care outcomes in
the United States are worse than in other countries. America's
often-cited infant mortality statistics cannot be directly
compared to statistics from other countries that do not record
the deaths of low birth weight newborns that we try to save.
Comparisons of a host of specific diseases such as diabetes
clearly show our outcomes are superior.
We cannot support and would actively oppose the discussion
draft. As I noted, we believe that allowing patients and
physicians to privately contract is the single most important
step we can take towards reforming the Nation's medical care
system. This will empower patients to choose their physician,
spend their own money on medical care and make their own
medical decisions. Medical expenditures can only be
appropriately controlled and allocated where there is complete
transparency and acknowledgement of necessity and value at the
time of the patient-physician interaction. Private contracting
will enhance access to medical care. Many physicians opt out of
government plans because payments do not cover costs. If
private contracting was allowed, every patient would have
access to every doctor. This option is currently not available
under government plans and is prohibited in the discussion
draft. Critics cite that private contracting will disadvantage
impoverished patients. I would argue that they will benefit
from increased access and competition in the medical community
and their physicians will be at liberty to waive copays, which
is currently forbidden in government plans.
We applaud the draft sponsors for planning to rebase the
SGR payment system but we remain concerned that they continue
to rely on a target-based approach. We support the emphasis on
prevention, wellness and claims transparency. We agree that
primary care should receive greater support and administrative
burdens should be reduced. We do not believe that the federal
government should replace current research and development
mechanisms or the training and judgment of physicians with
federally controlled comparative effectiveness research.
While we recognize the need for reform, we believe that the
private marketplace should remain the primary means of
obtaining insurance. A government-sponsored health insurance
program for working-age adults will invariably eliminate
private options. Recall that Medicare was originally introduced
as an option for seniors but today it has essentially become
their only choice.
We can reduce obstacles to individual ownership and control
of mental illness by adopting new tax policies. This would
eliminate the phenomenon of preexisting conditions because
individuals could carry their insurance with them for life
independent of their occupation or employer. To those who
assert that the private sector has failed our patients, I say
that our patients have been disadvantaged in the marketplace by
a tax system that penalizes individual ownership of health
insurance. When all Americans own their policies, insurance
companies will be forced to compete for the business of
millions of individuals and they will focus on satisfying the
patient, not the patient's employer. Finally, we can
significantly reduce health care expenditures and improve
access by enacting proven, effective medical liability reform
measures.
I appreciate this opportunity to present the views of
practicing physicians to you today. Thank you.
[The prepared statement of Dr. Williamson follows:]
Mr. Pallone. Thank you, Dr. Williamson.
Dr. Ulrich.
STATEMENT OF KARL J. ULRICH
Dr. Ulrich. Mr. Chairman, Ranking Member Deal and members
of the subcommittee, my name is Karl Ulrich and I am president
and CEO of Marshfield Clinic in Marshfield, Wisconsin. On
behalf of myself, our staff and the tens of thousands of
patients that we care for, we commend you for advancing the
national health reform debate.
At our clinic, we continue to follow closely this dialog,
especially reorienting the system towards quality and
efficiency while at the same time ensuring that any meaningful
reform is not built upon the flawed incentives of the current
program. Therefore, we strongly urge this committee to be bold
and address the problems of affordability, quality and
disparities in payment that plague the program, hurting
beneficiaries and providers alike.
As background, Marshfield Clinic is one of the largest
medical group practices in Wisconsin and indeed the United
States with almost 800 physicians, 6,500 additional staff and
3.6 million annual patient encounters per year. As a 501(c)(3)
not-for-profit organization, our clinic is a public trust
serving all who seek care regardless of their ability to pay.
As part of our commitment, the clinic has invested in
sophisticated tools that complement and support our mission
such as an internally developed certified electronic medical
record, a data warehouse and an immunization registry. With
this infrastructure, the clinic is presently publicly reporting
clinical outcomes and providing quality improvement tools to
analyze processes, eliminate waste and improve consistency
while still reducing unnecessary costs. These initiatives are
consistent with the stated goals of the national health reform
debate. Our clinic has long used information to facilitate care
redesign and we expanded these efforts after becoming a
participant in the federal physician group demonstration
project. As a result, we have improved care, reduced costs and
achieved significant savings for the Medicare program. In the
first 2 years of the demonstration, we have saved taxpayers
more than $25 million with our redesigns while meeting or
exceeding all 27 possible quality metrics. We believe that
equivalent or even greater results are possible with the
creation of the proposed accountable care organizations,
especially if the subcommittee aligns the incentives of the
Medicare program reimbursement with value and efficiency.
However, of concern is the current tri-committee mark. The
authors have proposed the establishment of a public health
insurance option. Providers who voluntarily participate in
Medicare would be required to participate in the public option
and would be paid at Medicare rates plus some incremental
percentage for the first 3 years of operation. This raises
substantial financial and operational questions around how the
federal government could compel physicians to see those
patients. For instance, would this mean that patients must be
seen when they present or would providers be compelled to see
the patient within a certain time frame? Further, if the public
plan pays at Medicare rates, the reduction in commercial
service revenue would compel radical restructuring of our
institution, perhaps resulting in our demise. As such and in
this current form, Marshfield Clinic strongly opposes the
public plan alternative based on the belief that a true level
playing field could never exist between public and private
providers. In Wisconsin, where commercial rates vary between
180 to 280 percent of Medicare rates, this public plan would
have such a profound competitive advantage that one needs to be
concerned that providers would uniformly abandon the Medicare
program to survive in the practice of medicine.
Further, there is a significant problem with the Medicare
payment rates in Wisconsin as well as the rest of rural
America. For example, Medicare currently reimburses us at only
51.6 percent of our allowable costs. We believe that this is a
result of Medicare's failed formulas for reimbursing physician
work and practice expense and Medicare's geographic adjustment.
To address these systemic problems, we believe that Congress
and CMS must refine Medicare payment systems to address the
problems of access and encourage appropriate care by providing
incentives that focus on quality and efficiency. Similarly, we
are also concerned about the practice expense components of the
Medicare physician formula. It is widely agreed that the data
used to estimate non-physician wages does not reflect current
patterns and practice of medicine. As a result, the formula
distorts payments, paying some too much and others too little.
To resolve this disparity, we would like to heighten the
legislative work of Congressmen Braley and Kind, who have each
authored legislation to correct this inequity, and we urge the
subcommittee to include these members' thoughtful provisions in
any health care reform legislation that advances.
Again, Marshfield Clinic appreciates the opportunity to
share our views and we look forward to advancing our shared
vision of a healthy America. Thank you.
[The prepared statement of Dr. Ulrich follows:]
Mr. Pallone. Thank you, Dr. Ulrich.
Dr. Wright.
STATEMENT OF JANET WRIGHT
Dr. Wright. Chairman Pallone and Ranking Member Deal and
members of the subcommittee, thank you for the opportunity to
appear before the subcommittee today. My name is Janet Wright.
I am a board-certified cardiologist, having trained in San
Francisco and practiced in northern California for 25 years.
For the last year I have been serving as the American College
of Cardiology's senior vice president for science and quality
here in Washington, and in that role I oversee our registries,
our scientific documents like guidelines and performance
measures and appropriate-use criteria and also our quality
improvement projects and programs.
On behalf of the 37,000 members of the ACC, I commend you
for setting out the health care reforms in the current draft
bill. We see so many improvements and we commend you and
applaud your efforts to both attend to and correct the flawed
physician payment model. We also register concerns about
proposed cuts in imaging and the effect they may have on
patients' access to care. But in broad overview, the ACC is
completely committed to comprehensive reform and we are very
grateful for your attention to the matter.
Ranking Member Barton invited me to speak today about his
draft proposal, the Health Care Transparency Commission Act of
2009, and I am delighted to offer these comments. The American
College of Cardiology values performance measurements, its
analysis and improvement and it demonstrates this commitment
through a 25-year history of producing guidelines for clinical
practice, the more recent generation of a particular kind of
guidance called appropriate-use criteria, to help clinicians
choose the appropriate type of treatment or technology or
procedure that best fits that patient's clinical scenario, and
in our efforts in what is now called implementation science,
taking what we know works and trying to get that into the
practice of medicine in a systematic way. Examples of that in
recent years are the Door To Balloon project of the Alliance
for Quality, over 1,100 hospitals here in the United States and
beyond trying to shorten up that time from diagnosis of a
myocardial infarction until the balloon opens that artery. And
more recently we are about to launch a program called Hospital
to Home, Excellence in Transition, along with key partnerships,
particularly with the Institute for Health Care Improvement.
And finally, we are beginning to implement our appropriate-use
criteria, both in imaging and soon in revascularization, to
help clinicians, their patients and their surgeons make good
decisions about revascularization.
In fact, our vision is not just separate projects but a
network of practices in hospitals. Our registries are in about
2,300 hospitals around the country and our ambulatory registry
called the Improvement Program is just beginning but we are out
into about 600 practices in the country. Our fully realized
vision is to connect these practices and hospitals in a quality
network. Those individuals practicing in the hospitals and
outpatient settings are committed to the systematic delivery of
scientifically sound patient-centered care, and fully realize
that vision will include a primary care network as well because
we understand most of cardiac diseases are actually managed by
primary care docs and nurses. In order to effect this vision to
make this come true, obviously payment needs to be readjusted
from the volume that we have known to the value that we
treasure. I enlist and again appreciate your efforts to make
that happen.
We believe that good data are the foundation for quality
improvement and serve to stimulate innovation, very healthy
competition amongst providers and rapid and continuous learning
network. As the science of performance measurement improves and
the skill of all of us at communicating complicated statistics
to lay people, as that skill is honed, consumers will likewise
find great value in quality information. The ACC strongly
supports the public's right to valid, actionable and current
data to help inform and enhance decision making. We find Mr.
Barton's proposal to be a laudable one and should Congress
proceed in this direction, we recommend consideration of the
following principles. These were published in 2008 and I am
only going to hit the high points.
But number one, the driving force for performance
measurements and public reporting should be quality
improvement. We acknowledge and support Mr. Barton's critical
inclusion in his draft bill of quality ratings along with
pricing information. Number two, public reporting programs
should be based on performance measures with scientific
validity. Number three, public reporting programs should be
developed in partnership with health care professionals, those
being measured. Number four, every effort should be made to use
standardized data elements to assess and report performance,
and to make the submission process uniform across all public
reporting programs. This helps reduce the measurement fatigue
and the disengagement that we often see in health care
professionals who are exhausted with the effort of measuring.
Number five, performance reporting should occur at the
appropriate level of accountability. I think this is true in
all areas of medicine but certainly in cardiology. The most
effective care is delivered by teams. Focusing on an individual
within that team may skew the measurement and the result of
that measurement in a way that has adverse consequences.
Mr. Pallone. Dr. Wright, you are almost a minute over, so
if you could just summarize.
Dr. Wright. Number six is avoiding those unintended
consequences. Thank you very much.
[The prepared statement of Dr. Wright follows:]
Mr. Pallone. Thank you. Sorry.
Dr. White.
STATEMENT OF KATHLEEN M. WHITE
Ms. White. Chairman Pallone, Ranking Member Deal,
distinguished committee members and Congressional staff, I am
Kathleen White, a registered nurse, speaking today on behalf of
the American Nurses Association, and we thank you for this
opportunity to testify. The ANA is the only full-service
national association representing the interests of the Nation's
2.9 million registered nurses in all educational and practice
settings. ANA advances the nursing profession by fostering high
standards of nursing practice.
ANA comments the committee for its work in the tri-
committee's draft legislation which represents a movement
toward much-needed comprehensive and meaningful reform for our
health care system. We appreciate the committee's recognition
that in order to meet our Nation's health care needs, that we
must have an integrated and well-resourced national workforce
policy that fully recognizes the vital role of nurses and other
health care providers and allows each to practice to the
fullest extent of their scope. ANA remains committed to the
principle that health care is a basic human right and all
persons are entitled to ready access to affordable, quality
health care services that are patient centered, comprehensive
and accessible. We also support a restructured health care
system that ensures universal access to a standard package of
essential health care services for all.
That is why ANA strongly supports the inclusion of a public
health insurance plan option as an essential component of
comprehensive health care reform. We believe that inclusion of
a public plan option would assure that patient choice is a
reality and not an empty promise and that a high-quality public
plan option will above all provide the peace of mind that is
missing from our current health care environment. It will
guarantee the availability of quality, affordable coverage for
individuals and families no matter what happens and generate
needed competition in the insurance market. ANA looks forward
to partnering with you to make this plan a reality.
There are a wide variety of ideas currently circulating on
health care reform but all include discussion of prevention and
screening, health education, chronic-disease management,
coordination of care and the provision of community-based
primary care. As the committee has clearly recognized in its
drafts, these are precisely the professional skills and
services that registered nurses bring to patient care. As the
largest group of health care professionals, registered nurses
are educated and practice within a holistic framework that
views the individual family and committee as an interconnected
system. Nurses are the backbone of the health care system and
are fundamental to the critical shift needed in health services
delivery with the goal of transforming the current sick care
system into a true health care system.
ANA deeply appreciates the committee's recognition of the
need to expand the nursing workforce and thanks you for your
commitment to amend the title VIII nursing workforce
development programs under the Public Health Service Act and
commend the inclusion of the definition of nurse-managed health
centers under the title VIII definitions. We applaud the
removal of the 10 percent cap on doctoral traineeships under
the advanced education nursing grant program and the inclusion
of special consideration to eligible entities that increase
diversity among advanced educated nurses.
Additionally, the expansion of the loan repayment program
eligibility to include graduates who commit to serving as nurse
faculty for 2 years will help address this critical shortage of
both bedside nurses and nursing faculty. We are also grateful
for the funding stream created through the public health
investment fund and the commitment of dollars through 2014 that
would offer vital resources and much-needed funding stability
for these title VIII programs.
ANA applauds the use of community-based multidisciplinary
teams to support primary care through the medical home model.
ANA is especially pleased that under this proposal nurse
practitioners have been recognized as primary care providers
and authorized to lead medical homes. Nurse practitioners'
skills and education, which emphasize patient- and family-
centered whole person care, make them particularly well-suited
providers to lead in the medical home model, focused on
coordinated chronic care management and wellness and
prevention. Many recent studies have demonstrated what most
health care consumers already know: nursing care and quality
patient care are inextricably linked in all care settings but
particularly in acute and long-term care.
Because nursing care is fundamental to patient outcomes, we
are pleased that the legislation places a strong emphasis on
reporting nurse staffing and long-term care settings, both
publicly and to the Secretary. The availability of nurse
staffing information on the nursing home compare Web site would
be vital to help consumers make informed decisions and the full
data reported to the Secretary will ensure staffing
accountability and enhance resident safety. ANA hopes that in
the same vein the committee will look toward incorporating
public reporting of similar nurse staffing measures and
nursing-sensitive indicators in acute care through the hospital
compare Web site as recommended by the National Quality Forum.
Finally, a reformed health care system must value primary
care and prevention to achieve improved health status of
individuals, families and the community. ANA supports the
renewed focus on new and existing community-based programs such
as community health centers, nurse home visitation programs and
school-based clinics and applauds the committee's recognition
of the vital importance of addressing health disparities.
Once again, the American Nurses Association thanks you for
the opportunity to testify before this committee. We appreciate
your understanding of the important role nurses play in the
lives of our patients and the health system at large. Nurses
are ready to work with you to support and advance meaningful
health care reform today. Thank you.
[The prepared statement of Ms. White follows:]
Mr. Pallone. Thank you, Ms. White.
Dr. Gabow.
STATEMENT OF PATRICIA GABOW
Dr. Gabow. Chairman Pallone, Ranking Member Deal and
members of the committee, thank you for the opportunity to
testify. I am Dr. Patricia Gabow and I am speaking for Denver
Health and National Association of Public Health and Hospital
System. Please excuse my voice.
Denver Health is an integrated safety-net institution that
includes the State's busiest hospitals, all Denver federally
qualified health centers, the public health department, all the
school-based clinics and more. Since 1991, we have provided
$3.4 billion in uninsured care and have been in the black every
year. We have state-of-the art facilities and sophisticated
HIT. These characteristics have enabled amazing quality.
Ninety-two percent of our children are immunized. Our hospital
mortality is one of the lowest in the country. Sixty-one
percent of our patients have their blood pressure controlled
compared to 34 percent in the country. This is despite the fact
that 46 percent of our patients are uninsured, 70 percent are
minorities and 85 percent are below 185 percent of federal
poverty level.
So you may ask if we are doing so well and meeting
patients' needs, why am I here supporting health reform. The
answer is straightforward. As the safety-net physician leader,
I see every day that America is failing to meet people's health
care needs in a coordinated, high-quality, low-cost way. The
number of uninsured at our door and the cost of their care
increases every year. In 2007, our uninsured care was $275
million. Last year it was $318 million, and is projected to be
$360 million this year. This is not sustainable. Moreover, not
every American city has a Denver Health. As a doctor, I ask
myself why should where you live in America determine if you
live. Why should an uninsured cancer patient get care if they
live in Denver but not if they live in another Colorado county?
You have included important reform components in your draft
bill. We support your goal to ensure affordable, quality care
for all. I agree that costs must be reduced if we are to cover
everyone and costs can be reduced by developing integrated
systems that get patients to the right place at the right time
with the right level of care, with the right provider and the
right financial incentives. We support your continued
investment in DSH hospitals, community health centers and
public health. I would encourage incentives to integrated
systems. These entities will be important during the transition
to full coverage and afterwards to vulnerable patients
including Medicaid, which will be a building block for much of
the coverage expansion. Integrated systems are cost efficient.
Our charges for Medicaid admission are 30 percent below our
peer hospitals.
Your investment in primary care and nurse training and the
National Health Service Corps is critical. Without this, we
will not be able to get patients to the right provider for the
right level of care. As a public entity, we believe in the
power of the public sector to meet the needs not only of those
patients on public programs but also private patients. We are
the major Medicaid provider for our State but our HMO also
serves private patients including Denver's mayor. We and other
safety-net systems would welcome the opportunity to continue to
be a plan of choice.
In summary, as a physician and a GEO of a public safety-net
system, I urge you to continue this effort to substantially
reform our delivery system, our payment model and to provide
care for all Americans. Our current system cannot and should
not be sustained. America deserves better. I and NPH are eager
to help you in this very important task. Thank you.
[The prepared statement of Dr. Gabow follows:]
Mr. Pallone. Thank you, Doctor.
Mr. Hawkins.
STATEMENT OF DAN HAWKINS
Mr. Hawkins. Well said, Dr. Gabow.
Good morning, Mr. Chairman, Ranking Member Deal and
distinguished members of the subcommittee, distinguished
meaning present and accounted for. On behalf of the National
Association of Community Health Centers, the Nation's more than
1,200 community health center organizations and the more than
18 million people they serve today, thank you for the
opportunity to contribute to today's discussion. In community
health centers all across the country, we witness the urgent
need for fundamental health reform every single day in the
faces and the struggles of our patients who for too long have
been left behind by our dysfunctional health care system.
Our 43 years' experience in caring for America's medically
disenfranchised and underserved has taught us three things.
First and foremost, that health reform must achieve universal
coverage that is available and affordable for everyone and
especially for low-income individuals and families, second,
that that coverage must be comprehensive and must emphasize
prevention and primary care, and third, that it must guarantee
that everyone has access to a medical or a health care home
where they can receive high-quality, cost-effective care for
their needs.
Mr. Chairman, we believe that the plan we have before us
today meets those principles and also moves our Nation much
closer to achieving the equity and social justice in health
care that has proven so elusive over the past century.
Community health centers strongly support the draft
legislation's call to expand Medicaid to cover everyone with
incomes up to 133 percent of poverty without restriction. This
Medicaid expansion may well be the most important and the most
essential feature of this plan, especially for the patients we
serve.
At the same time, we urge you to ensure that as these
Medicaid beneficiaries are potentially moved into the health
insurance exchange, they can continue receiving supplemental
Medicaid benefits, those key services like outreach,
transportation, nutrition and health education, screening and
case management that will remain so vital to their health and
well-being but will most likely not be covered by their
exchange plans. It is also clear that the expansion of
insurance coverage, while a vital first step, can only take the
country so far. Most importantly, the increased demand for care
that comes from expanding coverage must be met with an
augmented primary health care system as the people of
Massachusetts learned in the wake of their State's reform. Here
again, the draft legislation delivers a solid response to this
challenge and we applaud its call to expand the health center
system of care through increased funding as part of the new
public health investment fund. The members of this committee
have consistently provided broad, bipartisan support for health
centers over the years and we deeply appreciate that, and I can
assure that health centers are repaying your trust and your
investment in their every day.
For example, a recent national study done in collaboration
with the Robert Graham Center found that people who use health
centers as their usual source of care have 41 percent lower
total health care costs and expenditures than people who get
their care elsewhere. As a result, health centers saved the
health care system $18 billion last year alone, more than nine
times the federal appropriation for the program and better than
$2 for every dollar they spent in care. With the new funding in
the draft bill, these savings will grow even larger. The
National Health Service Corps is a vital tool for health
centers and underserved communities seeking to recruit new
clinicians and the draft legislation would bring an historic
investment to the program, leading to thousands more primary
care providers to practice in underserved communities.
The committee has also historically recognized that it
makes sense for all insurers to reimburse health centers and
other safety-net providers appropriately and predictably for
the comprehensive primary and preventive care they provide. In
order to accomplish this goal, we recommend that Congress align
health center payments from all insurers, public and private,
with the structure currently in place under Medicaid. As you
continue deliberations, we urge the committee to consider
improving the bill further by including language from H.R.
1643, which would align the current Medicare health center
payment methodology with the successful Medicaid prospective
payment system.
Finally, as full participants in a reformed health care
system, America's health centers stand ready to deliver quality
improvement, increased access and cost containment that will be
necessary to make this reform successful. To that end, we
applaud the committee's inclusion of network adequacy standards
for all exchange plans to ensure that people living in
underserved communities have access to the health centers and
other essential community providers located there.
Mr. Chairman and members of the committee, we again thank
you for your leadership and your commitment to make health care
reform work for all Americans and we pledge ourselves to work
with you to make that a reality this year. Thank you.
[The prepared statement of Mr. Hawkins follows:]
Mr. Pallone. Thank you, Mr. Hawkins.
Mr. Roberts.
STATEMENT OF BRUCE T. ROBERTS
Mr. Roberts. Chairman Pallone, Congressman Deal and members
of the Health Subcommittee, I am Bruce Roberts, the executive
vice president and CEO of the National Community Pharmacists
Association, NCPA. I am a licensed pharmacist in the State of
Virginia and I have owned four community pharmacies over the
last 33 years in Loudon County, Virginia. NCPA represents the
owners and operators of 23,000 independent community pharmacies
in the United States. We appreciate the opportunity to testify
before you today on the role of pharmacy in health care reform.
In many communities throughout the United States,
especially in urban and rural areas, independent community
pharmacies are often the primary source of a broad range of
health care products and services, services such as medication
therapy management and immunization programs for seniors under
Medicare Part B and D. We believe that a reformed health care
system should expand the availability of these programs because
they can help improve the quality of care and reduce health
care costs.
The reality is that for every dollar the health care system
spends paying for prescription medications, we spend at least
another additional dollar on health care services to treat the
adverse effects of medications that are taken incorrectly or
not at all. For example, a primary cause for costly hospital
readmissions is the lack of patient adherence to medications
used to treat chronic medical conditions such as hypertension
and high cholesterol. Pharmacists can play an important role in
the post-acute care and helping patients manage their
medications through education, training and monitoring. We
applaud the fact that the draft House language would allow the
involvement of non-physician practitioners such as pharmacists
in the medical home pilot project. Pharmacists can help improve
the use of prescription medications, especially in those
individuals that have multiple chronic diseases.
NCPA is very much appreciative of the fact that the draft
House legislation includes reform of the average manufacturer's
price, AMP, based reimbursement system for Medicaid generic
drugs. We would like to get this fixed this year. We are
concerned that the Medicaid generic reimbursement at 130
percent of the weighted average AMP as proposed in the draft
House bill combined with low dispensing fees paid by States
will in total still significantly underpay pharmacies for the
dispensing of low-cost generics in the Medicaid program. This
could create a disincentive for the use of generic drugs
causing a rise in Medicaid costs over the long term. NCPA asks
the committee to consider a higher FUL reimbursement rate for
generic medications, especially for critical access community
pharmacies that serve a higher percentage of the Medicaid
recipients or rural pharmacies.
With respect to our ability to continue to provide durable
medical equipment, DME, to Medicare beneficiaries, we believe
that requiring State-licensed, State-supervised community
retail pharmacies to obtain both accreditation and surety bonds
to simply sell demipost items such as diabetes testing supplies
to Medicare beneficiaries is basically overkill. Thousands of
pharmacies across the country, mostly small pharmacies, will
not be accredited at all or not be finished the accreditation
process by October 1, which will mean that they will not be
able to provide diabetes testing supplies for Medicare
beneficiaries. We applaud the 90 bipartisan members of the
House and 13 members of the Energy and Commerce Committee who
supported H.R. 616, the bill that was introduced by Congressman
Barry and Congressman Moran that would exempt pharmacies from
redundant and unnecessary accreditation requirements. We also
appreciate the work of Congressman Space in introducing H.R.
1970, which would exempt pharmacies from unnecessary surety
bonds. We ask that the provisions from these bills be included
in the chairman's mark. If there is willingness to exempt
pharmacies from these requirements, we ask that Congress
consider acting by October 1, which is the deadline for
providers to obtain accreditation and surety bonds.
Finally, I would make a few comments regarding the public
plan option. Under the House proposal, payment rates for
prescription drugs under the public plan proposal would be
negotiated by the Secretary. We would be very concerned giving
the Secretary authority to set payment rates for prescription
drugs without some basic guidance to how these rates should be
established and updated. We also ask that the language be
clarified such as the administration of any benefit under the
public plan would be accomplished by a pharmacy benefit
administrator as opposed to a pharmacy benefit manager. We
would prefer a model used in the Medicaid program or in the
Department of Defense Tri-Care program where the administrator
is used. Under this model, most, if not all, the negotiated
drug manufacturer rebates would be passed through to the public
program.
In conclusion, we look forward to working with Congress and
the Administration to reform the health care system and we look
forward to the opportunity to work with you to meet that end.
[The prepared statement of Mr. Roberts follows:]
Mr. Pallone. Thank you, Mr. Roberts.
Mr. Yarwood.
STATEMENT OF BRUCE YARWOOD
Mr. Yarwood. I should first of all say thank you for
including me in the distinguished panel. I mean, doctor,
doctor, doctor, doctor, pharmacy, and here is old Yarwood
sitting right in between them all. Thank you very much. I
appreciate being here.
As you know, I am Bruce Yarwood. I am president and CEO of
American Health Care Association and the National Center for
Assisted Living, which we represent about 11,000 facilities
across the country with a great cross-section of the
profession. We have big, we have small, we have rural, we have
urban, proprietary, non-proprietary. And I would be remiss if I
didn't say we look at ourselves as a pretty significant portion
of the economy right now. We are about 1.1 percent of the gross
domestic product when you kind of sort it all out.
Now, having said that, we have taken a look at the 800
pages and it is a significant bill, and I must admit one that
does not include long-term care reform. At the same time, it
includes a whole bunch of stuff that has impact on us. And let
me try to synthesize a little bit of the comments.
First, as we move forward and try to do a better job in
terms of quality, it is really important for us to have
economic stability, and one of the things we find in the bill
is we have three pretty big problems with it. First of all, the
bill has a provision that would institutionalize what the CMS
is doing to cut 3.3 percent out of our Medicare rate based on a
formulary mistake that was made by them 4 years ago. Secondly,
we are concerned about the discussion draft that will eliminate
a part of the market basket and so what we are looking at then
is not only a 3.3 percent cut in our rate coming from CMS but
then an additional cut coming from the committee that would
significantly take resources out in terms of our ability to
pay, and as you know, we are two-thirds to three-quarters or 75
percent labor based, and so a significant reduction in
reimbursement causes us a big problem in terms of our ability
to pay and keep staff.
Third, which is not your doing, but Medicare cuts are being
considered at the same time we are looking at what we call the
unfortunate reality of Medicaid underfunding. What we have
seen, the stimulus package was a help. However, in response to
the recession, we see 46 percent of the States are freezing or
cutting nursing home rates and that the 75 percent are not
keeping up with inflation. So in a short statement, what is
occurring is that we are looking down the barrel of a Medicare
cut and at the same we are looking across the country at
Medicaid rates either staying stable or falling in a period of
inflation and so we are feeling caught in an economic vise, if
you will.
Now, let me talk a little bit about some other stuff that
is I would say very positive. Regarding Part B, we applaud you
for the proposal to extend the therapy cap extension process
exception process. Second, I think in testimony earlier we
talked about Medicare re-hospitalization. We have a re-
hospitalization problem and we need to address that issue. We
think there are ways to do that. In a short statement, we find
that our re-hospitalization comes on day 2, 3 and 4 of
admission and typically they go back to the hospital because
they come on the weekend or things of that nature. So we think
we should continue work on that together. Third, we think that
we should be looking at the whole post-acute setting and trying
to integrate that much better than it is now and we have
numbers that would show that if we either on a pilot or
demonstration basis, we find that if we would integrate and pay
based on diagnosis, not on site, we can save multibillion
dollars ranging above $50 billion over the next 10 years, and
that simply stated is that we can take a knee or a hip that is
not an IRF but in a nursing home and do it for about half the
cost.
I would be remiss if I didn't respond a little bit to 100
pages of your bill that was addressed somewhat earlier by the
prior panel that talks about transparency in long-term care.
Very basically put, the question is that what we need to do is
take a lot better look at who owns places, how they are owned,
who makes the decisions. We have been in discussions with the
staff for about the last 18 months and frankly we support the
concept and the direction of the committee and we believe
firmly that by continuing to work together, the final
legislation that we can parse together, we can absolutely
support.
I would say there are a few specifics though that I would
be remiss if I didn't say that we have a problem with. First,
we have a difficult time with what a disclosable party, and in
the bill itself, for example, it mentions that we should be
disclosing our bankers' boards of directors. That is something
we don't have or can't get to. Secondly, we would suggest the
provisions that you are looking at be tailored to talk about
exactly who we want to disclose. We take a look at the bill and
we are in the position of disclosing people like who are
landscapers are, painters are and things of that nature that
don't have a significant amount so we think we can work that
out. Third, we heard a lot about compliance programs from the
Inspector General. We have no problem with compliance programs
but what we need is to tailor those based on the size of the
facility. A compliance program for Kindred Health Care, the
largest in the country, versus the compliance program for a 35-
bed facility in Oakland are two different things so we just
need to be sympathetic as to what those are.
Mr. Pallone. You are a minute over.
Mr. Yarwood. Let me say this. Thank you very much for
letting us be here. We certainly want to work together and
there are great things in the workforce area and the
transparency stuff. We are here to make it work for you.
[The prepared statement of Mr. Yarwood follows:]
Mr. Pallone. Thank you. Thanks a lot.
Ms. Fox.
STATEMENT OF ALISSA FOX
Ms. Fox. Thank you very much, Chairman Pallone, Ranking
Member Deal and other members of the committee. I really
appreciate the opportunity to be here today.
Blue Cross Blue Shield plans strongly support enactment of
health reform. We must rein in costs, improve quality, and
importantly we must cover everyone. Today the Blue system
provides coverage to more than 100 million people in every
community and every zip code in this country. For the past 2
years we have been supporting five key steps to reform our
system.
First, we believe Congress should encourage research on
what treatments work best by establishing a comparative
effectiveness research institute. We are very pleased the House
draft bill recognizes the importance of this key step. Second,
in order to attack rising costs, we must change the incentives
in the payment systems both private and in Medicare to promote
better care instead of just more services. The draft bill
includes some of the Medicare delivery system recommendations
we support. We also agree with provisions in the bill to help
build an adequate medical workforce to care for everyone in the
country. Third, consumers and providers should be empowered
with information and tools to make more-informed decisions.
Fourth, we need to promote health and wellness and prevention
and managed care for those with chronic illnesses. Finally, we
believe a combination of public and private coverage solutions
are needed to make sure everyone is covered. We support a new
individual responsibility program for all Americans to obtain
coverage along with subsidies to ensure coverage is affordable.
We also support expanding Medicaid to cover everyone in
poverty. We are also supporting major reforms in our own
industry including new federal rules to require insurers to
open the doors, accept everyone regardless of preexisting
conditions and eliminate the practice of varying premiums based
upon health status, and we also support a national system of
state exchanges to make it easier for individuals and small
employers to purchase coverage. I know there is a perception
that this is a new position for the insurance industry. It is
not for the Blue system. We had the same position in 1993.
We appreciate this opportunity to comment on the tri-
committee bill. We support the broad framework of the bill
which includes many of the critical steps we believe are
needed. However, we have very strong concerns that specific
provisions will have serious unintended consequence that will
undermine the committee's goals. Our chief concern is creation
of a new government-run health program. We believe a
government-run health program is unnecessary for reform and
will be very problematic for three reasons. First, many people
are likely to lose the private coverage they like and be
shifted into the government plan. This is because the
government plan will have many price advantages that the
private plans won't including paying much lower Medicare rates
than the private sector. This is an enormous advantage on its
own as Medicare rates are already 20 to 30 percent lower than
what we pay in the private side, and that is a national
average. I think here you heard Marshfield Clinic talk about
much huger variations in Wisconsin. But there are other
advantages in the bill as well. I will give you two examples.
Individuals in the government plan, they can only sue in
federal court for denied services. However, individuals in
private plans can sue in State court for punitive, compensatory
and other damages. In addition, private plans would have to
meet 1,800 separate State benefit and provider requirements
while the government plan would not. Second, the draft bill
would underpay providers in the government plan. This is likely
to lead to major access issues in the health care system such
as long waits for services. And third, the government plan
would undermine much-needed delivery system reforms that are
critical to controlling costs. We agree Medicare needs to be
reformed to reward high-quality care. We commend the committee
for including reforms to modernize Medicare. However, history
has shown the government can be slow to innovate and implement
changes through the complex legislative and regulatory
processes. The private sector, on the other hand, is free to
innovate, and let me just give you one example from our program
that is improving outcomes and lowering costs through our Blue
Distinction Centers of Excellence. Recent data shows that
readmission rates at our cardiac care centers around the
country have 26 to 37 percent lower readmission rates than
other hospitals.
In closing, I would like to emphasize the Blue system's
strong support for health care reform including major changes
in how insurers do business today. We believe the federal
government has a vital and expanded role to play in reform by
expanding Medicaid to cover everyone in poverty and enrolling
all the people that are now eligible for Medicaid coverage, by
reforming Medicare to pay for quality and assuring Medicare's
long-term solvency and setting strict new rules for insurers to
assure access to everyone regardless of their health. We are
committed to working with all of you to enact meaningful health
care reform this year. Thank you very much.
[The prepared statement of Ms. Fox follows:]
Mr. Pallone. Thank you, Ms. Fox, and now we will have
questions starting with me. Obviously I can't reach everyone so
I am going to direct my question--I will try to get in three
questions about primary care, Medicaid and DSH if I could, and
I am going to start with Dr. Epperly on the primary care
promotion issue.
We have obviously heard a lot of testimony about the
primary care shortages. We have heard that action on a single
front is not enough but that concerted action across the health
system is going to be required, and the discussion draft
reflects these calls for action and proposes major investments,
and I will list first increasing the rate paid by Medicaid for
primary care services, second, the primary care workforce
including increases for the National Health Service Corps and
scholarship and loan programs, third, payment increase in
Medicare and the public option for primary care practitioners
including an immediate 5 percent in payments and high-growth
allowances under a reformed physician fee schedule, fourth, an
additional payment incentive for primary care physicians in
health profession shortage areas, and finally, an expansion of
medical home payments and added flexibility for that model of
care. The draft also proposes a reform to graduate medical
education programs funded by Medicare and Medicaid. Two
questions. First, will these proposals help to reverse the
decline in interest in primary care among medical students, Dr.
Epperly?
Dr. Epperly. Absolutely.
Mr. Pallone. OK.
Dr. Epperly. Did you want me to expand on that?
Mr. Pallone. Well, let me give you the second one and then
you can talk. The second is, will the rate increases proposed
for primary care services in Medicaid and Medicare help to
address problems with access we have seen in those programs
over the past several years? So generally will you reverse the
decline among medical students, and secondly, what will it do
for access to Medicaid and Medicare?
Dr. Epperly. Thank you, Mr. Pallone. I would say to you
that the return to a primary care-based system in this country
is essential. If you will, it is foundational to building the
health care system of our future. To get primary care
physicians back into a position where they can integrate and
coordinate care, lower costs and increase quality, we must do
that. Right now, primary care is in crisis. A lot of that has
to do with the dysfunctional payment system. Primary care
practices are barely making it in regards to their margins, so
what we have to do in terms of the reform measures is, number
one, make this viable financially for physicians to choose
primary care.
Mr. Pallone. But tell me whether you think these proposals
that are in our draft discussion will accomplish that. Will we
get more medical students to go into primary care and what will
it mean for access to Medicare and Medicaid specifically with
this proposal before us?
Dr. Epperly. Right. So medical students now are opting not
to choose primary care because they can see that incomes can be
three to five times higher if they choose subspecialties so the
payment reform will help narrow that gap in disparity so that
they choose more to do primary care. The derivative effect of
that is that workforce will then be enhanced, access then
increases. What we must do in the system is not only coverage
people but we have got to have the right types of physicians
and the right communities to see them. So it is kind of
multifaceted, multilayered. We have got to fix payment, which
will increase workforce. Workforce will enhance access. That is
how it is all linked. What it saves America is cost in the long
run, increases affordability and access as a derivative.
Mr. Pallone. Do you believe that this discussion draft will
accomplish that?
Dr. Epperly. Yes.
Mr. Pallone. OK. Now, let me just ask my Medicaid and DSH
question of Dr. Gabow, if I can. Can you talk to us on
Medicaid, what will it mean to have Medicaid covering up to 133
percent of the federal poverty level, having subsidies that
help people access health care up to 400 percent and to have
individuals response to encourage all else to make sure that
their dependents have health insurance. So basically, you know,
the increase to the poverty level eligibility for Medicaid, the
subsidy in the health marketplace and the individual mandate.
That is a lot.
Dr. Gabow. Yes. Well, clearly, anything that expands
coverage, particularly for low-income, vulnerable people, will
reduce our $360 million of uninsured care. But as it relates to
Medicaid disproportionate share payment, I think the timing is
important. We would like to make sure that we see that the
patients actually who are eligible get enrolled and that they
are covered and that our uninsured costs go down before there
is any change in disproportionate share payments. So we applaud
your version of the draft bill regarding DSH. We know that many
patients who we hope to get enrolled are the most difficult to
enroll, for example, homeless for whom we did over $100 million
of care last year, the chronically mentally ill, illiteracy.
These patients have been difficult to enroll in Medicaid. So I
think expanding Medicaid is terrific. I don't know that
immediately it will reduce our need for other coverage.
Ultimately it should and I think we have seen in Massachusetts
that reduction of DSH at the front end has had negative effect
on the two principal safety-net institutions. So I think the
expansion of coverage that you are planning will reduce the
amount of uninsured care over time and we need to deal with
that sequentially as regards DSH.
Mr. Pallone. Thank you.
Mr. Deal.
Mr. Deal. Thank you.
I am going to ask for a yes or no answer from a couple of
you on this first question. We just heard the preceding panel
member who is chairman of MedPAC say that he felt that Medicare
reimbursements were adequate, and I would ask if you concur
with that. Dr. Williamson?
Dr. Williamson. No.
Mr. Deal. Dr. Ulrich?
Dr. Ulrich. No.
Mr. Deal. Dr. Wright?
Dr. Wright. No.
Mr. Deal. Dr. Epperly, I am going to ask you that question
in the context of the current reimbursements under Medicare,
not counting the bonuses that are proposed in this legislation.
Do you consider the current Medicare reimbursements to be
adequate?
Dr. Epperly. No, sir, I don't.
Mr. Deal. Have you, Dr. Epperly, as a result of that
inadequacy seen many of the members of your organization not
take Medicare patients?
Dr. Epperly. Yes, sir, I have.
Mr. Deal. Dr. Williamson, first of all, let me acknowledge
that he is the president of my Georgia Medical Association and
I am pleased to have him here. I made those statements
yesterday in your absence as we began these things yesterday.
Dr. Williamson, let me ask you what you think the impact would
be for the public option plan to adopt the Medicare
reimbursement plan as its model. How would that impact the
delivery of health care under the public option plan and also
as it then migrates, in my opinion, to the private insurance
market?
Dr. Williamson. I think it would have a very adverse impact
on access for patients and on the delivery of quality medical
care. Right now, access for Medicare patients I think is really
a house of cards. A lot of doctors are there simply by inertia,
and surveys that have been done in Georgia amongst practicing
physicians show that a large percentage of doctors plan on
dropping Medicare in the near future, and I think that is just
basically a train coming down the track, and I think any system
that is modeled on that premise is really going to fail in the
short run, not the long run.
Mr. Deal. The doctor-patient relationship has been really
the cornerstone of the importance of our health care delivery
system that makes it work. I would ask you, Dr. Williamson, in
light of this draft legislation, in particular the comparative
effectiveness portion of it, how do you see that potentially
impacting that doctor-patient relationship?
Dr. Williamson. I think it is going to push us farther and
farther away from it, which is really I think the opposite
direction that we need to be going. I have serious concerns
that bundling payments is going to drive a wedge between
patients and their physicians. I know that in some clinics that
we have looked at as examples, that type of environment works
but those are rare and I think they are different than the
general practice of medicine across the country and they have a
different patient population in some cases. I have grave
concerns about comparative effectiveness as well. I think this
would essentially give the federal government the ability to
practice medicine, and I know that is a strong statement but
let me say this. Scientific research is not new. It has always
been done and it has always been the basis of medical learning
and medical treatment but the art of medicine is taking this
science, these large studies and applying it to an individual
patient. When you try to treat the individual from the 30,000-
foot level, it is very difficult, and I am afraid that this
would drastically diminish our choice of options for our
patients. I can tell you that I am well aware as a neurologist
of the importance of the last 20 years in pharmaceutical
research. I have a lot of options for my patients now that
weren't available before. And some of these things are found
quite by accident, and we take them and we apply them and they
may be off-label drugs and that sort of thing and they may even
be therapies that have not been shown to work in large
randomized controlled trials that take many years and millions
of dollars to accomplish, and if we are limited by that we are
going to have a lot of therapies taken off the table for our
patients. And I will also tell you that I think it is a bit of
a conflict of interest to have the government deciding what is
valuable to patients because they are serving as the largest
payer. I think that the physician and the patient ought to be
able to decide in the context of private contracting what is
value and what is appropriate care.
Mr. Deal. Thank you.
Mr. Roberts, you have alluded to the issue with AMP. As you
know earlier this year, I introduced an amendment that I think
was more appropriately dealing with this federal upper limit
for reimbursement of going to 300 percent of the volume
weighted average and also included a minimum prescribing fee
for pharmacists, or dispensing fee, I should say, for
pharmacists. Which of those options do you prefer, what I
offered earlier this year versus what is in this bill?
Mr. Roberts. Well, I think, Congressman Deal, that your--
the challenge that we have is that we really don't know what
this benchmark is so there are changes made in the current
version that redefine the benchmark in a way that will make it
much better than what it is but the reality of what you are
proposing and having a minimum dispensing fee I think is
absolutely critical. The challenge that we have is that, you
know, the benchmark is just meant to get us to even, to break
even on the cost of the product. But the reality is, the States
set the dispensing fees and the dispensing fees are all over
the place from one State to another. And so unless the federal
government takes some action to say, you know, that our costs
of dispensing and a small profit are available to the pharmacy,
it is going to be very difficult to have pharmacies remain
viable.
Mr. Deal. Mr. Chairman, I take that as an endorsement of my
approach and I will yield back.
Mr. Pallone. Thank you.
Our vice chair, Mrs. Capps.
Mrs. Capps. Thank you, Mr. Chairman, and I want to thank
again all of the panelists for appearing today. It was a very
interesting presentation that each of you made, a lot of
linking, which I think is really important for us to have a
part of this discussion.
Of course, Dr. White, I want to single you out and thank
you for being here today to represent the voice of America's
nurses who are so important every day in delivery of health
care but also in understanding what this crisis is all about. I
was very pleased to hear that the American Nurses Association
has endorsed a public plan option. I also support this option
and the one that we are developing in this legislation and want
to hear your perspective a bit more as a nurse on why this is
so essential because it is one of the crucial parts of the
choice that people are going to make whether or not they
support this reform legislation. I will ask you to do it within
this framework. I often speak about the role that nurses have
not only as providers of health care and delivering service but
we are also patient advocates, and would you talk about maybe
the reason you endorse as ANA the public plan option and why
you feel it is best for patients and perhaps are encouraging
patients to advocate for this as well as the choice, to have
this choice made available?
Ms. White. Thank you, Mrs. Capps. I am happy to answer that
question because I do think it is extremely important, the
American Nurses Association endorsing a public option plan
because, as you said, our role is direct care. We are there 24/
7, 24 hours a day, 7 days a week, 365, you know, depending on
how long a patient is in there. We don't like to think it is
that long. But we see patients and families and how they are
dealing with the catastrophic impact of illness whether it is
an episode, a single, acute that affects the patient and their
family or whether it is a long-term kind of chronic condition
that, you know, includes, you know, many admissions or many
returns. And not being able to have a choice of insurance I
think is key and unfortunately we have seen employer plans
rising, the costs of those to patients rising greater than
wages over the last several years, and so patients are looking
for other ways of paying for their health care insurance and
sometimes those plans may not be exactly what they think they
are or they may have surprises so certainly a public plan that
includes some type of defined or essential benefit package that
the patient, the family could be sure will be there when they
need it I think it is extremely important.
Mrs. Capps. Let me follow this by another aspect of our
reform legislation. One of the ways--Dr. Epperly mentioned this
but he wasn't the only one on the panel, which was interesting,
who is stressing now on primary care as one of the ways we can
lower health costs and the ways he discussed on how we can
improve our primary care workforce and there are many advanced
practice nurses, nurse practitioners and others who can and do
serve as primary care providers and this bill ensures that
nurse practitioners can be the lead providers in medical home
models and increases reimbursements, for example, for certified
nurse midwives. Can you discuss this a little bit? You
mentioned one bill that I coauthored on nurse-managed clinics
but that is not the only avenue, and you might mention a few
others for the record.
Ms. White. Absolutely. Obviously the nurse-managed clinics
is an extremely important way for many vulnerable populations,
inner city, rural areas that get primary care and other--even
other follow-up care in those areas, and as far as nurse
practitioners, as our advance practice nurses functioning
within the primary care medical home and being able to lead
those teams, we have seen in the demonstration projects
throughout the country that nurse practitioners have been
paneled. They do function to their scope of practice in the
different states and the different demonstration projects and
have been able to lead their panel of patients and provide that
primary care. I think it is extremely important when we are
talking about the shortage of primary care that all providers
be able to be used to the fullest extent of their scope that
they can provide the care.
Mrs. Capps. Thank you very much. I will yield back.
Mr. Pallone. The gentleman from Indiana, Mr. Buyer.
Mr. Buyer. The challenge we have with a panel this large is
to try to get our questions in, so if you can take out a pen
and pad, I am going to rip through some questions. They won't
apply to all of you. First I am going to go to Mr. Yarwood.
When you stated the provisions in the draft bill would cut
Medicare reimbursement rates to skilled nursing facilities by
$1.05 billion in fiscal year 2010 alone and ultimately $18
billion from skilled nursing care over 10 years, I would like
to know whether you have calculated the number of jobs that
would be lost due to these cuts.
The next question I have would go to Dr. Ulrich. The draft
bill provides that physicians who treat both Medicare and the
public plan, patients would receive Medicare plus 5 percent for
treating their public plan, really the government plan,
patients for the first 3 years. What is the, quote, magic
number, end quote, regarding the percent of Medicare that it
would take to keep you whole? Is it Medicare plus 10, plus 12,
plus 13, plus 14?
The other question I have for Blue Cross Blue Shield, what
are the advantages that the government plan would have over the
private insurers? What about State premium taxes, State
solvency regulations, State benefit mandate requirements?
And the last question I have, I am going to go right down
the line with all of you. Medical liability reform that
restricts excess compensatory awards, limits on punitive
damages and attorney fees, should this be part of the public
plan option? Let us go right down the line. Dr. Epperly?
Dr. Epperly. Yes, we believe that----
Mr. Buyer. Dr. Williamson?
Dr. Williamson. Absolutely.
Mr. Buyer. Dr. Ulrich?
Dr. Ulrich. Yes.
Mr. Buyer. Dr. Wright?
Dr. Wright. Yes.
Mr. Buyer. Dr. White?
Ms. White. Yes.
Dr. Gabow. Yes.
Mr. Hawkins. We have FTCA coverage so I can't really
comment.
Mr. Buyer. All right. One equivocator.
Mr. Roberts. Yes.
Mr. Hawkins. Yes.
Ms. Fox. Yes.
Mr. Buyer. All but one except Mr. Hawkins testified in the
affirmative that it should be included. The other is, would
everyone on this panel agree that individual liberty is a
cornerstone of our society as an inalienable right? Would
everyone on this panel agree? OK. Mr. Hawkins, are you in?
Mr. Hawkins. Yes, I am in.
Mr. Buyer. He is in. All right. Awesome. Now, an individual
right, if in this scheme we are moving people into the
government plan, what about an individual's right to contract
with a physician of their choice? Should an individual in
America have the right to contract with an individual doctor of
their choice? Yes or no. Dr. Epperly?
Dr. Epperly. Yes.
Mr. Buyer. Oh, let me--without penalty from their
government. Dr. Epperly?
Dr. Epperly. Yes.
Mr. Buyer. Dr. Williamson?
Dr. Williamson. Yes.
Dr. Ulrich. Yes.
Dr. Wright. Yes.
Ms. White. Individual provider, yes.
Mr. Buyer. Thatta girl.
Dr. Gabow. Yes.
Mr. Hawkins. With their own money, yes.
Mr. Buyer. Thatta boy.
Mr. Roberts. Yes.
Mr. Hawkins. Yes.
Mr. Yarwood. Yes.
Ms. Fox. Yes.
Mr. Buyer. We are on a roll. Now, does everyone agree that
in the capital economic system that we have, even though we may
have a public option plan, that the marketplace should be able
to create some type of an instrument that would be a
supplement, a potential medical insurance supplement plan?
Should that be some type of an option that the marketplace
could create? Dr. Epperly?
Dr. Epperly. Yes.
Dr. Williamson. Yes.
Dr. Ulrich. Yes.
Dr. Wright. Yes.
Ms. White. I am not sure.
Mr. Buyer. OK. Dr. White is an unsure.
Dr. Gabow. No.
Mr. Buyer. A no.
Mr. Hawkins. I am not sure I understand----
Mr. Buyer. I am not sure.
Mr. Roberts. I am not sure I do either.
Mr. Buyer. Two I am not----
Mr. Yarwood. I am number three not sure.
Ms. Fox. Well, we are hoping that there is no public plan.
Mr. Buyer. Pardon?
Ms. Fox. We are hopeful there will be no public plan in the
program.
Mr. Buyer. All right. But if there is a public plan, should
individuals in the marketplace be able to create supplemental
coverage?
Ms. Fox. Yes.
Mr. Buyer. Yes?
Ms. Fox. Yes, like Medicare.
Mr. Buyer. All right. Thank you. Now I will rest and allow
those individuals to answer the questions that I had asked.
Dr. Ulrich. The answer is Medicare plus 100, and I can
expound as to why if you would prefer. I think in my testimony
I cited the fact that we currently in Wisconsin from the
private sector get anywhere from 180 to 280 percent of Medicare
in payment. Medicine is changing, and this is what is really
interesting, is that we have gone from kind of being a cottage
industry to now much more high tech. Our costs are very
different than what Medicare allocates to us now. We now
employ, for example, systems engineers. Why? Trying to
understand efficiency of work flow. We also in our clinic and
others as well employ many people in information technology. We
developed our own electronic medical record. We have close to
350 employees now, software engineers, et cetera. Our cost
structure has shifted dramatically from what the traditional
concept of what medical practice is, you know, a nurse
practitioner, physician, a nurse, a technician, et cetera, and
so the costs keep changing. The other thing I would ask this
committee to keep in mind is that medicine as an entity is an
ever-evolving one in the sense that we have come from----
Mrs. Christensen [presiding]. Dr. Ulrich, could you----
Dr. Ulrich. Yes?
Mrs. Christensen. We are way over time. Could you wrap up
your response, please?
Dr. Ulrich. I will just stop there, if my initial answer
satisfied you.
Mr. Buyer. Mr. Yarwood, do you have an answer?
Mr. Yarwood. Thirty thousand jobs.
Mr. Buyer. Thirty thousand jobs would be lost?
Mr. Yarwood. Over 10 years, yes.
Mrs. Christensen. Thank you. The gentleman's time has
expired. The chair now recognizes Ms. Castor for 5 minutes.
Ms. Castor. Thank you, Madam Chair, very much, and I would
like to return to the workforce issues.
This bill rightfully targets workforce incentives because
we must bolster the primary care workforce especially. Fifty
years ago, half of the doctors in America practiced family
medicine and pediatrics. Today, 63 percent are specialists and
only 37 percent are family doctors, and it is those family
doctors and the nurses on the front lines and the pediatricians
that really help us contain costs over time. I do not know what
I would do if I did not have the ability to call the nurse in
my daughter's pediatrician's office and ask a question and they
have had a consistent medical home over time and yet millions
of American families do not have that type of medical home and
relationship with their primary care providers.
So I think our bill does take important steps to bolster
primary care workforce but one place that I think it falls
short, and I would be very interested in your opinions, is that
we are not increasing the residency slots for our medical
school graduates, these doctors in training. The discussion
draft provides a redistribution of unused residency slots to
emphasize primary care, which is a good first step because we
are going to hopefully send them to community health centers
and other hospitals in need and other communities in need. But
we have got to enact the second step, the complementary step,
to even out the residency slots because, for example, in my
home State of Florida, the fourth largest State in the country,
we rank 44th in the number of residency slots and most folks do
not understand that those slots are governed by an old,
outdated, arbitrary formula that assigned distribution many
years ago and has not changed, even though the population of
the country has shifted. So I would like to know, do you
agree--Dr. Epperly, you might be the one most in tune but I
think many of you would have an opinion on that. Do you agree
we need to alter the residency in toto? And then are there
sections in the bill--the sections in the bill related to
scholarships and loan repayments, are they adequate? Are we
doing enough?
Dr. Epperly. Yes, ma'am. Can I expand for just a second?
Ms. Castor. Yes.
Dr. Epperly. In my day job, I am a residency program
director of a family medicine program in Boise, Idaho, and you
are right on. In fact, the workforce numbers are about 70/30
subspecialists to generalists. We must increase residency
training, especially for primary care, and what are we trying
to build, what system are we after. We think there should be
some regulation of what kind of physicians medical schools are
producing. It needs to meet community needs and so we are in
agreement with some sort of workforce policy center to kind of
take a look at this and what it is we are trying to accomplish.
I totally agree with you in terms of scholarships and loan
repayment. Scholarships on the front end will be more effective
than loan repayment on the back end because it helps shape the
types of physicians you are trying to train.
Ms. Castor. Does anyone else want to comment quickly? OK.
Then I will move on.
Ms. Fox, thank you so much. It is great to hear that Blue
Cross is supportive of health care reform. What I wanted to
share with you, I had a great meeting last week with the
Florida CEO, president and CEO of Blue Cross, and you all are a
very important provider in the State of Florida. You have about
32 percent of the market share in the State of Florida. Four
million Floridians are enrolled in Blue Cross and depend on you
all every day. It was interesting that the CEO from Florida had
a slightly different take and spoke much more favorably of the
public option because while Blue Cross in Florida has 30
percent of the market share and over 4 million folks enrolled,
you know, in Florida we have 5.8 million people who do not have
access to health insurance because it is so expensive, and I
think that in the discussion we had, he saw it as an
opportunity, that you all are so effective that you wouldn't
have any trouble competing against a startup public option, and
I thought we had a great discussion and exchange and I was
heartened to hear that maybe it is not--maybe while big Blue
Cross has a certain position, the folks on the ground in my
State are not daunted by the challenge ahead.
Ms. Fox. Well, I would respond that I think people are
looking at, can you create a level playing field and I think it
is very difficult to imagine how you can. I mean, I look at the
House draft bill, I just see huge advantages for the government
plan ranging from, you know, big advantages in the payment
levels to lawsuits to covering different--the government plan
would cover a lot fewer benefits than private plans would be
required to do. There is just a long list. For example, if the
government plan didn't estimate their premiums correctly, would
the government step and----
Ms. Castor. But where do these 5, almost 6 million
residents of my State go now? How do they--we can't afford--
America can't pay for all of them to go into subsidized
Medicaid. We have got to provide a level playing field and real
opportunity for them to access affordable care.
Ms. Fox. We agree we need to cover everyone and we are
recommending covering everyone in poverty under Medicaid and
then above that having subsidies as you do in your bill for
private insurance to help people afford coverage. We think that
is absolutely critical. You know, I have been doing health care
issues for over 25 years, and it used to be that everybody
believed that if you have individual mandate, employer mandate,
alliances, insurance reforms, that really would cover everyone.
It has only been the past year----
Mrs. Christensen. Ms. Fox.
Ms. Fox. --we talked about a public plan. We think it is
totally unnecessary and very problematic.
Mrs. Christensen. Thank you. The gentlelady's time has
expired. I now recognize Mr. Burgess for 5 minutes.
Mr. Burgess. Thank you, Madam Chairman.
Ms. Fox, let us continue on that and maybe if I could, I
think Mr. Buyer was asking a question or you were answering a
question when time ran out and maybe we could just get the
answer to the question that Mr. Buyer posed about the
advantages of a public plan would have over private insurance
in premium taxes, State solvency regulations, State benefit
mandates.
Ms. Fox. Yes. I mean, private plans have to pay a wide
range of premium taxes, assessments, federal taxes. The
government would be exempt from that. We have actually prepared
a little chart that we would love to submit that actually walks
through what are the rules private plans have to abide by.
Mr. Burgess. If you will suspend for a moment, I would ask
unanimous consent that that chart be made available to the
members and made part of the record.
Ms. Fox. And raises questions, would the public plan abide
by that, and when we look at the draft bill, we see there is a
huge unlevel playing field where the government would have so
many advantages that you could see why people will estimate
that millions of people will leave private coverage that they
like today and go into the public plan.
Mr. Burgess. OK. Great. I appreciate that answer very much.
Dr. Ulrich, let me just address you for a second. I really
appreciate--well, I appreciate all of you being here. I know
that many of you are taking time off of your private individual
practices and it is with great expense and inconvenience to
your families, and we have had a long day and appreciate your
willingness to be part of the panel here. The physician group
practice demonstration project that you referenced at your
clinic, I am somewhat familiar with that. I think that does
hold a lot of promise. In fact, you may have heard me question
Mr. Hackbarth from MedPAC about the feasibility of using the
Federal Tort Claims Act for Medicare providers under a
physician group practice model, the accountable care model if
you comport with all of the requirements, disease management,
care coordination, the IT, the e-prescribing, if you do all of
those things, getting some relief from liability under the
Federal Tort Claims Act. Do you think that is--is that a
reasonable thing to look at?
Dr. Ulrich. Absolutely.
Mr. Burgess. Thank you. I appreciate your brevity. Let me
ask you this, since we are in agreement. One of the things
about the physician group practice demonstration project was
you were going to actually benefit financially by doing things
better, faster, cheaper, smarter, and in fact there are some
great lessons for us that have come out of that, those
management techniques. But there is a barrier to entry. Do you
think the bar to that has been set too high? You have got to
make a lot of initial investment when you get into that and
then your return for your doctors, for the people in your
practice is a little slow in coming. Is that not correct?
Dr. Ulrich. Dr. Burgess, you show keen insight here into
this, and if I can just take a second to explain this?
Mr. Burgess. Sure.
Dr. Ulrich. As part of the group demonstration project,
what we are finding is that it is not just trying to strive for
quality outcomes. There are operational changes that you need
to make in how you deliver care. For example, we have
consolidated all of our anticoagulation patients into one
entity. Rather than being in each physician's practice, we now
share that coordinated care under one entity, and what we found
is that our capacity to have bleeding times, for example, are
much better within the therapeutic range. We also are
consolidating care of congestive heart failure rather than
being in a particular individual physician's office, whether it
be a cardiologist or a primary care physician into a congestive
heart failure clinic. Physicians craft the criteria we want.
Our nurses watch those. We are proactive in working with the
patients. The problem with doing all that is no one pays us,
you know, to undertake those operational changes at first. What
we are hoping and why we partnered with the federal government
through the CMS PGP project is that we are trying to prove that
yes, by undertaking these, ultimately there are cost savings.
Lastly, I would just make the point that we are just beginning
the process of understanding the cost of care in chronic
illness over time. We understand what the costs are to provide
care on an individual visit but not over time.
Mr. Burgess. One of the things that concerns me about our
approach to things and what little I know of the great
successes you have shown, for example, like bringing a
hospitalized CHF patient back to the doctor's office within 5
days, not just you make an appointment in 2 weeks, you get that
patient back to the office in 5 days and you really reduce the
re-hospitalization rate significantly and yet you have got CMS
now writing a rule that says well, if that is the case and you
can do that, we are just going to pay for one hospitalization
every 30 days and that will cut our costs down. It is
absolutely backward way of looking at what the data that you
all are generating, and instead of building on your successes
in fact we are going to make things punitive then for Dr.
Williamson in Georgia who may have an entirely different type
of practice. Again, that is one of the things that concerns me
about this. Do you have a concept? You mentioned about the rate
of reimbursement on the Medicare side. What would that
multiplier have to be in your accountable care organization or
physician group practice? What would that Medicare multiplier
have to be in a public plan?
Dr. Ulrich. We would say Medicare plus 100.
Mr. Burgess. Medicare plus 100 percent?
Dr. Ulrich. Yes.
Mr. Burgess. So double what the Medicare rates are?
Dr. Ulrich. Exactly.
Mr. Burgess. That is fairly significant.
Dr. Ulrich. That is significant, but it is also a realistic
significantly----
Mr. Burgess. And do you have data to back that up that you
can share with the committee?
Dr. Ulrich. I would be happy to provide information to you
in written form relative to that, yes.
Mr. Burgess. That would be tremendous.
Dr. Williamson, in words of one syllable, we heard Glenn
Hackbarth say that no doctors are not seeing Medicare patients
now because of the reimbursement rate. Is that your sense? Do
you think doctors are restricting their practice because of the
reimbursement rates in Medicare?
Dr. Williamson. Yes.
Mr. Burgess. Thank you.
Mrs. Christensen. Thank you. The gentleman's time has
expired. I now recognize myself for 5 minutes.
Let me just welcome everyone. It is great to have such a
diverse panel of witnesses here and we thank you for all of the
good work that all of you have been doing in this dysfunctional
system that really doesn't always give you the kind of support
that you need, and I want to particularly welcome Dr. Epperly,
president of the American Academy of Family Physicians. I want
to direct my first question to you, Dr. Epperly. In meetings,
for example, with the tri-caucus, we are on record as
supporting a public plan, and I do support a public plan but
also a public plan that is linked to Medicare. I have raised
concerns about that in our meetings and I would like you to
elaborate on your concerns about linking the public plan to
Medicare.
Dr. Epperly. Yes, ma'am. Thank you. First, we are
definitely in support of a public plan option but we do have a
couple caveats. One of them is linked to Medicare, just as you
are saying. We recognize there is going to be a huge
infrastructure cost in getting this thing up and running so our
position is that it can be the Medicare rate for the first 2
years but with a date certain then to elevate that. More of
just Medicare rates won't cut it for the physicians across
America. It is already a problem. But we recognize that there
is going to be a transition period. We recognize that
flexibility. So what we would say is yes, we are in favor of a
public plan. Medicare rates could be what it would be aimed at
for the first 2 years but by a date certain that has to
elevate.
Mrs. Christensen. Thank you. And I guess I can't ask
everyone this question, so Dr. Epperly, Dr. Gabow and Mr.
Hawkins, you have heard reference to bundling of payments by
Mr. Hackbarth of MedPAC and I wanted to know if you are in
support of the proposal to bundle payments to providers. Dr.
Epperly?
Dr. Epperly. Yes, ma'am. We are in favor of bundling in
terms of a team approach. We do have concerns that we would
want to make sure that primary care and the patient-centered
medical home is a very important part of that bundling was not
denigrated nor belittled into its importance. For instance,
with the heart failure example, we are talking about heart
failure patients and readmissions. Let us prevent it in the
first place. So with a bundling model, which looks at already
this has occurred, it is in the hospital, how do we pay for
this, why don't we take a better approach and look at what it
takes to prevent that in the first place. So therefore the
patient-centered medical home, primary care is critical in
that. Bundling could be a very interesting option if the
primary care is reincorporated into that in a big way.
Mrs. Christensen. Dr. Gabow?
Dr. Gabow. As an integrated system that deploys physicians,
we favor moving away from fee for service to a more global
payment, and we would favor the ultimate bundle, capitation,
and think that capitation or more global bundling would have
less administrative costs than if you bundle small things. I
would encourage it to be global but we favor it given a big,
integrated system.
Mr. Hawkins. Congresswoman, or----
Mrs. Christensen. Would it affect----
Mr. Hawkins. Madam Chair----
Mrs. Christensen. Would it affect community health centers?
Mr. Hawkins. Really, there are some important points to
make here. On today's panel, we are very fortunate to be joined
by Dr. Epperly, who runs a family medicine residency program,
Dr. Ulrich, who runs the Marshfield Clinic, and Dr. Gabow, who
runs Denver Health, unique and especially with the last two,
fully integrated health care systems. What may not be known
generally but should be is that all three are community health
centers or have community health centers embedded in them. As
such, two examples, Denver Health and Marshfield Clinic, are
good examples of integrated health systems that include
community health centers, but I am sure, as Dr. Gabow and Dr.
Ulrich would agree, the primary care component, the very issue
that Dr. Epperly expressed concern, appropriate concern over,
is identified and, I am not going to say separate but it is
able to function on a sort of co-equal basis with the specialty
and inpatient care components of their institutions. To the
extent that that is done, I think that is what Dr. Epperly was
relating to when he said primary care needs to be recognized
and appropriately integrated. We would agree. The notion of
integrated care systems, accountable care organizations and the
like and rewarding results is something that we all absolutely
support. What should not be lost, however, in the integration
of care, the vertical integration of care across primary,
secondary, tertiary care is the small ambulatory care practice,
be it independent practice, private practice physicians, health
centers or other forms of ambulatory care within the context of
a large, multilevel institution like Denver Health, and I am
sure Dr. Gabow would agree with that.
Mrs. Christensen. Thank you. To be a good example, my time
is up but I want to also without objection accept the chart
from Blue Cross Blue Shield into the record that was brought to
us by Dr. Burgess.
[The information appears at the conclusion of the hearing.]
Mrs. Christensen. The Chair now recognizes Dr. Gingrey for
5 minutes.
Mr. Gingrey. Madam Chair, thank you so much. I want to
direct my first questioning to my colleague from Georgia,
Gainesville, Georgia, and the president of the Medical
Association of Georgia. Glad to see you, Dr. Williamson. And I
have a series of questions that I would like to ask you. First
off, do you support a government-run plan?
Dr. Williamson. No, the Medical Association of Georgia does
not support a public option or a government-run plan in
addition to the public plans that already exist, Medicare and
Medicaid.
Mr. Gingrey. Right. We are talking about the government
option plan that would be competing with the private insurance
plans that----
Dr. Williamson. Right. We do not support a public option.
Mr. Gingrey. What would a government-run health plan that I
just described do to your ability and those of your colleagues
to treat your patients? What do you fear the most about that
type of a government-run option?
Dr. Williamson. My biggest concern is that it like Medicare
will become the only option, and I think over time I think the
plan as it is set up in the discussion draft already has the
framework for that, for basically all private plans to have to
conform to certain rules over time, and my fear, and I think it
is a very real concern, is that over time other plans will
disappear and the public option will become the only option and
we will be left with a single-payer system which I think if you
look at what has happened across the planet, single-payer
systems basically save money by rationing care and I see that
as an inevitable consequence of the creation of a public
option, no matter how benign it looks at first glance.
Mr. Gingrey. Well, that was going to be my next question.
You pretty much answered my question, which would be, Dr.
Williamson, do you support a government-run health care system
with the ability to ration care based on cost?
Dr. Williamson. I absolutely do not support that. I think
that care decisions should be made on an individual basis when
the patient sits down in the physician's office and I don't
think that the government can substitute for the training that
a physician has and the opportunity that a physician has to
look the patient in the eye and decide what that patient needs.
Mr. Gingrey. Let us see, I am going to skip over number
four. My fifth question, fourth actually, we have heard
testimony in this committee recently regarding the
Massachusetts health care system and the fact that those with
public health insurance in the State are twice as likely as
those who choose private health insurance to be turned away
from a desired physician. As a physician, practicing physician,
what are your thoughts on the reasons behind that kind of
disparity in access between a public and a private insurance
plan?
Dr. Williamson. Well, public plans in general, and I am
speaking in general now, are associated with quite a lot of
paperwork. They are associated with the hand of government and,
you know, right now in Georgia we are looking at these recovery
auditor contractors that are moving across the Nation and
coming back and recouping money, saying that you coded
something wrong 20 years ago or 10 years ago and coming after
those dollars. These sorts of things that the federal
government has the power to do makes dealing with them as a
payer a very daunting prospect, and traditionally, government
payers have been at the bottom of the barrel in terms of
covering costs and so physicians feel like they can't deliver
to patients what they have been trained to do and the downsides
associated with the government as a payer are daunting, and,
you know, I recently had the opportunity to go to the AMA and
one of my colleagues from Massachusetts stood and spoke loudly
in support of a national public option, but I believe that the
folks from Massachusetts probably want a public option
nationally so they don't have to pay for their own anymore.
Mr. Gingrey. Well, Doctor, I appreciated that response and
the reason I asked you the question is because what we are
talking about here is something very, very similar to the
Massachusetts model, and we have even heard suggestions from
the majority that it may be that physicians who are treating
people within this exchange would absolutely have to accept the
public option plan or they would be ruled ineligible to
participate in Medicare or Medicaid. So they would have their
arm twisted behind their back and have no choice, which is
pretty frightening.
I have got just a little bit of time left and I wanted to
go to Dr. Ulrich and also Dr. Gabow if we have a chance. If
time permits, Madam Chair, I hope you will let me get this in.
If health reform were to include a requirement that all
Americans purchase health insurance, do you think that
hospitals would need continued federal funding to offset cases
of uncompensated or charity care and why? And basically I am
talking about DSH hospitals and the suggestion that we are
going to save money by eliminating all DSH payments when we
pass this bill.
Dr. Ulrich. Well, my sense is, the answer to that is yes,
you would still need to have some supplemental dollars rolling
in, simply because the reality is that there still are things
as bad debt, you know, people who need care get it and then
can't pay for it because of competing priorities of their own
pocketbook and plus the fact that, you know, we really haven't
gotten to the point of having fair practice expense
accountability within the remunerative system yet and that is
absolutely critical to any kind of a public plan. If we are
going to go that way, then we have to have fair practice
expenses covered before we can go forward.
Mr. Gingrey. That would be a pretty painful pay-for for
your----
Dr. Ulrich. That is correct.
Mr. Gingrey. Dr. Gabow?
Mr. Gabow. My understanding, Congressman, is that this bill
does not cut disproportionate share payments and I think that
that will be necessary to be sustained at least in the
foreseeable future because we know that many of the patients
that we serve, the homeless, the chronically mentally ill, are
traditionally difficult to enroll and so I think if we got to
full coverage, certainly we may be able to decrease it but I
doubt that it will ever go away. So we support the preservation
of DSH as outlined in the draft bill.
Mr. Gingrey. You support the elimination of DSH payment? Is
that what you said?
Dr. Gabow. We support the maintenance of DSH payments----
Mr. Gingrey. Oh, absolutely, as I expected you would, Dr.
Gabow, and as Dr. Ulrich and hospitals all across the 11th
Congressional district of Georgia support the continuation of
those DSH payments. Thank you for your patience, Madam Chair. I
yield back.
Mrs. Christensen. Thank you. The Chair now recognizes
Congresswoman Baldwin for 5 minutes.
Ms. Baldwin. Thank you, Madam Chairwoman.
I want to welcome a fellow Wisconsinite, Dr. Ulrich. I am
pleased to have you on the panel. I wanted to probe into an
area--I stepped out for a little while so I don't know if
anyone else has raised this, but in your testimony on page 7,
you talk a little bit about care issues at the end of life and
make some recommendations, and it is one of those very
challenging topics because we certainly hear from much research
that much of our health care dollar goes to treat people at
that stage of their lives. But that is one thing much more
disturbingly that that often doesn't align with the wishes of
the person being treated. Could you elaborate a little bit more
about both your recommendations to this committee in that arena
but also the practices at the Marshfield Clinic, what you have
implemented in this regard?
Dr. Ulrich. Yes. Thank you, Congresswoman. I appreciate the
question. At Marshfield Clinic, we do have in conjunction with
St. Joseph's Hospital, who is our hospital partner, developed
palliative care. We have palliative care fellowships where we
train young physicians who are interested in that. We work with
families, the patient, obviously, et cetera, really try to do
two things. One, there is a humanistic process that occurs
under palliative care and that is taking care of people in
comfortable surroundings in their last few weeks or days of
life, and that really is a throwback, if you will, to the way
medicine used to be practiced before we were very fancy with
technology, et cetera, and it is not something that we should
ever forget. It is something that we need to continue. So we
are committed to doing that and will, and I think most medical
organizations throughout the country would be in sync with that
kind of concept.
The question you raise about the cost of care at the end of
life is obviously an important one, and if you think about the
cost of medical care in our country, there are really two main
things we need to understand. One, as you point out, the costs
escalate rather dramatically as life is ebbing away from us
because it is an emotional decision for families and patients
to keep mom or dad or grandma or grandpa alive for a little
while longer, et cetera. It is very difficult for families to
say it is time to say goodbye to someone. So we continue then
to provide medical care under those very difficult
circumstances. There is a cost to providing that care. The
other thing that I would like the subcommittee to understand is
that not all costs within the system are the same so that we
know from the Commonwealth Fund, for example, that really it is
only about 20 percent of patients that are costing about 75 to
80 percent of care in this country so that if we can manage
these chronic illnesses and in particular patients who have
more than one or two chronic illnesses concomitantly, that is
where the cost savings will come as we get better in managing
folks with complicated chronic illnesses who concurrently are
suffering from several of them at the same time.
Ms. Baldwin. Your testimony specifically points to things
that we could do earlier in life to talk about having people
think about advanced directives or other documents. I would
offer you to elaborate on that, but also I see some other
nodding heads and I would open this up to any of the panelists
who would like to make a contribution on this point.
Dr. Epperly. Thank you. What Dr. Ulrich just described is
the value of primary care. It is having that relationship of
trust with people over time in which you can have that type of
dialog, and I would say that those sorts of decisions are so
important, so critical to the family as a whole and many of
those decisions can take place outside of a hospital in terms
of where those final days and weeks are. In fact, I would
submit that most people would like to have a very dignified
death in the place where they can be surrounded by most of
their loved ones. And so again, we return right squarely back
to what primary care brings to the system. It is what Dr.
Ulrich said. It used to be part of medicine. That is kind of
gone now. We need to re-create that kind of system. It is in
that system that savings are made, quality goes up, cost goes
down.
Ms. Baldwin. Please, Dr. Wright.
Dr. Wright. Yes. I just would like to agree that what needs
to take place and is often missing is the conversation, which
begins with the relationship. So I completely agree and would
support recognition of the value of the cognitive services, not
to say that folks who do procedures for a living are not
thinking them, they certainly are, but the importance--I have
seen it over and over in my practice that while someone does
indeed benefit from a procedure, what is wrapped around that
procedure, the informed consent process, the education about
the disease process and right now the aftercare to try to
prevent that from ever happening again is incredibly valuable
to that individual and that family and our economy at this
point.
Ms. Baldwin. Dr. White, did you have a comment?
Ms. White. Yes, I would just like to add that I think as
Congresswoman Capps had mentioned earlier that patient advocate
role that nurses provide is absolutely important and I think
the emphasis on primary care medical home, nurse practitioners
being involved in that who have the skills for those
conversations, discussions and the relationships I think would
be an important consideration for it all.
Dr. Williamson. Thank you. I would like to briefly add, I
think that resources spent on time with the doctor saves money
in the long run. If you look at the percentage of medical
expenditures, physicians' services constitute a small fraction
of that. By concentrating on that whether it be for primary
care or for a specialist, you are going to have money in other
areas whether it is the end of life, very sick patients. So
funds, resources that are concentrated on giving the patient or
the patient's family face time with their doctor is going to
save you lots of money across the system.
Mrs. Christensen. Thank you. The gentlelady's time has
expired, and I now recognize Congresswoman Blackburn for 5
minutes.
Mrs. Blackburn. Thank you, Madam Chairman, and thank you to
all of you.
I want to do a yes and no and show of hands to get where
you all are on some issues, and by the way, thank you for your
patience with us today. As you know, we have another hearing
that has been going on upstairs. OK. Show of hands, how many of
you favor a single-payer system? OK. Nobody on the panel favors
a single-payer system. OK. How many of you favor a strategy,
putting in place a strategy that would eventually move us to a
single-payer system? So nobody favors doing that. That is
really interesting because there are some of us that fully
believe that this bill that is before us, whether it is the
House version, the Senate version or the Kennedy plan would
move us to a single-payer system and we make that determination
based on experience that we have had from pilot projects and
from programs that have taken place in the States, my State of
Tennessee being one of those. OK. How many of you favor having
government-controlled comparative research? Nobody favors
government-controlled comparative research. OK. How many of
you--OK. We have got some takers on that one. All right. Just
show of hands, the comparative research board that they are
talking about having, that this bill would put in place, how
many of you want to see that? OK. So we have Epperly, Ulrich,
Wright, White and Gabow. OK. And then how many of you favor
having that comparative research board make medical decisions
for patients? Nobody. OK. All right.
Dr. Epperly, you know, it makes it kind of a head scratcher
to me and I appreciate having your views on this because we
know that the comparative research results board would end up
making a lot of the medical decisions for patients and it would
move that away from the doctor-patient relationship. I wanted
to ask you, you had mentioned in your testimony that you felt
that a public plan would be actuarially sound. What I would
like for you to do is cite for me the research upon which you
base that assessment and that decision. How did you arrive at
that?
Dr. Epperly. You know, I would say that I don't--I am not
aware of anything I said that said that it would be actuarially
sound.
Mrs. Blackburn. Well, I think that that is a statement in
your testimony.
Dr. Epperly. What I will say as you look that up, though,
is that we believe that expanding coverage to people and giving
them choice is a sound decision for America in regards to
helping people get health care coverage. We are in agreement
with that. As it presently stands, this would have to be at an
enhanced rate above Medicare. That is why we say that, you
know, if the model is Medicare, that is not going to work, but
anything that starts to promote primary care as being a
solution to that, that will work and that----
Mrs. Blackburn. OK. Let me interrupt you with that. You say
that it would be at an enhanced model above the rate of
Medicare. So in other words, it is going to cost more?
Dr. Epperly. Yes, but the----
Mrs. Blackburn. OK. Now, yesterday, if I may interrupt you
again, Secretary Sebelius said that this would be deficit
neutral. So I am trying to figure out, and I asked her
yesterday how she could say it was deficit neutral. We have not
had one witness out of all the hearings we have done that has
said they felt like this would be deficit neutral or would be a
money saver. Everybody has said it is going to cost more.
Dr. Epperly. I would say that it would be beyond deficit
neutral in a positive way because where the savings will come
from the system is in regards to reduced hospitalizations,
reduced readmissions, more efficient----
Mrs. Blackburn. OK. If I may interrupt you again, do you
have any kind of model that shows that actually happens because
you can look at TennCare in Tennessee, you can look at
Massachusetts and you can see that that does not happen.
Dr. Epperly. Yes, Community Care of North Carolina proved
that. Other international studies have proven that as well.
That is why when we talk about the value of primary care, we
are saying that there are systems savings from across the
existing system that will save the entire system money.
Mrs. Blackburn. All right, but I can tell you that in
Tennessee we found that did not happen, and so I appreciate
your input.
Dr. Williamson, I have got 15 seconds left. Medicare
patients, senior citizens are just up in arms. They see that
their care is going to be diminished somewhat, that savings
from Medicare are going to go to pay for care for younger
enrollees in this public plan. My seniors are coming to me and
saying we are scared to death. What do I say to them? What is
Medicare going to look like after this public plan goes in
place?
Dr. Williamson. I don't see anything in the discussion
draft that gives me hope that we are moving in the right
direction in terms of payment. I think that private contacting
and empowering patients to buy their own health care. I don't
think we should ever take away a patient's right to pay for
their own health care, and if we do that, we are committing a
colossal mistake.
Mrs. Blackburn. Thank you. I yield back.
Mrs. Christensen. Thank you. The Chair now recognizes
Congresswoman Harman for 5 minutes.
Ms. Harman. I thank you, Dr. Christensen, and point out
that our committee benefits a lot from the fact that many
members are medical doctors and nurses and have extensive
medical backgrounds. I hope the panel is impressed that we
actually, some of us, others here know a great deal about this.
In my case, I don't have either of those but I am the daughter
of a general practitioner who actually made house calls to
three generations of patients before he retired in Los Angeles
and I am the sister of an oncologist/hematologist who was the
head of that practice at Kaiser in San Rafael, California,
before he semi-retired. He is younger than I am, so go figure.
But he did win the healer of the year award in Marin County for
his compassionate treatment of patients, so I love listening to
a bunch of docs and experts who put that on the front burner.
I come from Los Angeles County, as you just heard. We are
extremely concerned, if not panicked, about the President's
proposed cuts in DSH payments. Listening to this panel and
listening to you, is it Dr. Gabow or----
Dr. Gabow. Yes.
Ms. Harman. And reading your excellent testimony, I think
your bottom line is, you don't want cuts on the front end, you
want to see how all this works and phase in cuts later once the
efficiencies take hold. Is that what you are saying?
Dr. Gabow. That is correct.
Ms. Harman. Thank you. And on this point, Madam Chair, I
would like permission to put a letter in the record from the
board of supervisors of the county of Los Angeles talking about
the DSH----
Mrs. Christensen. Without objection, it will be admitted
into the record.
[The information appears at the conclusion of the hearing.]
Ms. Harman. Thank you. Well, I would just like to invite
the panel on this subject to address, and starting with you,
Dr. Gabow, and it seems like you may have a bit of laryngitis.
Am I right?
Dr. Gabow. Congresswoman, I have a chronic voice problem--
--
Ms. Harman. Oh, my goodness.
Dr. Gabow [continuing]. Spastic dysphonia, and the
treatment for it is Botox but it doesn't do anything for my
wrinkles.
Ms. Harman. As my kids would say, I think that is more
information than we need. But I appreciate this. I hope I am
not stressing you, but I would really like the record to be
more complete on this subject because I think it is an urgent
subject for at least our large metropolitan areas and one this
committee has to take very seriously, and based on the comments
I heard from the minority side, I think everyone here generally
agrees about this. Yes?
Dr. Gabow. Congresswoman, I think all of the safety-net
institutions would be very concerned if disproportionate share
funding were cut at the front end of this process. We rely
heavily on disproportionate share funding to cover not only our
uninsured patients but also the gap between what Medicaid pays
us and our costs. So I think that the timing of this issue is
really critical, and as I said earlier, I think what we have
learned from expansions in the past with Medicaid and SCHIP is
that it takes a long time to enroll certainly highly vulnerable
populations. They are vulnerable in so many ways that
enrollment is not an easy process so it is going to take a
period of time to really get to full coverage even with this
bill so I don't think we can cut DSH at the front.
Ms. Harman. I realize I only have 48 seconds left, so let
me just expand the question in case anyone else wants to answer
it as well. One of my personal issues, since I focus on
Homeland Security issues generally, is surge capacity in our
hospitals in the event of a terror attack or a large natural
disaster, and so my question is, what is the relationship
between the ability of our level I trauma centers which are
located in many of our DSH hospitals, what is the relationship
between the ability of our level I trauma centers to be
available in the event of terror attack or a natural disaster
and the proposed cuts in DSH?
Dr. Gabow. Congresswoman, I think you are right, that these
are related in that many of the trauma centers are at the
disproportionate share hospitals and also many of the pre-
hospital care services and burn units so that much that you
would need in disaster are located in these safety-net
institutions so they need to be preserved and you can't
destabilize them financially at the beginning of the process
and still preserve those critical resources.
Ms. Harman. Thank you very much.
Mrs. Christensen. Thank you. The Chair now recognizes Mr.
Pitts for 5 minutes.
Mr. Pitts. Thank you, Madam Chairman.
Dr. Ulrich, if a large number of private-payer patients
were to shift into the public plan and the public plan is paid
based on Medicare rates, what would be the effect on your
ability to continue to offer the same level of services that
you provide today?
Dr. Ulrich. Well, it would be impacted extremely negatively
and probably fairly rapidly. It would be beyond my capacity to
give you an exact timeframe but it would be disastrous, I
think, is a fair word to use.
Mr. Pitts. Now, are you treating a large number of
Medicare- or Medicaid-eligible patients in your part of
Wisconsin?
Dr. Ulrich. Absolutely. If I can enlarge on that just a
second, there already is a problem as you are describing. In
certain parts of the service area that we provide, we comprise
about 33 percent of the physicians. We are caring, however, for
70 percent of what we call fixed payer, which is Medicare or
Medicaid patients. Why? Because other providers are not
choosing to take care of those patients. So this is already
happening. This is not----
Mr. Pitts. So how are you surviving now if you----
Dr. Ulrich. Well, you know, we try to watch our costs as
closely as we can. I found it necessary to try to branch into
ancillary revenue streams, try to sell the electronic medical
record. We do food safety with Cargill, with Hormel, et cetera
because I am not confident that just providing health care is
going to be a way to sustain our organization.
Mr. Pitts. Dr. Williamson, each year fewer and fewer
physicians are willing to accept Medicare and Medicaid
patients. From your perspective as a practicing physician,
could you tell us why you think this is?
Dr. Williamson. I think as has been said, it is becoming
more and more impractical to do that. I think inertia plays a
large role here. Doctors have done it for a long time. It is
becoming less and less practical because the Medicare and the
Medicaid payment systems have not kept pace with the cost of
providing care, and physicians want to keep taking care of
these patients, we want to keep doing that, and so what you are
seeing across the Nation are doctors basically doing the very
best they can to control costs and keep functioning in this
environment, but as I said, it is a house of cards. Some
doctors are retiring early. They are getting out of medicine.
They are going into other ancillary revenue streams because
these payment systems simply are not adequate to cover the
costs of providing care and moving more patients onto those
types of payment schedules is going to adversely impact
everybody's health care in this country, not just those
patients that are taking--that are enrolled in the public
option.
Mr. Pitts. Now, if we allowed more people to purchase
health care services with untaxed dollars instead of relying so
heavily on third-party payers for routine health care services,
do you think that we could solve many of our problems faced
today by consumers or providers of health care services?
Dr. Williamson. Congressman, I think you just hit the nail
on the head. Right now what we are trying to do is solve a
problem for uninsured patients. That is what all this is about.
We wouldn't be sitting here if we weren't dealing with this
issue. I think that by making it feasible for every person to
own and control their own insurance policy is the way to solve
this problem, and I know that we can do that with the tax
system, with tax credits, tax subsidies. We can put the control
back into the hands of the patients so that the government
doesn't have to orchestrate this massive machine that we are
looking at right now that is going to not attend adequately to
the needs of the individual patient. I believe by restructuring
the tax system, we can take care of the uninsured patients and
we can solve this problem without putting private insurance
companies out of business and taking away the ability of
individuals to purchase their own health care.
Mr. Pitts. Dr. Wright, if you could respond, polling has
suggested that over 95 percent of the American people support
the right to know the price of health care services before they
go in for treatment. What do you view as the major barriers to
the American people getting the price and quality information
that they want and they need?
Dr. Wright. I think there has just not been enough
transparency in the pricing structures. It is Byzantine at the
very least. It is difficult to figure out. Even within a
practice often most of us have no idea what an individual
patient is paying for a service, so I think the system would
clearly benefit from additional transparency.
Mr. Pitts. And how would the patients, the providers, the
taxpayers benefit by public disclosure price and risk adjusted
quality?
Dr. Wright. Well, I think it lends to the--it is one
component of their decision-making process. I would not
uncouple pricing information from quality information because
cheap care may not necessarily be the best care. On the other
hand, the best care can be less expensive than we are
delivering it now.
Mr. Pitts. What about the agency that reports price and
risk adjusted quality information to be completely separate
from the Department of Health and Human Services? Do you see
any conflicts of interest with HHS reporting on their own
programs?
Dr. Wright. No, I don't.
Mr. Pitts. My time is up. Thank you very much, Madam Chair.
Mrs. Christensen. Thank you, Mr. Pitts. The Chair now
recognizes Mr. Gordon for 5 minutes.
Mr. Gordon. Thank you, Madam Chair.
Last week the President put forth a challenge to find ways
to reduce the number of medical liability suits without capping
malpractice awards. I agree with the President. I think if you
are going to be able to try to reduce the cost of health care,
you have got to get all the inefficiencies out and this is
certainly one area. PriceWaterhouseCooper estimates there is
$280 billion spent in defensive medicine. We can't wrench all
that out but surely there is some savings that can be made
there. That is why I am drafting medical malpractice reform
alternative legislation responding to the President's
challenge. The bill encourages States to step outside the box
and test so-called alternatives like health courts and ``I am
sorry'' methods. Also, I think that this will help lower the
cost of defensive medicine and I think it will compensate
patients faster and be more fair. In my home State of
Tennessee, we enacted a certificate of merit requirement last
October that has already proven that there has been a 4 percent
reduction in malpractice premiums. Earlier you were all asked
about whether you would think that malpractice reform should be
a part of the overall reform, and you agreed. So I want to
quickly ask you to say why and what savings you think we might
be able to achieve. Dr. Epperly, why don't we start with you?
Dr. Epperly. First, I applaud you for doing this. I think
it is the right step in the right direction.
Mr. Gordon. Don't applaud me. Let us just move on and tell
me why it is good.
Dr. Epperly. Oh, oK.
Mr. Gordon. No, no, no, no, tell me why. Please tell me why
it is good.
Dr. Epperly. Oh, oK. I think it is a step in the right
direction. If there is not a relationship with patients, the
default is to do more to patients, not less so that you cover
yourself. That is why the relationship is critical. If we don't
get reform in place, then people that don't have that
relationship will continue to order every test known to man to
try to diagnose the problem.
Dr. Williamson. I agree completely. I think the costs are
hidden but they are very, very real and I think they are
gigantic. Physicians order expensive tests to rule out
conditions that they don't suspect but might occur randomly in
one in several thousand, and if someone gets $10 million from a
lawsuit and it occurs in an incidence of one in 10,000, if you
don't screen for that you are statistically going to lose
money. And so you are exactly on target here. We must have real
medical liability reform. I will tell you in Georgia in 2005,
we enacted a very effective tort package. The number of suits
in Georgia are down by 40 percent now. We only had three
professional liability carriers in Georgia. We now have
something like in the teens, and we have a cap on non-economic
damages, not total damages but only non-economic damages so
that economic----
Mr. Gordon. We are not talking about caps here. We are
thinking about things less than that.
Dr. Ulrich?
Dr. Ulrich. I would agree with what both gentlemen before
me said. The reality is that, you know, having to pay some
dollars out in those unfortunate circumstances is an actual
cost and without some relief from that we will continue to bear
those costs.
Mr. Gordon. Dr. Wright?
Dr. Wright. I also agree. I think the burden of this is
quite large and I particularly like the idea that you would
test various options, various approaches to controlling the
tort problem.
Mr. Gordon. What we want to do is give incentives for
States to experiment and let us find out what might work.
Dr. White?
Ms. White. The American Nurses Association does have some
concerns about caps. They have a position statement that----
Mr. Gordon. OK. We are not talking about caps. I said
practices short of caps.
Ms. White. OK. Well, they have a position statement that
they can make available to the committee.
Mr. Gordon. But they would support malpractice reform short
of caps? You raised your hand earlier.
Ms. White. Yes. I mean, it----
Mr. Gordon. Dr. Gabow?
Dr. Gabow. As a governmental entity, we have governmental
immunity. In the broader discussion, I think that it is very
important to do malpractice reform and I think your idea of
experimenting with health courts is a very good one.
Mr. Gordon. Mr. Hawkins, earlier you said you weren't
personally affected but that is not the question, it is for the
system overall.
Mr. Hawkins. Yes, and as a matter of fact, if I can, one
important thing that--a couple of members of the committee here
have sponsored legislation to extend the Federal Tort Claims
Act, FTCA coverage, that health center clinicians get today to
clinicians who volunteer at health centers.
Mr. Gordon. Well, that will be a part of the bill in terms
of emergency rooms. I think they should be considered as first
responders.
Mr. Hawkins. Yes, I would just say we know for a fact----
Mr. Gordon. And Mr. Yarwood--oh, I am sorry. OK. You are
saying you know for a fact that it helps?
Mr. Hawkins. That many local physicians and clinicians
would volunteer time at a health center if this issue were
addressed.
Mr. Gordon. Mr. Roberts?
Mr. Roberts. I think from a pharmacy's perspective, it is
not as large an issue but still we would be supportive.
Mr. Gordon. Mr. Yarwood?
Mr. Yarwood. It is a huge issue. We talked about this
before.
Mr. Gordon. Ms. Fox?
Ms. Fox. We absolutely agree.
Mr. Gordon. And if I could go back, since I have a little
more time, concerning those individuals that have the
hospitals. Are you finding it a problem now to get specialists
to come into the emergency room because of the medical
malpractice problem? Yes, ma'am, go ahead.
Dr. Gabow. Because of medical malpractice, we aren't
because we have governmental immunity and our physicians are
employed so we have no problem getting coverage and we don't
pay extra for that coverage.
Mr. Gordon. But it is because they are already covered?
Yes. OK. My time is up and I thank you for your advice.
Mrs. Capps [presiding]. The Chair now recognizes Mr.
Shadegg for questions.
Mr. Shadegg. Thank you, Madam Chair.
Dr. Wright, I want to begin with you. I also want to follow
up with Dr. Ulrich because he mentioned a word that I think is
very important. He talked about the incentives in the current
policy or health care system. Under the tax code in America
today, businesses can buy health insurance tax-free.
Individuals have to buy it with after-tax dollars, making it at
least 30 percent more expensive. You were just asked, and I
want to follow up, a question by Mr. Pitts about transparency.
I guess my concern about transparency is that until we enable
consumers, individual people, to buy health insurance on the
same tax-free basis that businesses can do it, I don't see how
a consumer has the motivation to look at transparency, that is,
to say if my employer provides me with health care and he or
she pays for it, I don't see what the motivation is for me to
go research the cost of a particular procedure at one hospital
versus another or one doctor for another or the quality
outcomes. Because I agree with you, I think that both cost and
quality are things consumers want to know but only if they are
a part of a marketplace where those factors can make a
difference to them. Would you agree?
Dr. Wright. I am not a pricing expert. I am barely a
quality-of-care expert. I understand your point. I am greatly
concerned about the number of people who are not covered at
this point in time.
Mr. Shadegg. Me too.
Dr. Wright. I know you are, and so I guess most of my
priority in terms of getting this fixed has been directed at
them.
Mr. Shadegg. Dr. Ulrich, is that one of the incentives that
concerns you?
Dr. Ulrich. Yes, certainly, and if I can expand on that
just briefly?
Mr. Shadegg. Please.
Dr. Ulrich. If we look at the quality equation, that is the
outcomes of patient care and the patient-physician interaction
being the numerator, costs being the denominator, quality being
the end product of that, the concern I have is this, is that
currently we don't pay for that. We absolutely need to move to
that model, but what hinders us now is the fact that patients
don't understand necessarily what quality is. We did some
market research, and what patients tell us is that look, you
guys are all the same. You all went to medical school, you all
did residencies so there is really very little to pick between
you. When in fact for those of that work in the industry, there
are differences, so the question before us, how do we now
educate our patients so that they can make fully informed
decisions relative to that quality equation.
Mr. Shadegg. Dr. Williamson, I think if I gather your
testimony correctly, you think that is exactly the point. If we
empowered or allowed, just permitted people to buy their own
health insurance policy and therefore to shop for it and to be
involved in the selection of the plan and the selection of the
doctor, they would be motivated to use transparency, cost data,
quality data, and make the market much more competitive,
bringing down costs and causing quality to go up?
Dr. Williamson. Absolutely, and I think it would raise
quality on two levels. It would raise quality on the national
level in terms of saving money in the entire system and it
would raise the quality that the individual patient perceives.
Even though patients may not be able to judge scientific
quality, they do vote with their feet, and I think if we had
transparency, I think doctors are going to have to compete with
each other, and if we can do what you have suggested which is
to empower patients to buy with the same tax advantage that
employers have now, their own health insurance policies and
control that, they then control their medical decision making
and that is the best way to keep costs down and ensure good
patient care.
Mr. Shadegg. The health care policy I have advocated says
that we should tell every American that has employer-provided
health care that they can keep it and they can keep the
exclusion, but every American that doesn't have employer-
provided health care would get a tax credit. Those Americans
who can't afford to buy their own health care would get a
refundable and advancable tax credit to go out in the market
and buy what they want. We would then bring consumer choice to
the entire health care industry.
I would like every member of the panel to tell me what
other thing in our society somebody else buys for us. I mean, I
struggle with this question, and I don't understand it. Our
employers buy our health care insurance. They don't buy our
auto insurance, they don't buy our homeowners insurance, they
don't buy our suits. I don't buy my employees lunch. But why in
health care do we decide that only employers can buy it? Is
there something else that somebody on the panel can remember or
can think of that is of that dimension where your employer buys
it for you and you are just kind of a pawn in the whole system?
Dr. Williamson?
Dr. Williamson. I can't answer the question but I can tell
you where it came from, and it came from the notion of pooling
risk. Patients realize that if I get really sick, I am going to
need a lot of money, and so they went together and they pooled
their money and then what happened is, over time they have lost
control of that pool of money and that is where all this is
coming from. The patients have turned over to others the
ability to make their health care decisions for them by
allowing them to pay for it.
Mr. Shadegg. So if we empower them to be able to buy their
own health care if choose it from their employer or out on the
market and we empower poor people to do that who can't afford
it by giving them a refundable tax credit, we would also need
to create new pooling mechanisms, would we not?
Dr. Williamson. I completely agree with you.
Mr. Shadegg. Thank you very much.
Mrs. Capps. Thank you very much, and we will turn to Mr.
Green for his questions, and I will just say probably this is
our last series of questions because the vote has been called
and your panel can be excused. You really set a record for
endurance. I have to thank each of you.
Mr. Green. Madam Chairman, some of us were here last night
at 7:00. Well, you were too, I think, and we started at 9:30
yesterday morning and finished some time after 7:00.
Mrs. Capps. Be thankful you weren't on that last panel.
Mr. Green. Yes, you will at least get out before dark.
Mr. Hawkins, you and I have been working with
Representative Tim Murphy since we reauthorized community
health centers program last year on a bill we introduced, the
Family Health Care Accessibility Act of 2009. The bill would
extend Federal Tort Claim Act coverage to volunteers by deeming
these volunteer practitioners at health centers as employees of
the federal government. These volunteers would have to be
licensed physician or licensed clinical psychologists and
unpaid in order to qualify. This seems like an easy solution to
the lack of primary care physicians in some areas, especially
in medically underserved areas where community health centers
are located. Yesterday the GAO released a report stating that
the lack of Federal Tort Claims Act coverage for volunteer
practitioners can be a barrier for volunteers who wish to
dedicate their time at a federally qualified health center. Can
you elaborate on how the extension of the FTCA coverage to
licensed physicians or other licensed practitioners would help
increase the number of volunteers at federally qualified health
centers?
Mr. Hawkins. Sure, Mr. Green, and thank you for raising
that issue. In fact, just a couple of minutes ago we were
discussing the issue of malpractice and I----
Mr. Green. I thank my colleague, Congressman Murphy, for
bringing it up.
Mr. Hawkins. That is oK. I specifically alluded to this
legislation which you and Mr. Murphy have collaborated on in
the past and continue to collaborate on. I can't tell you not
only for primary care, Mr. Green, but even for urologists,
dermatologists. You know, the biggest frustration that health
center clinicians who are virtually all primary care today
express is the barriers and difficulty they face getting
specialty care, diagnostics, even hospital admits for the 7.5
million uninsured people we serve in particular, not
exclusively but in particular. Allowing FTCA coverage to extend
to individuals who, as you note, come into the health center
and donate their time, do not charge the patient, don't charge
the health center, would be a phenomenal benefit and boon and
would provide for much more fully integrated care and better
health outcomes.
Mr. Green. And we discovered this problem in Texas with
Hurricane Katrina with all the evacuees. In our federally
qualified health centers, we had medical professionals who
couldn't volunteer in Texas because they weren't covered, and
we realize now that it is a way we can provide for our
federally qualified health centers.
The discussion draft also addresses the issue of residency
training in offsite locations like FQHCs, but it still
allocates the funds to the hospitals and not to the offsite
locations. Do you believe the language in the draft should make
it easier for federally qualified health centers and other
offsite residency training programs to start up and operate
residency programs? And again, we have an example in my
district of a federally qualified health center has a
partnership with Baylor College of Medicine in Houston, and
they do it, and what I would like to do is see if we can get a
number of medical schools, because I want primary care
physicians to know they can make a living at a federally
qualified health center in a community-based setting.
Mr. Hawkins. Not only that, Mr. Green, but I am honored to
be part of a panel today that includes Denver Health, a
community health center, as well as a public hospital----
Mr. Green. Congresswoman DeGette has preached to me for
years about Denver Health.
Mr. Hawkins. And the great work that Dr. Gabow has done.
Also, residency training program, Marshfield Clinic, which has
a community health center embedded in it, doing residency
training and Ted Epperly, Dr. Epperly, whose family medicine
residency training program in Boise, Idaho, is also a federally
qualified health center. Perfect examples. Now, all are working
locally with their medical schools and with teaching hospitals
to ensure, because those residents, even family medicine, have
to have med-surg residency inpatient based so it can't be done
independently. At the same time, the vast bulk of family
medicine residency training, pediatric residency training, even
general internal medicine residency training can be done in an
ambulatory care site. More than 300 health centers today across
the country are engaged in residency training programs. They
have rotations of residents through them and everyone is
willing to step up and do more. All that is needed is the
resources to be able to do so.
Mr. Green. And if we know we have chronic need for primary
care doctors, then this is a way we can do that and hopefully
expand it.
One last question in my last 6 seconds. The discussion
draft includes additional funding through the Public Health
Investment Fund, and as many on the committee know, we have
been asking for additional funds for federally qualified health
clinics for years. How do you intend to use the new funds when
you provide more services like dental and mental health and
would it also help build more FQHCs? Because we know we need
that in our country.
Mr. Hawkins. I think there are two or three quick points to
make on that. Just last month, the Government Accountability
Office, GAO, issued a report that pointed out that almost half
of federally designated medically underserved areas in this
country have no health centers, not a one. There are 60 million
people out there today across this country, some of whom have
insurance and yet do not have a regular source of preventive
and primary care, no family doctor, no medical or health care
home. So the need is great. It runs in tandem with the
extension of coverage that this bill would provide but takes it
that one step further, turning the promise of coverage into the
reality of care through providing a health care home. The
expansion of coverage to serve more people as you noted very
importantly the expansion of medical care to include oral
health and mental health services so crucially important, all
of that will be afforded through the new resources in this
bill.
Mr. Green. Thank you.
Mrs. Capps. Thank you again to the panelists, and we are in
recess for the next panel to begin after this series of votes.
It is eight votes, but after the first one apparently is 2
minutes per vote so it should go fairly quickly hopefully.
Thank you very much.
[Recess.]
Mr. Pallone. The Subcommittee on Health will reconvene, and
our next panel is on employer and employee views. Let me
introduce the panel, from my left is Kelly Conklin, Mr.
Conklin, who is the owner of Foley-Waite Custom Woodworking,
Main Street Alliance, and then we have John Arensmeyer, who is
founder and CEO of Small Business Majority. We have Gerald M.
Shea, who is the assistant to the president of the AFL-CIO,
Dennis Rivera, who is the health care chair for the SEIU, John
Castellani, who is president of the Business Roundtable
Institute for Corporate Ethics, John Sheils, who is senior vice
president for the Lewin Group, and Martin Reiser, who is
manager of government policy for Xerox Corporation, I guess
representing the National Coalition on Benefits. And you know,
we ask you to speak for about 5 minutes, your written testimony
becomes part of the record and then we will have questions from
the panel.
So I will start with Mr. Conklin. Thank you for being here.
STATEMENTS OF KELLY CONKLIN, OWNER, FOLEY-WAITE CUSTOM
WOODWORKING, MAIN STREET ALLIANCE; JOHN ARENSMEYER, FOUNDER AND
CEO, SMALL BUSINESS MAJORITY; GERALD M. SHEA, ASSISTANT TO THE
PRESIDENT, AFL-CIO; DENNIS RIVERA, HEALTH CARE CHAIR, SEIU;
JOHN CASTELLANI, PRESIDENT, BUSINESS ROUNDTABLE; JOHN SHEILS,
SENIOR VICE PRESIDENT, THE LEWIN GROUP; AND MARTIN REISER,
MANAGER OF GOVERNMENT POLICY, XEROX CORPORATION, NATIONAL
COALITION ON BENEFITS
STATEMENT OF KELLY CONKLIN
Mr. Conklin. Thank you, Chairman Pallone, Ranking Member
Deal and other members of the committee for inviting me to
appear today. My name is Kelly Conklin and I co-own with my
wife, Kit, an architectural woodworking business in Bloomfield,
New Jersey. My purpose today is to explain how the House tri-
committee's health reform proposals might affect small
companies like ours.
To start, I think the draft legislation is right on target.
I believe it will receive broad support in the small business
community. Before I go any further, let me provide some
background. My wife and I opened Foley-Waite in 1978 in a 700-
square foot shop in Montclair, New Jersey. In 1985 we expanded,
hired four employees and started offering health insurance. The
premiums were about 5 percent of payroll and we paid it all.
Today we employ 13 people, occupy 12,000 square feet of space
and serve some of the most influential people in the world, and
we fork over $5,000 a month in health insurance premiums, close
to 10 percent of payroll and one of the largest single expenses
in our budget. Practically speaking, we offer coverage to
attract and retain skilled employees but like the majority of
small companies, we do so because it is the right thing to do
for our workers and if we don't offer coverage, we are just
passing our obligation and our share of the cost on to someone
else.
Cost is by far the single most important driver in making
basic decisions regarding health care. That applies whether it
is a small firm like mine or the United States Congress, and no
system that tends to dance around the cost issue can succeed.
April is the month I dread, not for taxes but for health
insurance renewal nightmares. Every year is worse--
unpredictable rate hikes, unaffordable premiums, an
administrative tangle that is our system. In 3 years, we have
had three different insurance companies. Most recently, Horizon
Blue Cross Blue Shield raised our rates 25 percent. Now we have
Health Net. That means new primary care physicians, and for my
wife, who has a chronic illness, a new doctor who knows nothing
of her medical history. It is very frustrating. There are no
quality, affordable health care options available for small
businesses.
In reading the discussion draft, it is apparent the
committee is determined to control cost. Responsible employers
understand we will all be better off in a system where
employers and individuals contribute a reasonable amount toward
assuring our common health and well-being. That is why I
support the draft provisions requiring employees and
individuals to pay their fair share. For too long, the small
business community has paid too much for too little. We
sacrifice growth, financial security and the peace of mind of
our employees and their families in the name of protecting
private insurers from meaningful competition. The private
health insurance market has failed to contain costs, enhance
efficiency or improve outcomes. It fails to provide coverage to
millions. Half measures warmed over, more of the same second
chances for the health insurance industry won't fill the
yawning gaps in our patchwork coverage. We need a guarantee
that individuals and small companies will have real choices and
affordable coverage options.
I commend the committee for including a strong public
health insurance option in this legislation. With a public
option, small businesses will have leverage, real bargaining
power and guaranteed backup and greater transparency. Most
importantly, by creating genuine competition and restoring
vitality to the market dynamic, this proposal will bring about
the kind of broad-based changes in the private insurance
industry Main Street is clamoring for. For a small business
like mine, bringing down health insurance premiums can be the
difference between growth and sitting tight. Two years ago we
were interested in buying a building. It represented growth
potential, financial security and long-term equity. We were
looking at around $5,000 a month in mortgage payments as
opposed to our rent of around $3,500. If our health insurance
premiums had been closer to our rent and not the future
mortgage, we might be in that building today. We work in a
competitive marketplace. All the time there are new competitors
looking to take business away. We find savings, improve
efficiency, invest in equipment and personnel. That is how it
is for us and that is how it will be for the health insurers if
a public option is available.
Transparency is critical. It is time for the insurance
companies to come clean and in plain English explain where our
premium money goes, to say up front what is covered and what is
not. It is time to put a halt to cost containment by denial,
copays and hidden charges. The draft discussion addresses this
need by creating a health insurance exchange to offer real
coverage choices to allow us to actually know where our premium
dollars are being spent. We can provide access to both
preventive and therapeutic care for everyone. We are encouraged
by the provisions reforming common practices in the current
insurance market. Ending lifetime and annual benefit limits,
discriminatory coverage and rating policies and creation of a
basic benefit are all important and necessary parts of a
complete reform package. These are full measures designed to
provide real relief. If enacted, they will represent a
watershed for American health care and a godsend to the small
business community.
This committee working with its counterparts to develop the
tri-committee proposal has done yeoman's work taking on and
meeting an extremely complex set of issues. I will not be alone
in supporting this extraordinary effort. I am a member of the
New Jersey Main Street Alliance, a coalition of over 450 small
businesses working for health reform that will finally give us
access to quality health care we can afford. I have canvassed
small businesses, and when I say ``and we support a public
option,'' they take the pen out of my hand and the New Jersey
MSA has a new member. Small businesses have seen your
leadership and with this document you have delivered. Now the
real fight begins. We need you to enact this proposed
legislation and bring about health reform that works for us and
our employees this year so we can do our part for economic
recovery. Thank you, Mr. Chair.
[The prepared statement of Mr. Conklin follows:]
Mr. Pallone. Thank you, Mr. Conklin.
Mr. Arensmeyer.
STATEMENT OF JOHN ARENSMEYER
Mr. Arensmeyer. Thank you, Chairman Pallone, Ranking Member
Deal and members of the committee. Small Business Majority
appreciates this opportunity to present the small business
perspective on the House tri-committee draft health care reform
plan. We support the effort to move this legislation through
Congress expeditiously, and thank you for bringing a proposal
forward in such a timely manner.
Small Business Majority is a nonprofit, nonpartisan
organization founded and run by small business owners and
focused on solving the biggest single problem facing small
businesses today, the skyrocketing cost of health care. We
represent the 27 million Americans who are self-employed or own
businesses of up to 100 employees. Our organization uses
scientific research to understand and represent the interests
of all small businesses. I have been an entrepreneur for more
than 20 years including 12 years owning and managing an
Internet communications company. Together with the other senior
managers in our organization, we have a total of 70 years
running successful small businesses ranging from high tech to
food production to retail. We hear stories every day from small
business owners who can't get affordable coverage and for whom
health care is a scary, unpredictable expense. Louise Hardaway,
a would-be entrepreneur in Nashville, Tennessee, had to abandon
her business stream after just a few months because she
couldn't get decent coverage. One company quoted her a $13,000
monthly premium for her and one other employee. Others such as
Larry Pearson, owner of a mail order bakery in Santa Cruz,
California, struggle to do the right thing and provide health
care coverage. Larry notes that, ``The tremendous downside to
being uninsured can be instant poverty and bankruptcy, and that
is not something my employees deserve.'' Our polling confirms
that controlling health care costs is small business owners'
number one concern. Indeed, on average, we pay 18 percent more
than big businesses do for health care coverage.
An economic study that we released earlier this month based
on research by noted M.I.T. economist Jonathan Gruber found
that without reform, health care will cost small businesses $24
trillion over the next 10 years. As such, we are pleased to see
that the House bill addresses key cost containment measures
such as expanded use of health IT, transparency, prevention,
primary care and chronic disease management.
Our polling shows that 80 percent of small business owners
believe that the key to controlling costs is a marketplace
where there is healthy competition. To this end, there must be
an insurance exchange that is well designed and robust. We are
very pleased that the committee's bill proposes a national
insurance marketplace with the option for state or regional
exchanges that adhere to national rules. Moreover, we were
encouraged by the committee's proposal that there be
standardized benefit packages along with guaranteed coverage
without regard to preexisting conditions or health status, a
cap on premiums and out-of-pocket costs and marketplace
transparency.
We understand that a balanced set of reforms will require
everyone to participate. Sixty-six percent of small business
owners in our recent polls in 16 States for which we released
preliminary data this week support the idea that the
responsibility for financing a health care system should be
shared among individuals, employers, providers and government.
It should be noted that respondents to our surveys included an
average of 17 percent more Republicans at 40 percent than
Democrats at 23 percent while 28 percent identified as
independent.
According to the results of the economic modeling done for
us by Professor Gruber, comprehensive reform that includes even
modest cost containment measures and a well-designed structure
for employer responsibility will offer vast improvement over
the status quo. A system with appropriate levels of tax
credits, sliding scales and exclusions will give small
businesses the relief they need, potentially saving us as much
as $855 billion over the next 10 years, reducing lost wages by
up to $339 billion and restoring job losses by up to 72
percent. We are very pleased that the committees have addressed
some of the affordability concerns of the smallest businesses.
Professor Gruber has modeled specific scenarios described in
detail in our report and we look forward to working with you to
ensure the best balance between the need to finance the system
and our ability to pay.
Finally, another issue of great concern to us is the unfair
tax treatment of the 21 million self-employed Americans. Under
the current tax code, self-employed individuals are unable to
deduct premiums as a business expense and are required to pay
an additional 15.3 percent self-employment tax on their health
care costs. We encourage that this inequity be rectified in the
final bill passed by the House.
In closing, health care premiums have spiraled out of
control, placing our economy and the fortunes of small business
in peril. Health care reform is not an ideological issue, it is
an economic and practical one. We are encouraged by the overall
approach of this bill and look forward to working with you to
make it a reality this year. Thank you.
[The prepared statement of Mr. Arensmeyer follows:]
Mr. Pallone. Thank you, Mr. Arensmeyer.
Mr. Shea.
STATEMENT OF GERALD M. SHEA
Mr. Shea. Good afternoon, Chairman Pallone and
Congresswoman Capps. I really appreciate the opportunity to
share the views of the AFL-CIO on this critically important
issue.
I want to start by saying a hearty congratulations on
producing a very good draft bill. I think you really responded
to what the American people have asked for, and we look forward
to working with you over the coming weeks to get that bill
enacted.
You have decided to build health reform based on the
current system, therefore based largely on the employment-based
system, since that is the backbone of our health coverage and
health financing, and I want to direct my remarks to that
today, and I hope that the experience I bring, which is the
experience of unions that bargain benefits for 50 million
workers each year, will be of some benefit to you. And the main
thing I have to say is, if you are going to proceed down this
path, and we certainly support it, then job number one is
stabilizing employment-based coverage. It has proved remarkably
resilient in the face of high cost pressures but it is in
fragile shape today. From 2000 to 2007, we lost five full
percentage points on the number of 18- to 64-year-old working
Americans who were covered, and the underinsured rate, people
who have insurance but really can't afford to get care under
it, shot up from 16 percent to 25 percent in the last 4 years.
So despite the fact that it is still hanging on, employment-
based coverage is really eroding very rapidly, and to stabilize
that coverage, we would suggest that you focus first of all on
cost, secondly on having everyone involved in coverage and in
the system, and thirdly, and I don't mean these in rank order,
they are really all important, thirdly, reform of the delivery
system.
Let me start with participation because in some ways that
is the simplest. If you are going to base this on employment-
based coverage, we think it makes simple sense, as you have
done in your bill, to require that everyone, every individual
participate and take responsibility to some extent, certainly
responsibility for their own health status, and every employer
to participate, and that is included in your bill, and the
benefits of this are simple. It helps bring people into the
system, it does stabilize the employment-based coverage, it
helps reduce the amount of federal tax dollars that you have to
spend because everybody who is covered by an employer plan will
not be dependent on monies that you have to raise and put into
this bill for subsidies. It levels the playing field between
employers who now do provide and those who don't. And there
really are just three categories of workers in terms of their
insurance coverage. The vast majority, as you know, get
insurance coverage at work, some 92 percent of the employers of
50 or above workers provide health insurance. There are some
employers who don't provide insurance but certainly are well
enough off to do that. The example of the Lobby Shop in
Washington comes to mind. And then there are a group of low-
wage, small employers who really need a lot of help to do this.
Our suggestion is that everyone be included in this, no
exemptions, because once you start exempting people, we think
you are going to run into distortions in the marketplace as now
exist, but we do think it is appropriate, as you have done, to
provide tax subsidies for employers with low wage and small
numbers of employees and I would emphasize that we don't think
there are just small numbers of employees, it actually it is
some measure of the financial stability or success of the firm
that should be taken into account.
Secondly, in terms of controlling costs, the most important
thing we can do is to change the delivery system. If the
Institute of Medicine estimate of 30 percent waste in the
system is anywhere near correct, we could easily pay for health
reform and cover all of the uninsured if we can get a
substantial amount, not all of that but a substantial amount of
that waste out of the system. So that is the most important
thing, and your bill includes a number of good provisions on
that. We are working with your staff because we think they
could be strengthened in a number of areas but we think you
have made a very good start. However, in the short term, that
is really not going to do the job. You are going to need to do
something else, and there are only two options in our view as
to how to do this in the short term. One is to do it by
regulation. You could do global budgets or set rates, and the
other is to introduce competition into the marketplace that now
doesn't exist, and you have chosen the idea of competition
through a public health insurance plan and we strongly support
that. I would just point out that there is an additional
advantage of a public health insurance program in that it can
be a leader in reform of the system as Medicare is now. I deal
with a lot of employers and a lot of unions who have wanted to
change the delivery system for the better over the past few
years but it wasn't until Medicare started to change their
payment rates that this really started to happen.
And then lastly, looking at the delivery system, I think,
as I said, that there is plenty of money in it to pay for
reform, but we are not going to get that money back very
quickly and some people are talking about having to pay for
reform totally out of the current money in the system, which we
think is just very unrealistic. We think you have to look
outside for additional monies, and if you take the view that
you have to look inside, you may well get to the very dangerous
territory of the Senate Finance Committee talking about
taxation of benefits, which we think would be a disastrous
approach. It is unfair to the people involved since they
already pay an arm and a leg, many of them, for health
coverage, and it is unfair in terms of the inequities built
into this, workers who are older, groups that have families,
groups that have more retirees will have much higher costs. And
then there is the simple political dynamic of this. If you want
to throw a monkey wrench into public support to health reform,
this would be the perfect way to do it because in the process
you would really, really turn the apple cart upside down in
employment-based coverage.
Thank you, Mr. Chairman.
[The prepared statement of Mr. Shea follows:]
Mr. Pallone. Thank you, Mr. Shea.
Mr. Rivera.
STATEMENT OF DENNIS RIVERA
Mr. Rivera. Thank you. I am chair of SEIU Health Care, the
1.2 million health care workers who are committed to reforming
our Nation's broken health care system. We represent members
like Pat DeJong of Libby, Montana, who works as a home care
aide. Pat and her husband Dan were ranchers but had a hard time
finding affordable coverage and were uninsured when he was
diagnosed with Hodgkin's lymphoma in the year 2000. The medical
bills piled up for Pat and Dan, eventually forcing them to sell
the land they loved and that has been in Dan's family for
generations. Dan succumbed to cancer and Pat remains uninsured.
This is America. We can and we must do better for hardworking
families like the DeJongs. Americans are ready to fix health
care and they know that this is the year it must happen. Now it
is up to you to deliver Pat and the millions who face the
consequences of our broken health care system with a real
choice of affordable, quality, private and public health care
coverage. SEIU's 1.2 million health care workers in hospitals,
clinics, nursing homes and in homes in communities are at the
bedside every day witnessing high-price families pay for the
delay and skip medical treatments. The uninsured are not just a
statistic. They are hardworking people, people such as Pat, who
despite caring for those who cannot care for themselves, cannot
afford health care coverage for herself.
The discussion draft includes many essential elements that
would promote coverage and access, cost containment and improve
quality and value for American families. A strong public health
insurance option is vital to ensuring consumer choice and
access. The public plan will drive down the cost of insurance
by competing with private insurance and lowering overall costs.
Medicaid expansion--we support increase in Medicaid
eligibility for families up to 133 percent of federal poverty.
The discussion draft will also improve Medicaid payments to
primary care practitioners to address concerns about access to
needed services by Medicaid beneficiaries. We caution the
committee that safety-net providers and systems must be
protected to provide access and support to low-income
communities and to maintain a mission that includes trauma care
and disaster preparedness. Special payment to these facilities
such as the disproportionate share payments must be maintained
as coverage expands. In addition, essential community providers
must be included in insurance plans that serve Medicaid
beneficiaries and individuals eligible for health care credits.
Health care reform needs to work for everyone including the
4 million American citizens who reside in Puerto Rico, and we
urge Congress to include Puerto Rico and all the territories in
all parts of health care reform. SEIU is pleased to see that
the committee has recognized the need to improve the treatment
of Puerto Rico and the territories under Medicaid by increasing
the caps and federal matching rates. While this is an important
step in the right direction, it falls short of resolving the
longstanding inequities in federal health care programs that
have been hurting the people of Puerto Rico for decades.
Shared responsibility. Employers, individuals and
government must all do their part to make sure we have a
sustainable and affordable system that covers everybody. For
employers that do not provide meaningful coverage to their
employees, they must pay into a fund. This pay-or-play
requirement is necessary to ensure individuals can meet their
responsibility to obtain affordable coverage with special
support provisions to provide small businesses with tax credits
and access to an insurance exchange to help them purchase
coverage for their employees.
Affordability. Individuals' responsibility must be
augmented by measures to ensure affordability. We commend the
committee for offering federal financial assistance to
individuals and families with low and moderate income and those
with high health care costs relative to their income to
guarantee affordability.
Eliminating disparities--We congratulate the committee for
recognizing disparities in access to quality health care. No
one should be discriminated for preexisting conditions. No one
should be discriminated for being low income, minority,
disabled or aged.
Workforce. As coverage grows, so much the health care
workforce. Today there are chronic shortages in almost every
area of health care from primary care physicians to nurses to
long-term-care workers. Health care reform to be effective must
include a diverse, well-trained workforce that is working in
the appropriate setting across the delivery system and is well
distributed in both urban and rural areas.
This is your moment, your moment to ensure that Pat DeJong
and millions of other hardworking Americans do not have to wait
any longer in America for quality, affordable health care
coverage. The time is now. We cannot wait.
[The prepared statement of Mr. Rivera follows:]
Mr. Pallone. Thank you, Mr. Rivera.
I wanted to apologize to Mr. Castellani because I said that
you represented the Business Roundtable Institute for Corporate
Ethics, and apparently it is just the Business Roundtable.
Mr. Castellani. I am president of the Business Roundtable.
I am a member of the board of directors of the Business
Roundtable Institute for Corporate Ethics. That is probably----
Mr. Pallone. Oh, I see. OK. Well, thanks for clarifying
that.
STATEMENT OF JOHN CASTELLANI
Mr. Castellani. Thank you, Mr. Chairman. I am here on
behalf of the members of the Business Roundtable who are the
chief executive officers of America's leading corporations.
Collectively, they count for more than $5 trillion in annual
revenues and 10 million employees but most importantly they
provide health care for 35 million Americans. I appreciate the
invitation to testify and I share the urgency of this committee
and the fellow panelists that health care reform must be
addressed now.
Today I want to focus on key three messages. First, we need
to get health care costs under control. Second, we must
preserve the coverage for those 132 million Americans who
receive that coverage from their employer. And third, we need a
reformed insurance marketplace so that individuals and small
employers can afford and find affordable coverage.
Let me address the draft legislation that you have before
the committee. First, let me thank you and the committee of
moving forward on health care reform. We view that as very
positive and necessary and we want to be constructive in what
we believe will work and what we believe will not. We support
the provisions that reform the insurance market so that there
are more affordable coverage options. The bill also includes a
requirement that all Americans get health insurance coverage
and includes auto-enrolling for individuals into SCHIP or
Medicaid if indeed they are eligible. We support both of those
provisions and also support offering subsidies to low-income
Americans who cannot afford coverage. The changes that you have
included in the Medicare programs and other efforts to make our
health care system more efficient are very positive. Medicare
payments do need to be adjusted and we will provide the
committee with comments on these and other issues.
We do, however, have significant concerns about two major
issues in the draft legislation and hope that the committee
will consider some revisions. First, ERISA should not be
changed if reforms are to be built on the employer-based
system. The proposal before you would change some of the ERISA
rules. For example, it would impose minimum benefit packages on
our employees. Large employers design innovative plans
including wellness and prevention initiatives that have been
tremendously successful in helping employees take greater
control over their own health and yet such programs which we
believe are critical to the success of health care reform would
be jeopardized by a new federally mandated benefit law.
Second, we are very concerned about public plan proposals
that would compete in the private marketplace. As large
employers, we are concerned that our employees will suffer from
additional cost shifting that come from inadequate government
repayment to the providers. For that reason, we are concerned
that the kind of cost shifting that we are dealing with now
would be exacerbated. Further, the government plan could erode
existing worker coverage if employees seek subsidized lower
priced public option that would diminish the people in our
plans and would leave employer-sponsored coverage with more
expenses, most cost for both employers and employees.
Innovation, which we think is the key to modernizing our
health care system and getting our costs under control,
benefits improvements and how best to care for patients, we
believe come best from the private marketplace. We need to
preserve the energy and the commitment to improve our health
care market and we are concerned that government plans cannot
do that as well as the private sector. We urge the committee to
instead create even stronger rules to make the private
insurance marketplace more competitive and we want to help in
that effort.
Business Roundtable believes that the search for bipartisan
consensus can begin by honoring the principles that we have
outlined in our written testimony and by crafting reform that
is consistent with the uniquely American principles that drive
our economy: competition, innovation, choice and a marketplace
that serves everyone. On behalf of our members, we pledge to
work with you and all the members of the committee to find
workable solutions that let people keep what they have today in
a reformed health care system that works better for everyone.
Thank you.
[The prepared statement of Mr. Castellani follows:]
Mr. Pallone. Thank you.
Mr. Sheils.
STATEMENT OF JOHN SHEILS
Mr. Sheils. Hello. Good afternoon, Mr. Chairman. My name is
John Sheils. I am with the Lewin Group, and I have specialized
over the years in estimating the financial impact of health
reform proposals. We got your bill on Friday and immediately
went about doing some preliminary estimates on coverage and the
impact on provider incomes. Allison is going to help me with
some slides.
[Slide.]
The first slide, the system that the bill would establish
begins with, we have new health insurance exchange. The
exchange would provide a selection of coverage opportunities.
Most of them are private coverage that we are familiar with but
it would also offer a new public plan. The impact that this
program will have on coverage is going to be drive by the
groups that you are permitted to enroll. The program would
allow individuals, self-employed and small firms, at least in
the first year, to go through the exchange to obtain their
coverage. In the third year, the newly established commissioner
would have the authority to open the exchange to firms of all
sizes. The new public plan, we predict, will attract a great
many people because the premiums in the public plan will be
much lower than for private insurance, and because of that, we
think that a great many people are going to be attracted to it.
Let us discuss that a little bit.
[Slide.]
On the next slide, we summarize some of the payment rates
on the left side. You are using the Medicare hospital
reimbursement methodology, and under Medicare, payments are
equal to about 68 percent of what private payers have to pay
for the same services. For physicians' care, you pay about--
well, Medicare pays about 81 percent of what private insurance
pays. You are going to be adding another 5 percent to that, so
we are looking at about 85 percent of private payers. And we
also have some information here on what happens to insurance
administrative costs in the exchange. The public plan will not
have to worry--need an allowance for profits and it will not
pay commissions for brokers and agents.
[Slide.]
The next chart shows what happens to premiums. For family
coverage for the enhanced benefits package described in your
legislation, in the private sector it would cost about $917 per
family per month. Under the public plan, it would cost about
$738 per family per month. That is savings of about $2,200 a
year, and we think that is going to draw a lot of people into
the public plan. Next page.
[Slide.]
On the right-hand side, we illustrate what happens to
coverage when the plan is open to all firms. The program would
reduce the number of uninsured by about 25 million people.
There would be an increase in Medicaid enrollment of about 16
million people but we find 123 million people going into the
public plan. That is a reduction in private coverage of about
113.5 million people. That is about 66 percent of all privately
insured persons. This of course is if and when the plan is
opened up to firms of all sizes. If it is limited to just firms
less than 10 workers as in the first year, you still get a
reduction of about 25 million people uninsured, still 16
million people with Medicaid coverage but private coverage
would drop by about 20 million people. The public plan coverage
would be 29 million people. Next chart, please.
[Slide.]
This chart summarizes what happens to provider incomes
under the plan. On the right-hand side, we have the scenario
where all firms are eligible to participate in the program.
Hospital margin, which is hospital profit, net income
basically, would be reduced by about $31 billion because of
that. That is about a 70 percent reduction in hospital margin.
Physician net income would go down by about $11 billion. That
comes to, in terms of net income, that is an average of about
$16,000 per year reduction in net income per physician. On the
left-hand side, we show what is happening in the small firms,
and this is really interesting because under this scenario
provider incomes actually go up. For instance, hospital margin
goes up by about $17 billion. Much of this has to do with the
fact that we will have reduced uncompensated care and they will
be paid for services they were providing for free before, and
there will be new services they will provide to newly insured
people. The physician net income would go up by about $10
billion, and the increase in income there is largely driven by
the fact that you are going to increase payments for primary
care under the Medicaid program.
That sums it up, and I am out of time so I will turn it
over to my colleague here.
[The prepared statement of Mr. Sheils follows:]
STATEMENT OF MARTIN REISER
Mr. Reiser. Mr. Chairman and members of the committee, I
want to thank you for the opportunity to testify about
proposals to reform the U.S. health care system. I am here
today on behalf of the National Coalition on Benefits, a
coalition of 185 business trade associations and employers that
have joined together to work with Congress to strengthen the
employment-based system.
The NCB supports health care reform that improves health
care quality and reduces costs. The NCB recently wrote
President Obama applauding his commitment to comprehensive,
bipartisan health care reform. We expressed our shared view
that a strategy to control costs must be the foundation of any
effort to improve the health care system. I have included that
letter in my written testimony.
For many years, the American people have sent two clear
messages to elected officials. First, Americans want to see
change and improvements in both cost and access to health care,
and second, Americans like the health benefits they receive
through their employer. The NCB believes the American people
are right on both points. We do need change, however, such
change should not erode the part of the health care system that
is working. The employer-sponsored model works well because it
allows the pooling of risks and because group purchasing lowers
health care costs, enabling those who are less healthy to
secure affordable coverage for themselves and their families.
ERISA and its federal framework allows employers to offer
equal, affordable and manageable benefits regardless of where
the employees live and work and without being subject to the
confusing patchwork of mandates, restrictions and rules that
vary from State to State.
Yet as good as it is, the system is increasingly at great
risk. As President Obama has said, soaring health care costs
make our current course unsustainable. The National Coalition
on Benefits completely agrees. Unfortunately, we are concerned
that the legislative proposal released last week does not
provide meaningful cost savings for the overall system. In an
effort to expand coverage, cost containment has not received
the priority it demands. For several years, employers have
worked to make clear the issues that health care reform must
properly address to preserve the employment-based system,
control costs and lead to our support. To date, we have not
seen legislative proposals where each of these core issues have
been adequately resolved. I will briefly discuss our concerns
on ERISA, the employer mandate and the public plan.
If the objective is to build upon the employer-based system
that successfully covers more than 170 million Americans, then
employers must have the ability to determine how best to meet
the needs of their employees. Legislation should not include
changes to ERISA or other laws that would risk hurting those
who are highly satisfied with the health care coverage they
currently receive. The NCB opposes provisions that alter the
federal ERISA law remedy regime. The existing structure
encourages early out-of-court resolution of disputes and
provides a national uniform legal framework to provide both
employers and employees with consistency and certainty. The
draft of the legislation would replace the successful structure
with differing remedy regimes depending on where the employers
and employees attain health coverage. All these differing
bodies of law are likely to result in contradictory decisions
about plan determination and would expose employers who obtain
coverage to the exchange to unlimited state law liability. In
other words, these legislative provisions would weaken the
employer-based system.
We are also concerned about proposals that would limit the
flexibility of employers at a time when our country needs
employers to create jobs and invest in future growth. Employer
mandates including requirements to pay or play are not the
answer to the health care problem because they undermine our
ability to address 2 key goals of health care reform, coverage
and affordability. On the public plan, we do not believe a
public plan can operate on a level playing field and compete
fairly if it acts as both a payer and a regulator. A public
plan that would use government-mandated prices would result
directly in a cost shift to other payers and thus would do
nothing to address the underlying problems that make health
coverage unaffordable for many. We already experience that cost
shift today as Medicare, the largest payer in the United
States, consistently underpays providers.
In summary, we remain concerned about any provisions that
would make health care more costly for employers and employees,
to stabilize our employer-based system of health coverage or
restrict the flexibility of employers to provide innovative
health plans that meet the needs of their employees. As
Congress moves forward to formal consideration of the
legislation, we want to continue to work with all members of
Congress to enact reforms that not only allow Americans to keep
the coverage they have today if they like it, and for most
Americans that means their employer-based coverage, but make it
possible for them to count on it being there tomorrow when they
need it.
[The prepared statement of Mr. Reiser follows:]
Mr. Pallone. Thank you, and thank you all. I am going to
start, and I am going to try to get a lot in in my 5 minutes
here so bear with me if you don't mind. Mr. Shea, you expressed
concern about taxing health care benefits. And you know, and
you acknowledge in your testimony, this came from the Senate,
not from the President, not from the House, needless to say. My
concern is that, you know, a stated purpose of this reform is
to let people keep what they have, and of course that implies
employer, not only for employer benefits, but whoever has an
insurance policy that they have. So I mean if you just want to
tell me briefly what the consequences would be. I mean I know
everything is on the table, but this is something that I am
concerned about. Just briefly.
Mr. Shea. What was it that somebody said about some things
are moving off the table, but we hope this is in that category.
The main thing that would happen is destabilized employment
coverage which, as I said, is exactly the opposite direction
for where we need to go because it would change the
relationship between employees and employers around this very
important part of their compensation. Some employees who are
younger might say, well, gee, I really don't need to be part of
the group plan. I am going to go off since it is now taxed
money. Secondly, it would penalize certain groups of workers
because of their health status essentially. We looked at health
funds----
Mr. Pallone. I am going to stop you because, you know, I
appreciate what you are saying but I have got to ask Mr. Rivera
a question. He stressed the pay to play requirements for
businesses and, of course, we get criticisms of this, and, you
know, a suggestion that, you know, it is going to hurt
business. Why do you think the pay to play requirement is
necessary for, you know--why do you think it is a good idea
basically?
Mr. Rivera. Because we believe at this moment some of the
employers--the employers who basically are providing health
care are basically subsidizing those who are not providing
health care. For example, on average health insurance is about
between $1,300 to $1,500 more for the cost of a family
insurance, and those who don't provide health care coverage to
their employees are basically on the free ride here. That is
basically it.
Mr. Pallone. OK. And what about the public option? You
know, you said you are supportive of it. Obviously, it is in
the discussion draft. Are insurance market performance enough
to drive down costs and ensure coverage for all or do you think
the public option is an essential piece of the reform?
Mr. Rivera. We believe that it is an essential part of the
reform, sir, and we believe that it will be a very important
contribution to lowering the cost of health care. And basically
this is America where we all can compete and this is another
way of competing to lower the cost, sir.
Mr. Pallone. OK. Mr. Sheils, I am going to you last here. I
have about 2 minutes left. You criticize the public option and
just for purposes of full disclosure the study you mentioned,
my understanding, and tell me if I am wrong, is it was
completely funded by an insurance company. You said in your
written testimony you are the senior vice president of the
Lewin Group and your group is--my understanding is your group
is 100 percent funded by United Health Group, one of the
largest insurance companies in the country. Is that accurate?
Mr. Sheils. We are owned by United Health. We have a 36-
year tradition of doing----
Mr. Pallone. But it is 100 percent owned by United Health.
Mr. Sheils. I would like to finish.
Mr. Pallone. Well, let me get to the next thing and you
probably can respond to it----
Mr. Sheils. Anyway, about 2 years ago and at that point we
were--but our work is completely independent. We have complete
editorial control over our work.
Mr. Pallone. But I mean the group is 100 percent funded by
United Health, right?
Mr. Sheils. Well, we are a consulting firm. We are funded
by the work we negotiate with the clients, so I work for the
Commonwealth Fund, I work for Families, USA, I work for Blue
Cross/Blue Shield.
Mr. Pallone. Well, what about this study?
Mr. Sheils. This study?
Mr. Pallone. Yes.
Mr. Sheils. This study was done on our own nickel.
Mr. Pallone. But who funded it?
Mr. Sheils. Well, we just did our own nickel. We did it out
of our firm's overhead.
Mr. Pallone. Did United Health directly or indirectly pay
for it because they are funding you? I am just trying to get an
answer to that.
Mr. Sheils. You could say it that way but United Health did
not review any of our materials.
Mr. Pallone. OK. The only reason I mentioned it is our
committee conducted an investigation of United Health and we
found that the company had incredible profitability. In 2004
their net income was $2.6 billion, 2005 it grew to $3.3
billion, 2007 it went up to $4.7 billion. Even last year at the
height of the financial collapse, the company's net income was
$3 billion. And then in 2005 the CEO of United Health, William
McGuire, was the third highest paid CEO in the country
according to Forbes magazine. He resigned in 2006 after the SEC
launched an investigation involving the back dating of stock
options, but United Health gave him a severance pay of $1.1
billion, which was stunning to me. I mean do you think it is
appropriate for United Health to pay the CEO more than a
billion dollars severance?
Mr. Sheils. I don't have--if I were at the pay level where
I would even know this stuff, it would be a much different
spot. We were a firm that was bought by Genex which is owned by
United Health. We don't get involved in anything like that and
there is nobody in our firm who ever sees income of that type.
You can only imagine how surprised we were when 2 years ago we
were bought. They quickly assured us that they wanted us to
maintain editorial control of our work to continue our 36-year
tradition of non-biased, objective, non-partisan work.
Mr. Pallone. All right. Thank you.
Mr. Sheils. That is all I am about.
Mr. Pallone. I appreciate that. Thank you. Mr. Whitfield.
Mr. Whitfield. Thank you, Mr. Chairman. And I want to thank
all of you on the witness panel for being with us today. We
genuinely appreciate your testimony as all of us attempt to get
through this legislation and understand as best we can what the
ramifications and implications of the legislation will be. We
hear a lot of discussion about the public plan, the public
option, and I know some of you are opposed to it, some of you
support it. What I hear most of all from members of the
committee the concern is that if you have a public plan many
people will leave the private plan, their employer plan, and go
join that plan because the costs are lower, which is certainly
understandable. But eventually you can basically destroy the
employer plans because everyone is going to leave and then you
will end up with one big government plan.
And maybe that is OK except the Medicare system can be
criticized in many ways, particularly because of the cost
escalations and I am saying that because Medicare is basically
a U.S. government plan and if this public option goes the way
some people will say that is going to be a big government plan.
And I will make one comment. In 1965 when they started the
Medicare program the Congressional Budget Office did a forecast
that in 1990 that plan would cost $9 billion. It turned out to
be almost $200 billion by 1990, so that is an astronomical
miscalculation. So, Mr. Shea, you represent the AFL-CIO?
Mr. Shea. Yes, sir.
Mr. Whitfield. OK. Well, tell me, the argument that I made
that if it is less expensive more people are going to move over
there and it is going to weaken the private system. Does that
concern you or do you think that that argument has merit?
Mr. Shea. Well, as I said, Congressman, we start out saying
that we need to address cost containment just like others on
the panel said that is job number 1. If we don't control these
costs nothing else is going to be done in health care. So how
do you do that? Well, there is several ways to do it but the
public health insurance plan is one. You can calibrate the
rates in the public insurance plan. This plan proposes Medicare
rates. You could do Medicare plus 10 percent or you could do
halfway between private. That would all affect this. But the
notion is to put some competition in the insurance market that
now doesn't display any competition. What we have are really
close relationships in my view between insurers and providers,
and that is the problem that we have to change. It was what Mr.
Conklin was talking about. We are just trapped by this. So
there are other ways to do it but this is what the competitive
model is----
Mr. Whitfield. OK. Thank you. There are other ways to do
it. Mr. Reiser, will you make a comment on the argument that I
put out there that people are making?
Mr. Reiser. The concern that we have about the public plan
option is Medicare currently underpays, and there is a
significant cost shift onto the private employers which is a
big problem in the current system. A public plan option, we
believe, would exacerbate that, particularly a public plan
option as outlined in the proposal that would pay Medicare
rates so that would just exacerbate the system. The second
problem that we see with it is if people do leave the employer
pool, that is going to weaken our risk pool and lead to higher
costs for the remaining employees, and over time will weaken
and potentially destroy the employment-based system.
Mr. Whitfield. Yes, sir, Mr. Rivera.
Mr. Rivera. One of the things that we have in New York
State is a health care plan which provides health care for
health care workers in the greater New York metropolitan area,
and we pay about $8,500 for family insurance. Upstate New York
where only one of the insurance companies basically dominates
the market, we pay close to $17,000 so basically the idea of
the public plan is to come into markets where basically are
concentrated by only one insurance company, and there is a case
of Maine, New Hampshire, and you can see high cost areas where
basically the lack of competition that basically insurance
companies don't come into those areas and the cost of health
care goes up.
Mr. Whitfield. Mr. Castellani, I know the Business
Roundtable is comprised of very large companies but what are
your views on the pay or play provisions of this bill?
Mr. Castellani. Well, pay or play is almost an academic
issue for us because indeed on the surface all of our members
provide health care, and we want to continue providing it. The
problem that we see with the concept of pay or play is that we
need to bring into the healthcare system all those people who
are currently not covered or can't afford to be covered because
we are paying for them through the kind of cross subsidies that
Mr. Reiser referred to. We do not see the merit of forcing
companies to buy something that they cannot afford,
particularly the small businesses. And so pay or play we think
can be dealt with if we provide the kind of competition that
both Mr. Rivera and I think all of us would agree on but we
think it is best provided through reforms in the insurance
market because in addition to what Mr. Reiser said, that is,
the public option plan exacerbates the cost shift. It
potentially erodes our risk pool and causes younger, healthier
people to leave, quite frankly, and get a lower premium.
But it also does something else that hurts what we all want
and we all talk about, and that is we see much more innovation
in terms of delivery, in terms of wellness, in terms of
prevention, in terms of quality, in terms of information
technology, the kinds of things that will reduce costs and
increase quality coming out of the private sector. We are
concerned that a government run program as we see now in
Medicare and Medicaid just doesn't have the ability to
innovate, so we also lose out on the ability to gain from those
innovations.
Mr. Whitfield. Thank you. I think my time has expired.
Mr. Pallone. Mrs. Capps, our vice chair.
Mrs. Capps. Thank each of you for your presentations. It
has been a good panel. You waited a long time, many of you,
because it has been a very long day of presentation and
different panels on this topic of health care reform. I have
questions for two of you because there is not enough time, only
5 minutes, and my first question will be for Mr. Rivera with
SEIU. In your testimony, Mr. Rivera, you expressed that
individual responsibility must be augmented by measures to
ensure affordability. It seems fair to think that our health
care system should meet hard-working Americans halfway. For
this reason, SCIU supports affordability credit for families
between 133 percent and 400 percent of the federal poverty
line. Why do you believe it is necessary to offer these credits
for families up to 400 percent of the poverty level?
Mr. Rivera. Part of the problem that we have is the
incredible cost of health care these days. For example, in the
case of SEIU almost 50 percent of the members of our union
basically live on very meager means, less than $35,000, so when
you take into account on one hand the high cost of health care
and the disposable income you can see that basically in order
to make it meaningful you have to have subsidies.
Mrs. Capps. So you are talking about your work force, hard-
working men and women with raising a family and trying to have
a quality of life in this country, not at all luxurious, but
still they are doing essential work in their communities and
they should have a decent health care system, and so you are
wanting to provide----
Mr. Rivera. As a matter of fact, the overwhelming majority
of Americans who don't have health care coverage are working
people who make more money than to qualify for Medicaid and are
not enough to qualify for Medicare and then the question that
they have----
Mrs. Capps. Which shows you one of the disparities that the
premiums are so expensive that you really--if you are going to
have your own private insurance plan, self-employed or
whatever, you have to be upper middle class or wealthy in order
to pay for it, and that is one of the major challenges that we
face in this country right now. I am sure you would say that.
Are there some other protections? We are talking about middle
class, right, or at least what we want to consider as the
middle class, the working class, the hard-working people who
keep this country going whether in small businesses or in large
companies providing labor or providing management. What other
projections do you believe are necessary to make health care
more affordable for the middle class? This is a big question,
but I want to also move on to another subject.
Mr. Rivera. I think the fundamental question that we have
is that we are spending 17\1/2\ percent of our gross domestic
product on health care, and if we do not--and I think my
colleague, Mr. Shea, was talking about it, if we don't resolve
the problem of the cost controls we are not going----
Mrs. Capps. I see other people nodding your heads. Is this
sort of a given that this is one of the major challenges that--
and one of the reasons that you are participating is because we
need reform to deal with this in some aspect. I appreciate
that. You are a very diverse group, I might add. I think there
is quite a cross section here. That is interesting. I would
like to now turn for the last couple minutes to you, Mr.
Sheils, just some particular questions about what you were
talking about. Your analysis suggested a public option can get
lower premiums than private plans. Some of our colleagues are
making the--come to the conclusion that this disparity--that a
private plan is not even going to be able to compete with the
public option. Does your model assume that private insurers and
large employer purchases are simply price takers with no
ability to add value or change behavior in a competitive
market? In other words, it is so monolithic in that private
world that there is no ability to compete?
Mr. Sheils. Well, we don't conclude that they cannot
compete. We conclude that there are only certain types of plans
that could survive, and those would be integrated delivery
systems like some of the better HMO type models. I would like
to explain that though because there are some key issues here.
Right now a lot of the insurers get price discounts with
providers.
Mrs. Capps. Right.
Mr. Sheils. Having to do with the fact that they make
volume discounts. They say to a hospital I will bring you all
100,000 of my people for their hospital care if you will give
me a break. Now if everybody goes to the public plan and the
private health plan only has 10,000 people left in it----
Mrs. Capps. The public plan is not going to be able to
offer that, is it? That is pretty competitive.
Mr. Sheils. I wanted to finish my--my point is if there is
only 10,000 people left in the private insurance plan then they
are not going to be able to negotiate discounts that are as
deep as what they can get today.
Mrs. Capps. And that is the only way they can be
competitive.
Mr. Sheils. Right.
Mrs. Capps. I would hope that there would be a lot more
creativity within the private sector. I will get to you but--
but you said I could have a little more time because of that
terribly disruptive moment there. Anyway, maybe you or someone
else would comment about some of the larger markets like Los
Angeles, New York City, private plans sitting below Medicare
fee for service levels. How do you factor that into it and then
I will open it up if there is time?
Mr. Sheils. Well, there are places where there are smaller
disparities between Medicare and private, and then there are
places where there is much larger disparity. In those areas
where you have large disparities, we get quite a bit of shake
up. In areas where there is little disparity it doesn't really
show us very much of a change.
Mrs. Capps. Another comment on this with the other----
Mr. Shea. Just on the whole dynamic. I think what is
important to bear in mind about the Lewin analysis is that it
is based on the prices. Your point is just price taking.
Employers, and you could ask people on this panel, employers
make decisions based on more than price in health care. This is
a very----
Mrs. Capps. Is that a valid point? May I ask for
corroboration?
Mr. Pallone. One more and then I think we got to move on.
Mrs. Capps. OK. I would hope so because I would hope that
we would have a little more creativity in the private market.
We actually need that competition because this is too big for
anyone's response. Many of us feel that way, and I think that
is a feature of the public option is that it will be
competition and it will be a competitive market place. In my
congressional district it isn't competitive at all. It is rural
and there is only one private provider. So, you know, this is a
thoroughly needed situation. I will yield back, Mr. Chairman.
Mr. Pallone. Mr. Gingrey.
Mr. Gingrey. Mr. Chairman, thank you. Let me direct my
question to Mr. Castellani of the Business Roundtable. Mr.
Castellani, could you explain to us how the public plan
proposals would undermine the private insurance industry that
many Americans are very happy with, and I am not--quite
honestly, I have read some of your testimony, and I am not sure
where you are on this public plan proposal. In the interest of
full disclosure, I am concerned about it so that is the reason
for my question.
Mr. Castellani. Yes, sir. What we are concerned about is
not that it would undermine although it would the private
insurance but it would undermine our ability as employers to
provide health care for our employees through the private
insurance market. And it is for the reasons that we have
discussed here and it is primarily three. We do agree with
competition. What Congresswoman Capps was addressing is what we
think is part of the solution. We need greater competition, but
that competition has to be on a level playing field. If a
government plan exists and it has all the elements of a private
plan except it is not required to pay its investors back a fair
return on their investment, the taxpayers in this case, then it
can and will by definition have a lower premium cost. So the
first effect is we would lose people who could qualify and
would move to that lower premium from our plan.
As a result of that, they will tend to be younger and tend
to be healthier employees. Our costs go up because we would
lose that spectrum of our risk pool that allows us to provide
an affordable product for all of our employees.
Mr. Gingrey. Now, Mr. Castellani, you are speaking from the
perspective of the Business Roundtable?
Mr. Castellani. From the payers, yes.
Mr. Gingrey. From the Business Roundtable?
Mr. Castellani. Correct.
Mr. Gingrey. And we are talking about the payers and there
are probably 270 million lives covered through employer-
provided health insurance. My numbers here say most of the 177
million Americans who have employer-based coverage say they are
happy with the coverage they receive. President Obama, God
bless him, has promised to ensure that those folks can keep
what they have. I think that is almost a quote. He likes the
word folks. Those folks can keep what they have. I have heard
him say it many times. Do you think that the public plan could
lead to Americans losing their current coverage because of an
unfair playing field that would be established by a public
plan?
Mr. Castellani. Yes, I think it runs that risk.
Mr. Gingrey. All right. Well, I tend to agree with you. Now
describe for the committee and for everyone in the room what
are some of the unfair aspects that could be attributed to a
public plan that we are concerned about, that you are concerned
about, that the Business Roundtable is concerned about?
Mr. Castellani. Well, as I had answered previously, a lower
premium cost would be attractive to some of our own employees
for which we provide coverage now. If they leave the system, we
have a reduced risk pool and the nature of that risk pool, the
nature of our employees could leave us with a more costly and
fewer number of lives to cover. The second thing that it does
is by its design in this draft legislation it does not fully
reimburse for cost, so another large player in addition to
Medicare and Medicaid that does not fully reimburse for cost
because it is a situation, for example, you are a hospital. The
government is not going to pay any more, Medicare and Medicaid
is not going to pay any more, the uninsured can't pay any more.
There is only one person left paying and that is the employers,
so it exacerbates the cost shift, makes our cost potentially
greater rather than what we are all trying to achieve which is
more affordable health care at lower cost trajectories than we
have now.
The third thing it does is it hurts us in the long term and
that is that fundamentally government programs are not able to
innovate at the kind of rates and with the kind of creativity
that we see in the private sector with competition, and we need
that kind of innovation to bring down the trajectory of cost so
it hits us 3 ways in raising our----
Mr. Gingrey. I had one more, Mr. Chairman. I can't see the
clock.
Mr. Pallone. It keeps going off. Go ahead.
Mr. Gingrey. OK. Thank you, Mr. Chairman. I appreciate your
indulgence. Just one more question, Mr. Castellani. Under this
draft proposal, a tri-committee draft proposal, did you see
anywhere that describes what would happen if the public plan
did not set the premiums and the cost-sharing high enough to
cover its cost? Was there a provision that described what
happens if the public plan--if their reserves are not high
enough, for example, and indeed was there anything in the draft
that describes where those reserves would come from and how
they would compare with the reserves that were required of the
private insurance, health insurance plans, that they are
competing with.
Mr. Castellani. I don't believe they were--at least in my
reading of it and analysis of it, they weren't specified. They
say there are reserves. Reserves would be provided for. But the
one thing that is missing even whatever levels they would be
provided at and the networks would be provided at in the public
plan the one thing that is missing is a fair return on the
people who invest in the capital that allows that public option
to exist. If you don't have that, you always have accost
advantage.
Mr. Gingrey. Well, I thank you very much, and I am sure my
time has probably already expired. Mr. Chairman, thank you for
your indulgence. I appreciate it, and I yield back.
Mr. Pallone. Thank you. I think that is the end of our
questions. Thank you very much. We appreciate it. I know it
keeps getting later. We have one more panel. You may get, as I
think you know, you may get some additional written questions
within the next 10 days and we would ask you to get back to us
on those. Thank you very much. And we will ask the next panel
to come forward. I think our panel is seated. And I know the
hour is late, but we do appreciate you being here, and I am
told we may also have another vote so we will see. We will try
to get through your testimony. This is the panel on insurer
views. And beginning on my left is Howard A. Kahn, who is Chief
Executive Officer for L.A., I assume that is Los Angeles, Care
Health Plan. L.A. OK. Karen L. Pollitz, who is Project Director
for the Health Policy Institute at Georgetown Public Policy
Institute, Karen Ignagni, who is President and CEO of America's
Health Insurance Plans, and Janet Trautwein, who is Executive
Vice President and CEO of the National Association of Health
Underwriters. I don't think I have to tell anyone here that we
try to keep it to 5 minutes, and your written testimony will be
included complete in the record. I will start with Mr. Kahn.
STATEMENTS OF HOWARD A. KAHN, CHIEF EXECUTIVE OFFICER, L.A.
CARE HEALH PLAN; KAREN L. POLLITZ, PROJECT DIRECTOR, HEALTH
POLICY INSTITUTE, GEORGETOWN PUBLIC POLICY INSTITUTE; KAREN
IGNAGNI, PRESIDENT AND CEO, AMERICA'S HEALTH INSURANCE PLANS;
AND JANET TRAUTWEIN, EXECUTIVE VICE PRESIDENT AND CEO, NATIONAL
ASSOCIATION OF HEALTH UNDERWRITERS
STATEMENT OF HOWARD A. KAHN
Mr. Kahn. Thank you, Chairman Pallone, members of the
committee. Thank you. The need for national health care reform
has never been greater. As the CEO of L.A. Care Health Plan,
America's largest public health plan, I am here to provide
information about our model and how a public health option has
worked in California for more than a decade. L.A. Care is a
local public agency and health plan that provides Medicaid
managed care services. We opened our doors in 1997 as the local
public plan competing against a private health plan, Health Net
of California, Inc. L.A. Care strongly supports the concept
that public plans can provide choice, transparency, quality,
and competition. L.A. Care competes on a level playing field
against our private competitor. Plans must have enough funding
to endure provider payments and operate under the same set of
rules.
L.A. Care has always been financially self-sustaining and
has never received any government bailout or special subsidy.
L.A. Care serves over 750,000 Medicaid beneficiaries and has 64
percent of the Medicaid market share in Los Angeles. The
competition between L.A. Care and Health Net has resulted in
better quality and system efficiencies. For example, as part of
our efforts to distinguish ourselves in the market place, L.A.
Care attained an excellent accreditation from NCQA, validation
that it is possible to provide quality care to the poorest and
most vulnerable in our communities. There are 7 other public
plans like L.A. Care in California providing health coverage to
Medicaid beneficiaries. In all of these counties, the public
plans compete against private competitors.
Two and a half million Medicaid beneficiaries are provided
health services through this model. California has other public
plan models as well. Congresswoman Eshoo, a member of this
subcommittee, is very familiar with the enormously successful
county organized health system which she and I helped create
within her district. Our provider network includes private and
public hospitals and physician groups, non-profits, for-
profits, federally qualified health centers, and community
clinics. Our subcontracted health plan partners include some of
the biggest private health plans, Anthem Blue Cross and Kaiser
Permanente, as well as smaller local plans. In addition to
Medicaid, L.A. Care operates a CHIP program, Medicare Advantage
special needs program, and a subsidized product for low income
children.
What makes L.A. Care, a public health plan, different? L.A.
Care conducts business transparently. We are subject to
California's public meeting laws so all board and committee
meetings are open to the public. L.A. Care answers to
stakeholders, not stockholders. Its 13-member board includes
public and private hospitals, community clinics, FQHCs, private
doctors, Los Angeles County officials and enrollees. Our
enrollees actually elect 2 of our board members resulting in a
strong consumer voice. Part of our mission is to protect the
safety net. When Medicaid managed care began there was fear
that FQHCs and public hospitals would lose out. Through several
strategies over 20 percent of L.A. Care's enrollees have safety
net providers as their primary care home. In Los Angeles large
numbers of people will remain uninsured under even the most
ambitious health care reform proposals, and the safety net will
continue to need our support.
Local public plans like L.A. Care protect consumer choice.
Since we started, 3 private health plans serving this
population in Los Angeles have gone out of business. L.A.
Care's stability has ensured that Medicaid beneficiaries
continue to have continuity and choice. Local public plans
raise the bar on performance and quality in their local
communities. L.A. Care offers a steady calendar of provider
education, opportunities that improve provider practices and
the quality of care. Our family resource center serves over
1,200 people, most of whom are not our plan members. While
defining a public plan option is still underway, we recommend
against creating a monolithic national public plan. Health care
is, and will continue to be, delivered to local markets which
vary in terms of population and competition, infrastructure,
community need, and medical culture.
California recognized years ago the need to lower cost and
improve quality and develop local plan options for Medicaid
that have been supported by each successive Administration,
both Democrat and Republican. With regard to the health
insurance exchange, L.A. Care supports allowing states to
create their own exchange. We appreciate the recognition that
Medicaid beneficiaries have special needs and so are not
included at first. However, we strongly recommend excluding
Medicaid beneficiaries completely as they are among the most
vulnerable to care for and present unique challenges.
California's local public plans are successful local models
that should be considered. Let us build on what is working in
health care and focus on fixing what is broken. Thank you.
[The prepared statement of Mr. Kahn follows:]
Mr. Pallone. Thank you. Now let me mention that we do have
votes, but I would at least like to get one or possibly two of
the testimony in, so let us see how it goes. Ms. Pollitz next.
STATEMENT OF KAREN L. POLLITZ
Ms. Pollitz. All right. Thank you, Mr. Chairman, members of
the committee. First, I would like to congratulate you on the
tri-committee draft proposal. It contains the key elements
necessary for effective health care reform and at this time I
am sure you are going to get the job done. The proposal
establishes strong new market reforms for private health
insurance with important consumer protections, a minimum
benefit package, guaranteed issue, modified community rating,
elimination of pre-existing condition exclusion periods. These
rules apply to all qualified health benefit plans including
those purchased by mid-size employers with more than 50
employees. Today, mid-size firms have virtually no protection
against discrimination. When a group member gets sick premiums
can be hiked dramatically at renewal forcing them to drop
coverage and with no guaranteed issue protection finding new
coverage is not an option.
I commend you for not including in the bill exceptions to
the employer non-discrimination rule that would allow employers
and insurers to substantially vary premiums and benefits for
workers through the use of so-called wellness programs.
Clearly, wellness is an important goal but ill-advised
regulations issued by the Bush Administration cynically hid
behind it to allow discrimination against employees who are
sick through the use of non-bona fide wellness programs that
penalize sick people but do nothing else to promote good
health. Another good feature of the tri-committee bill is the
requirement of minimum loss ratios of 85 percent, which will
promote better value in health insurance. The bill grants broad
authority to regulators to demand data from health plans in
order to monitor and enforce compliance with the rule, and it
creates a health insurance ombudsman that will help consumers
with complaints and report annually to the Congress and
insurance regulators on those complaints.
Another key feature in the bill is the creation of a health
insurance exchange and organized insurance market with critical
support services for consumers. The exchange will provide
comparative information about plan choices and help with
enrollment appeals and applications for subsidies. The exchange
will negotiate with insurers over premiums to get the best
possible bargain and importantly consumers and employers who
buy coverage in the exchange will also have that choice of a
new public plan option. I know you have talked today about the
cost containment potential of such an option. It is all
important that a public option would offer consumers an
alternative to private health plans that for years have
competed on the basis of discrimination against people when
they are sick. Just last week, your committee held a hearing on
health insurance rescissions that discussed people who lost
their coverage just as they started to make claims.
At the Senate Commerce Committee hearing yesterday, a
former officer of Cigna Insurance Company testified on common
industry practices of purging employer groups from enrollment
when claims costs get too high. I would like to submit his
testimony for your hearing record today. When consumers are
required to buy coverage having a public option that doesn't
have a track record of behaving in this way will give many
peace of mind. And I left the rest of my statement in the
folder. Isn't that terrible? There we are. I got it. I got it.
I am so sorry. Second, a public plan will promote transparency
in health insurance market practices. In addition to data
reporting requirements on all plans, with a public plan option
you will be able to see directly and in complete detail how one
plan operates, and if private insurers continue to dump risk
after reform it will be much easier to detect and sick people
will have a secure coverage option while corrective action is
taken.
Mr. Chairman, in my written statement I offer several
recommendations regarding the draft bill and will briefly
describe just a few of them for you now. First, the benefit
package, the benefit standard in your bill does not require a
cap on patient cost sharing for care that is received out of
network and it really needs one. Also, the benefit standard
does not specifically reference as a benchmark that Blue Cross/
Blue Shield's plan that most members of Congress enjoy. Many
have called on health reform to give all Americans coverage at
least as good as what you have. It is not clear whether your
essential benefits package meets that standard but if it
doesn't, it should, and if that raises the cost of your reform
bill, it will be a worthwhile investment to raise that
standard.
Over the next decade, our economy will generate more than
$187 trillion in gross domestic product and we will spend a
projected $33 trillion on medical care. The stakes are high and
it is important to get this right. The second rules governing
health insurance must be applied equally to all health
insurance. As drafted in your bill, some of the rules that will
apply in the exchange might not apply outside of the exchange.
Further, there is no requirement that insurers who sell both in
and out of the exchange to offer identical products at
identical prices. If the rules aren't parallel risk
segmentation can continue. As an extra measure of protection,
the tri-committee bill provides for added sanction on employers
if they dump risks into the exchange and similar added
sanctions should apply to insurers.
Another problem with non-parallel rules is the exemption
for non-qualified health benefit plans and limited benefit
policies called accepted benefits. Health care reform is your
opportunity to end the sale of junk health insurance and you
should do it. And, finally, Mr. Chairman, with regard to
subsidies, the bill creates sliding scale assistance so that
middle income Americans with incomes up to 400 percent of the
poverty level won't have to pay more than 10 percent of income
towards their premiums. But as charts in my written statements
show, some consumers with income above that level could still
face affordability problems, especially those who buy family
coverage and baby boomers who would face much higher premiums
under the 2 to 1 A trading. I hope you will consider phasing
out the A trading and also setting affordability premium cap so
that no one has to spend more than 10 percent of income on
health insurance. Thank you.
[The prepared statement of Ms. Pollitz follows:]
Mr. Pallone. Thank you. I don't want to cut you short, Ms.
Ignagni, so you can all wait until we come back. Hopefully, we
won't be too long. I would say 20 minutes or so. Thank you.
[Recess.]
Mr. Pallone. The hearing will reconvene, and we left off
with Ms. Ignagni. Thank you for waiting.
STATEMENT OF KAREN IGNAGNI
Ms. Ignagni. Thank you, Mr. Chairman, members of the
committee. It is a pleasure to be here, and having watched the
hearing all day I just want to congratulate you. It is a
wonderfully diverse group of people that you have assembled and
you all should be congratulated. It was terrific to watch it. I
think in the interest of time recognizing you have been here
all day, I want to make just a couple of points. First, on
behalf of our industry, we believe that the nation needs to
pass health reform this year. We don't believe that the
passionate debate on which direction or form that should take
in any way should deter getting this done. It needs to happen.
And to that end, I think it is somewhat disappointing that the
focus generally in the press and here in Washington had been
almost exclusively on the question of whether to have a
government-sponsored plan or not. And I think in many ways one
could say that it is obscuring the broad consensus that exists
and indeed that I believe you built on in the legislation in
several important areas.
First, we see several important areas. First, we see a
consensus on improving the safety net and making it stronger.
Second, providing a helping hand for working families. Third, a
complete overhaul of the market rules. We have proposed an
overhaul. You have imbedded it in this legislation. We firmly
support it and congratulations for it. We think it is time to
move in a new direction and we are delighted you are doing
that. Next, a responsibility to have coverage. We think that is
very important because, in fact, the market and many of the
questions today about how the market works today really can be
answered because until Massachusetts passed legislation
requiring everybody to participate the industry grew up with
the rules that are no longer satisfactory to the American
people, and the opportunity to get everyone in and
participating is an opportunity to charge a new course.
Next, the concept of one-stop shopping for individuals and
small employers. Next, investments in prevention and chronic
care coordination. Next, addressing disparities. Bending the
cost curve. A number of the witnesses have talked about that
today. We believe it is integral to moving forward. And,
finally, improving the work force creating new opportunities
and looking at where we have deficits and attending to them.
The committee's draft contains many and all--actually all of
these elements, and we commend you for it. Moreover, we feel
that we have to seize the moment as a country and build on this
consensus that will accomplish what has eluded the nation for
more than 100 years and that is to pass health care reform.
The government-sponsored plan shouldn't be a roadblock to
reform, and the key concept of introducing a government-run
plan is that it would compete on a level playing field, but
that is not what would happen. And, Mr. Chairman, as I sat here
today, I thought of an analogy, and just to reduce it to a
clear and hopefully very direct way to explain our concerns, I
want to make an analogy to a race between 2 people, one that
makes the rules and at the same time says to the other
competitor this is my 50-pound backpack and I want you to carry
it. Cost-shifting for Medicare and Medicaid is that backpack
for our health plans and we can't take it off in this race. The
government plan will run without that encumbrance. Moreover, it
will add weight to the backpack. We now pay hospitals 132
percent on average nationally of costs about 46 percent above
Medicare rates. That has implications for preserving the
employer-based system. We believe you cannot under those
circumstances implications for hospitals and physicians who
have long expressed concerns about Medicare rates and the
adequacy or not adequacy--not being adequate, and the
implications for the deficit which are not being taken into
account.
We believe that the most important message we can convey is
that we have tools and skills to provide. Indeed, we have
pioneered disease management and care coordination. We
pioneered opportunities for individuals to be encouraged when
their physician finds it acceptable to substitute generic
drugs. We are recognizing high quality performance in hospitals
and physicians, and we are moving down a path of showing
results. Imbedded in our testimony are some of those results,
which are very specific and very measurable about what we are
doing and how we are doing a better job. We can help with
traditional Medicare. We can bring more of those tools, but we
hope that you will recognize the 50-pound backpack and the
weight as we explain our concerns with a government-sponsored
program.
The most important message I can convey to you today is not
to let what people disagree on threaten the ability to pass
reform this year. Our members have proposed and are committed
to a comprehensive overhaul of the current system. We have
appreciated the opportunity to discuss key features of the bill
with your staff, and we pledge our support to work to achieve
legislation that protects consumers and provides health
security to patients. Thank you very much.
[The prepared statement of Ms. Ignagni follows:]
Mr. Pallone. Thank you. Ms. Trautwein.
STATEMENT OF JANET TRAUTWEIN
Ms. Trautwein. Thank you very much. And being the last
witness of the day, I will try to not repeat everything that
everyone else has said. What I would like to do is I agree with
everything Ms. Ignagni has just said except that I do want to
say one thing, and that is that the details matter. And one of
the things that our members do for a living is we look at a lot
of the details, and I feel it incumbent to bring up a couple of
those because I think we do need to make sure that we get these
things straightened out before we move forward. I do want to
stress that we don't want to not move forward. We want health
reform and we want it done correctly. I do want to mention a
couple of things to illustrate to you that we have got to get
some of these things that may appear to be small straight
because they could have huge implications.
First of all, I want to mention the rating provisions in
the bill, and I want to stress I am not talking about the no
pre-existing conditions. I am not talking about the no health
status rating. I am not talking about anything like that. I am
talking about specifically the modified community rating
provisions. Currently the bill uses something called an age
band of 2 to 1. I am not going to go into details about that
except to tell you that it is too narrow. And, Mr. Chairman, I
would like to use your own state for an example of it being too
narrow. New Jersey recently went to 3\1/2\ to 1 age bands
because what they had was too narrow already and it wasn't
affordable for people. The gentleman on the last panel that
talked about New Jersey rates of $13,000, they are in a
situation of 2 to 1 age bands, and that is one of the reasons
why it is too expensive. So we want to make sure that we
establish bands that allow wide enough adjustments to make it
affordable for more people so that we don't end up losing a lot
of the young person participation.
In addition, one of our very specific concerns has to do
with the fact that this bill tends to lump all groups that are
what we call fully insured together, whether they are a group
of 10 people, 50 people, or 200 people, and the modified
community rating provisions apply to all of them. Today, groups
of over 50 on a gradual basis use their own claims experience,
and when I talk about claims experience, I don't mean
perspective health status ratings where they fill out a health
statement in advance. I mean that the group develops community
rates based on the experience of their own group of employees.
It is very cost effective. It allows them to keep their rates
low over time, and I would point out this is not a market that
has problems today. These are not the people that are knocking
on your doors telling you that they have a problem.
And I would encourage you to not eliminate that ability for
them to do that because the rate shock to the employers in that
category will be fairly significant. I would also like to point
out that the grandfathering provisions really need to be
improved, and there are a couple of areas that I am thinking
are probably just mistakes, it is a draft, inside the bill that
ought to be changed. The provision, first of all, is too strict
for individuals. It only allows them to add family members and
frequently these policies are reviewed on an annual basis and
other minor adjustments need to be made. For example, a person
that has an HAS qualified plan has a legal adjustment to be
made relative to the deductible on an annual basis, and the
bill doesn't really allow for that. And then groups, of course,
are not really grandfathered. They have a phase-in period over
5 years, and we would be hopeful that groups could keep their
coverage longer than that period of time.
The one thing I want to talk about that I don't think
anyone else has mentioned has to do with risk adjustment. This
is something that we look at a lot. We are very involved with
risk adjustment and reinsurance plans to make sure that they
are stable. I am very concerned that the risk adjustment that
is suggested is not adequate for starting up this program.
The risk adjustment suggested is more something you would
do once your exchange had been in effect for a period of time
and it would adjust risks among the plans inside the exchange.
It doesn't account for what is going to happen initially when
we have lots of people entering the system, many of whom may
have serious health conditions. For example, the way that your
bill is written today on day one of guarantee issue every
single person in this country that is in a high risk pool will
come immediately into that pool, so we got to have something to
mitigate the cost of those high risks coming in so that you
don't end up with something you don't want which is a pool that
results in costs that are higher instead of lower, so again
these details are important that we get them straightened out
correctly.
I would be remiss if I didn't say something else about the
public program. Like many of the people that have talked here
today, we are very worried about a government run public
program. I want to talk specifically about the cost shifting.
There are a lot of things that we have concerns about but we do
definitely see the impact of cost shifting. We all have heard
the statistic but I think it bears repeating again. Almost
$1,800 a year for the average family of 4 is a direct result of
today's cost shifting without a new public program. And I want
to mention one other thing. I see that I am out of time but I
want to mention this very quickly. We have heard state premium
taxes mentioned here many times today, but I want to kind of
put a face on that because in New Jersey alone state premium
taxes are $503 million annually to the state and they are not
dedicated to insurance. They have gone to other programs.
We have programs in North Carolina, Connecticut, Kentucky,
Pennsylvania, North Dakota that were state premium taxes from
firefighter programs. They buy equipment to fight fires and so
these funds, I don't think the states can do without this
revenue source. It is another example of how we are not going
to have a level playing field and we need to think this through
a little bit more carefully. And I have additional information
but I am out of time so I will go ahead and stop now.
[The prepared statement of Ms. Trautwein follows:]
Mr. Pallone. Thank you. And, as I mentioned earlier, I
think I did, that whatever your written testimony is or data
that is attached to it, we will put in the record in its
entirety. I wanted to--let me start with Ms. Pollitz. The
discussion draft takes the step of prohibiting discrimination
in insurance based on a person's health status, things such as
disability, illness or medication history. However, you know,
as we are trying to close the door on that with this bill, some
are proposing others, and I am not entirely sure what you said,
but I know that you said that, or at least in your written
testimony, that insurers should--I am talking about Ms.
Trautwein now, that insurers should continue to be able to
alter premiums based on a person's past claims experience, and
the way I understand it that employers would be permitted to
change a person's premium not necessarily on their health
status but on certain activities like wellness programs and
those kind of things. I don't want to put words in your mouth.
Ms. Trautwein. What I meant is not what I----
Mr. Pallone. Sure. Go ahead.
Ms. Trautwein. We want health status rating to go away for
individuals.
Mr. Pallone. Right, but you said that the employers----
Ms. Trautwein. But we are talking about employer groups
there they look at all of their employees, de-identified
information, and they calculate what their anticipated claims
are for the next year. This is done all the time. And then they
figure out how much they need for reserves and things like that
and they develop a rate based on their particular group and it
is a very, very cost effective way of doing it. It results in
lower rates for the employees, not higher. That is why we were
asking for that.
Mr. Pallone. I just want to make sure, and I am not trying
to put words in your mouth, Ms. Trautwein. I am just trying to
understand that I want, you know, employers be able to have
wellness programs certainly but it just seems to me we have to
insure the persons who are, you know, unable to achieve a
specific physical or other goal and not penalize and therefore
somehow health status comes back again. But I am not just
talking about Ms. Trautwein's testimony. I am just talking
about in general that we are trying to eliminate a lot of these
things. Let me just ask you this, Ms. Pollitz. Can you discuss
the role of employer wellness program and what sort of
protections we can be sure to include to promote the positives
without allowing this discrimination and what it would mean for
people if insurers were able to use claims experience and
ratings. Again, I am not entirely clear on what Ms. Trautwein
was saying so maybe this is not fair, but hopefully between the
two of you, you can answer my question.
Ms. Pollitz. I think those are 2 separate things.
Mr. Pallone. OK.
Ms. Pollitz. Just very quickly on the wellness programs.
You are right. I think there is a lot of interest. At
Georgetown there are a lot of great programs, sponsored walks,
time off, free exercise classes in the building, stuff like
that, so I think there is a great deal of creativity and good
intentions and good results in a lot of employer-sponsored
wellness programs. But there are other programs that even take
on the name incenta care that all they do is just apply health
screenings, make you take certain health tests, and if you
flunk them, that is it. Your benefits get cut, your deductible
gets raised, or your premium gets hiked by a lot, and there is
nothing else. There is no classes. There is no help. There is
no nothing. So I think a return to the original notion under
the old Clinton Administration regs for non-discrimination
establish some standards for bona fide wellness programs, you
know, some indication that there actually is wellness
promotion, disease prevention activities going on,
opportunities to participate, giving employees opportunities to
participate that doesn't kind of come out of their hide.
Privacy considerations, employers are not covered entities
under HIPA privacy rules. All that health screen information
that goes in, people are very worried about that. And so that
is the first thing, and then whatever rewards there are, I
think it is important to just keep that separate from the
health plan because otherwise it----
Mr. Pallone. Do you agree with her, Ms. Trautwein, because
if you do then I don't need to pursue this any longer.
Ms. Trautwein. Well, I sort of agree with her. The plan
that she talked about that is not a real wellness program, we
are not in favor of those. That is not what we are talking
about.
Mr. Pallone. OK.
Ms. Trautwein. We are talking about very unique programs
where each person designs their own goals. Somebody might be in
a wheelchair and the other person might be a marathon runner.
Mr. Pallone. OK.
Ms. Trautwein. That would be silly.
Mr. Pallone. I don't want to prolong it. I think we have--
--
Ms. Trautwein. I think we agree. I do think you could have
some incentives relative to people meeting the goals that they
have established for themselves though.
Mr. Pallone. OK. Now let me ask Karen the second question,
and then I will quit. Mr. Shadegg, he is not here, I hate to
mention him with his not being here, but I am, Mr. Shadegg and
others have suggested that it would make sense to allow
insurers to get licensed in one state and sell those license
products and others. I have always been worried about that, and
I know insurance commissioners don't like it. Can you tell me
under this new national market place what would your thoughts
be on a proposal like that? Did I say Karen? Either one of you.
I meant Ms. Pollitz but you can answer it too, Ms. Ignagni.
Ms. Ignagni. Thank you, Mr. Chairman. I didn't mean to step
in. I thought you were directing----
Mr. Pallone. No, go ahead.
Ms. Ignagni. Actually just on the last question, I do think
there is a combination as you are suggesting. I do think it
makes a great deal of sense to have a permissible corridor of
activities that could be done in the context of wellness and I
think you are right to pursue it. There have been some major
advances in the employer context that I think we could take
advantage of and if you would like, Ms. Pollitz----
Mr. Pallone. No, go ahead. Why don't you start with Ms.
Pollitz and then we will come back to you.
Ms. Pollitz. I will be happy to answer.
Mr. Pallone. All right. This idea that you allow insurers
to get licensed in one state and sell the products in another,
I have always thought that was a dangerous thing, you know.
Ms. Pollitz. The experience has been that that is a
dangerous thing in association health plans. This is where you
see this happening a lot and it is very dangerous and it
creates opportunities for fraud.
Mr. Pallone. But in addition now we have this national
proposal in the draft so how does that all fit in with that?
Ms. Pollitz. Well, now you have got a national proposal,
but in your proposal a requirement to sell anywhere outside or
inside of the exchange the first requirement that is listed is
that you have to be state licensed, so you still need to--you
have to have a license. You need to work with licensed agents.
You need to meet solvency standards. All of those things are
established at the state level. You don't need to replace those
at the federal level and you haven't in your bill, but I think
you need that close accountability so someone need to be
watching the health plans all the time, otherwise, there is
great nervousness about selling back and forth. Just the last
thing I would mention, and I think it was mentioned in some of
the written testimony, I think there may be a little bit of
drafting imprecision about sort of what are the federal rules
that apply across the board and then what other sort of state
rules or rules under the old HIPAA structure that apply and
that you probably need to straighten out a little bit in the
next draft, but you don't want a situation where a health plan
can be licensed in one state and operate under one set of rules
but then be able to sell somewhere else under a different set
of rules. If your national rules become completely across the
board always the same, you still need to be state licensed but
then this whole notion of selling across state laws I think
won't matter.
Mr. Pallone. And if you want to comment on----
Ms. Ignagni. Thank you, Mr. Chairman. I think this is a
tremendous opportunity to look very carefully at the regulatory
structure and take a major leap forward. Having everyone in
allows the complete overhaul that is baked into the proposal
now, guarantee issue, no pre-existing conditions, no health
status rating. We ought to specify those guidelines at the
federal level, have uniformity and consistency, not re-regulate
them at the state level, which is causing a great deal of
confusion now in the market with same function regulated at
different levels by different entities. We should take this
opportunity to make it clear so that consumers can feel
protected and know that the health plans will be accountable.
We are very comfortable with that. We would have this enforced
at the state level. States have done a very good job at
maintaining solvency standards, consumer protections, et
cetera. We think that is the right balance.
We don't believe that--and we have some advice in our
testimony but the drafting of the legislation in terms of these
regulatory responsibilities. We think it is absolutely clear
and key for consumers to understand how they will be protected,
where they will be protected, and what the standards are. And
we have such duplication and confusion now in the system it is
very, very difficult for consumers to feel protected, so I
think this is an opportunity to take a major step forward and
really respond to that.
Mr. Pallone. OK. Thank you. Mr. Burgess is next.
Mr. Burgess. Let me just be sure I understand something
now. The new public government run program is going to have to
be licensed in all 50 states? I guess that is a maybe. This new
public plan, this new government plan----
Ms. Pollitz. I would defer to your own staff on that. It is
a federal program.
Mr. Burgess. Right. Medicare is a federal program. It is
sold across state lines and it is not licensed individually to
every state.
Ms. Pollitz. I don't see the requirement that it has to be
licensed by states. It is a federal program.
Mr. Burgess. Right. So it seems to me that if Ms. Ignagni's
group wants to develop something that meets certain criteria
that it ought to be afforded the same courtesy to be sold in
every state.
Ms. Pollitz. Well, I don't know that that is a courtesy. I
think it is just an administrative faculty.
Mr. Burgess. The same administrative faculty then, but we
will not call it a courtesy. It just strikes me as we have got
2 sets of rules here, one for the public sector and one for the
private. That seems inherently unfair. This is not what I
intended to talk about but I am not following. Where is the
inherent fairness in the--Ms. Ignagni has already talked about
carrying a 50-pound weight on her back because she has got to
carry the freight, the cross subsidization from the federal
programs, the freight they are not paying in the first place
and then on the other hand are we creating a product that is
just by definition she can't compete with it because it is
something that could be sold without regard to state insurance
regulation. Ms. Ignagni, is that your understanding? Is that
your understanding of this new public plan?
Ms. Ignagni. I know the remedies. I would yield to counsel
but I understand that the remedies are federal remedies, and I
think the entity is charted at the federal level but I wouldn't
want to be presumptuous in that regard.
Mr. Burgess. Ms. Trautwein, you are the national
organization. Do you have an opinion about this?
Ms. Trautwein. Oh, yes, sir. We have a very--that is what I
said in my testimony that we are very concerned about the fact
that a playing field would never be level. On one is the
payment, which I spoke about in my oral testimony. The other is
the rules. Its regulation at the state level is what we have to
meet. Having state premium taxes, state regulation, state
remedy. That is not the way the bill reads at present.
Mr. Burgess. Maybe I will figure out a way to say this more
clearly and submit it in writing. Ms. Ignagni, I just have to
say maybe I am a little bit disappointed after the group of six
met down at the White House, and I know my own professional
organization was part of that. And we came out of there with,
what was it, a trillion dollars, 2 trillion dollars in saving
over 10 years, and part of those savings was administrative
streamlining, which presumably is one claim form instead of 50
or 60, which we have to deal with now. I did see it reported,
but I am also going to assume that perhaps there is one
credential form rather than filling out 50 different
credentialing forms every January and taking 2 or 3 full-time
equivalents to have them do that in a 5-doctor practice. Why
the hell didn't we do that a long time ago?
Ms. Ignagni. Well, sir, that is a fair point, and we have
been working now over a 4-year period. As you probably know, we
set up a separate entity to actually take on this issue of
simplification in the ways the banks took on the ATM
technology. We have worked with physicians. We have worked with
all the specialty societies. We have worked with hospitals, the
different types of hospitals to make sure that we were going to
get the language right. We have taken our time doing it to make
sure we had that language right in a way that physicians,
physician groups, and hospitals felt satisfied that we are
actually solving the problem. So now that we did that, we were
able to step forward and say we are not only taking the
responsibility of moving forward, we are not going to be doing
it voluntarily. We are very committed to legislation. We have
said that. We want to make sure it is uniform across our
industry. We are comfortable with that, and we will help you
draft it.
Mr. Burgess. Let me ask you because you have been up here a
long time and you know the rules we live under with the
Congressional Budget Office, and a $2 trillion score, whatever
it is, over 10 years, the Congressional Budget Office is going
to look at that and say if this is something you were supposed
to be doing anyway then we just calculate it into the base line
and there in fact is no new money to spend. How are you going
to deal with that?
Ms. Ignagni. This is a very important question you are
asking. First, until we made the announcement no one said from
our industry that we were going to be regulated for this, that
it would be not only committed to legislation, we would support
it and help draft it, so that is a material difference, number
1. Number 2, for the $2 trillion goal to be achieved, as you
know well, it is going to take an interdependence among all the
stakeholders to achieve that. There are 4 key areas of savings
if we are going to bend the curve as a nation, we have to take
seriously. One is administrative simplification. We need to
make sure that not only everything we have committed to, but
where we go in the future is the right direction for hospitals
and physicians that they can achieve----
Mr. Burgess. You have no argument from me about that. I do
wonder how we are actually going to get the dollars savings
scored by--we all know, we talked about the Medicare
prescription drugs. It is much more cost effective to treat
something at the front end. Then when the target is destroyed
and yet the Congressional Budget Office is never going to score
that as an actual savings. It actually scores it as an expense
because you are going to be treating more people by virtue of
the fact you are treating disease at an earlier point.
Ms. Ignagni. Well, we have some ideas on both. Let me just
quickly----
Mr. Burgess. We are about out of time. I am going to submit
some other questions in writing. I would just say this. You see
what a fluid situation this is, and please forgive me, Mr.
Chairman, just close your ears for a minute. Pay no attention
to the man behind the curtain. Things are in such flux. Don't
be quick to give things up. By all means, work with us, but
don't go to the White House waving the white flag as the first
volley. In fact, it can be counterproductive. It is just my
opinion. I will return it to the chairman.
Ms. Ignagni. Sir, if you will allow me to just--Mr.
Chairman, just a quick point.
Mr. Pallone. Sure.
Ms. Ignagni. I will be delighted to--you have some very
important technical questions. I will be delighted to submit
that for the record, but you ask now, the last point you have
made is more in the category of right road, wrong road, so let
me give you a very direct answer. If you look at the Council of
Economic Advisors report unless we truly bend the cost curve in
a sustainable way not only will we not be able to afford the
new advances we want to make in getting everybody covered, we
won't be able to afford the current system. We participated in
an effort with the hospitals, the physicians, as you know, with
the SEIU, farm and the device companies to take our seat at the
table to say as stakeholders, as private sector entities, we
could take part of the responsibility of stepping up and saying
we have skills we can bring to the table to get this problem
solved.
That is what our plans do. That is the point that we are
making here. Mrs. Capps had asked a question earlier to Mr.
Castellani about what is the legacy of the private sector. The
legacy of the private sector is that we have brought disease
management care coordination. We are now recognizing physicians
and hospitals, as you know, recognizing high quality
performance. We brought the skills to do that. Patient decision
support, personal health records, helping physicians not have
to sort through loads of paperwork. We are proud of that. We
pioneered those tools. We are implementing it. And similarly
with administrative simplification, we are the key domino to
make that happen. We have taken that very seriously, which is
why we participated in this effort to try to contribute to this
major goal.
Mr. Pallone. That sounds like a good----
Mr. Burgess. Briefly reclaiming my time.
Mr. Pallone. You don't have any left.
Mr. Burgess. It is obvious that there have not been people
willing to work with you on that for the last 7 years that I
have been here. I just cannot tell you how distressed I am that
there was never this willingness to work when our side was in
power, when a different president was in the White House. I
feel personally affronted by this, and it is ironic that you
were just at the point now where your industry is going to be
delivering on the promise that we all knew it could do, and I
don't know what the future holds for you, because there are
many people, we have heard it over and over again in this
committee this week, that a single payer system is what is down
the road for the United States of America.
Mr. Pallone. All right, let us get moving.
Mr. Burgess. And all of the things that you have done with
care and coordination disease management, that may be something
you have developed only to find it is never really fully
implemented to use in the private sector.
Mr. Pallone. All right, Dr. Burgess.
Mr. Burgess. We could have done a much better job with
this. I yield back.
Mr. Pallone. I don't want to be tough because I kind of
like the dialogue, but we need to move on. Mrs. Capps.
Mrs. Capps. I find it interesting too, but I really want to
commend you all for the last panel of the day and think there
ought to be some kind of medal. Do we design medals for the
last panel? This is our fourth day of hearings too so if we
seem a little kind of flat you will understand, I hope. But
this is one I wanted to state in particular because you are so
key in what you represent to us getting this right, and that is
the goal and that is exactly where we all are. And, Ms.
Ignagni, I appreciate you taking us down saying we have got so
much we can agree on unless at least agree we don't agree. I
don't agree with you on many things, and you know that, but
that is OK. We can talk. I want to tell you, Ms. Pollitz, you
hold the bar very high, and we are going to try to get as close
as we can to the standards you are giving us. And, believe me,
I have constituents who are reminding me of that every single
day when I go home, which is a good thing. This is all across
the map. But everybody's attention is now focused on health
care, and I salute that. It is about time.
Mr. Kahn, I have suburban counties north of your region but
I am a big fan, as you know, because now I can boast that each
of the 3 counties, I represent part of the 3, now has a county
operated program, and that yesterday we were able to get Mr.
Freeland, who speaks very highly of you, to testify as a
provider. It is now called CenCal. And they were one of the
first to get a waiver and there are some really exciting
options that can be brought to the table now. Call them what
you want but they are going to help us deliver care. I have a
tough--I want to share what it is like to be a member of
Congress and have the phone ring and hear a story, and you know
this. But I just want to bring it out and make sure that it is
on the record. This panel gives me the chance to relay the
story of the constituent whose situation really illustrates why
we need to bring honest competition into the insurance market.
I represent a little town called Carpinteria, a rural part of
Santa Barbara County.
A young woman is a good member of part of a non-profit
community organization. She has a 12-year-old daughter who was
born with spina bifida and needs surgery to replace a stent in
her brain. Her mother's income places her mother just over the
threshold to--she is not able to qualify for Medicaid. We call
it the Healthy Families, the SCHIP expansion, in California.
Though her mother's employer does provide coverage the young
girl is covered under the plan but this plan specifically
states that it will not cover the surgery she needs for her
life because spina bifida is a pre-existing condition. Ms.
Ignagni, I am going to start with you. I would like to have
comment for as much time as I have, and I don't want to go over
time, but this plan that this mother has in rural--parts of my
district there is one option in much of it, one private plan,
and there are at most in Santa Barbara County, I think 2, maybe
3, at the moment, so she can't shop around very much.
She called my office because she is beside herself. This
denial is for a condition that this young woman was born with,
and this surgery is needed to relieve the pressure of fluid on
her brain. People have been talking about pre-existing
conditions in the private sector for a very long time. This is
real time. This is happening today in my constituency.
Ms. Ignagni. And, Mrs. Capps, I think there is no
legitimate answer to your question but to say this is why we
have worked so hard to propose change in the comprehensive
proposal----
Mrs. Capps. It hasn't happened yet.
Ms. Ignagni. It has not happened yet because we have a
system now where people purchase insurance if they are doing it
individually when----
Mrs. Capps. No, this is part of her employment, but let
me----
Ms. Ignagni. If it is part of an employer then guarantee
issue----
Mrs. Capps. A non-profit organization with very minimal
amount that they can spend for employee-covered care but let me
see what some other comment is. Maybe, Mr. Kahn, if this young
mom was working for this non-profit which abounds in Los
Angeles as well, what option might she have?
Mr. Kahn. Well, Congresswoman, and, by the way, you have a
beautiful area that you cover. Your district is beautiful and
you did have the first of all the country organized health
systems there. The problem is a structural one which is the way
our regulations and our markets are set up right now that an
individual or if they are in a very small group perhaps because
usually pre-existing conditions are not excluded from group
coverage. It may be such a small group, however, that it is.
That could be----
Mrs. Capps. Less than 10 employees.
Mr. Kahn. So knowing the situation, that could be the case.
And under the current system, to be perfectly honest with you,
there is no good answer for that situation for the individual
or in a small group like that. That is the problem with the
system right now and why I think we all agree we have to change
the system. Now depending on our income level, it is----
Mrs. Capps. It is not very high.
Mr. Kahn. Not very high. They could actually become
eligible for Medicaid if they spend down enough depending on
what her income level is.
Mrs. Capps. Pretty big price to pay.
Mr. Kahn. And it is a very big price to pay, but that is
the problem is that we have a broken system right now that
needs to be fixed, and that is why we are all here because of
those kinds of situations covered and not covered.
Mrs. Capps. Our reform legislation being a remedy?
Mr. Kahn. Absolutely. I think that the solutions that are
being addressed----
Mrs. Capps. From both the private sector and this public
option of course.
Mr. Kahn. Well, I think what we are talking about is reform
of the rules around coverage, and indeed you would accomplish
that because once everyone is covered then the pre-existing
conditions issue should really go away. The problem right now
is that--and we don't do individual coverage. We serve only low
income people.
Mrs. Capps. Right. Right.
Mr. Kahn. But the problem with the system right now is that
where people are not covered, they decide once they get sick
they need coverage and that is why there is underwriting. I am
not defining it. It is just--there are no bad guys in this
play. Unfortunately, it is bad structures. It is a bad system.
Mrs. Capps. Right, which is why it calls for intervention
from us. I am not looking for support for that, and I applaud
this is finally the moment that all the stars are aligned. I
think we would all agree that we are going to--not everybody is
going to be maybe pleased with the outcome, but we are going to
make progress. And I am just so hopeful that we can do it in a
very bipartisan way.
Ms. Ignagni. And, Mrs. Capps, I would be happy if you think
it is appropriate to help with your office and see if we can
look into the case and see if there is anything that can be
done. As a mother, I would be delighted to do that.
Mr. Pallone. Thank you. Mr. Whitfield.
Mr. Whitfield. Thank you, Mr. Chairman, and thank you all
for your testimony. One of the common reasons given for having
a public option is the fact that there is not competition
particularly in rural areas, and there is probably an obvious
reason for this that I don't understand but in the prescription
drug benefit under Part D of Medicare in my rural district of
Kentucky there were like 42 different plans offered to Medicare
beneficiaries, so why are there so many plans offered as a
prescription drug benefit but not plans competing with each
other on the other sector. Would someone answer that for me?
Ms. Pollitz. Prescriptions are a little different just
because you don't need the provider network. I mean if there
are pharmacies nearby or even mail order pharmacy it is easier
to ensure the costs of prescriptions.
Mr. Whitfield. So it is the fact that there is a lack of a
provider network and putting that together?
Ms. Pollitz. I would expect. I am not familiar with your
district but prescriptions are a more kind of national market
than other health care.
Mr. Whitfield. OK.
Ms. Ignagni. I think, Mr. Whitfield, one of the things that
we have observed is that often there are products available but
in particularly rural areas if individuals don't have a broker,
for example, they haven't been presented with the information,
they don't know where to go, which is why one of the first
things that we suggested is this concept of having an organized
display on a site, it could be a state site, of the health
plans that are available in every part of every state and
organized it so people can understand what is available. That
would be, I think, a major step forward.
Mr. Whitfield. Mr. Kahn, would you want to say something?
Mr. Kahn. Thank you, Congressman. I would just add that the
challenge in rural communities beyond the pharmacy situation is
that if you are the one hospital in town, you probably don't
have to negotiate so it is not very attractive for a health
plan. That is why you don't have competition. Now I will say
though that in California we have a number of our public plans
that compete with private plans, and some of those are in rural
areas as well, Kern County, for example, and so there is
competition but again by the nature of that market because all
health care is local still and it probably will be for the most
part under the reform, so it depends on that market. Ms.
Ignagni and Mr. Trautwein, you all are both involved in
associations that represent companies that I am sure provide a
lot of group insurance plans to rather large employers. Are you
at all concerned that employers because of this public option
being available might just say, you know, to save money we are
just not going to provide health insurance anymore?
Ms. Ignagni. We are concerned about that, sir, and we are
also concerned about employers seeing the differences in the
numbers. As I indicated in my oral testimony there would be
very little available or left in the private sector because the
incentives are so compelling, and I think there is a strong
value in having the best of both, doing a better job in the
safety net and then doing a better job as we have talked about
in proving the----
Mr. Whitfield. Does this draft bill provide the protection
that is necessary to protect the private sector?
Ms. Ignagni. Well, I think that it is not--we were very
concerned, as we indicated, that we would not see a private
sector sustained because the playing field isn't level. If you
pay at Medicare rates, it is such a major differential that
that there is no way to sustain a private sector.
Mr. Whitfield. OK.
Ms. Pollitz. But, Congressman, just to add, under the bill
if an employer buys through the exchange they have to agree to
let their employees pick the plan and if they elect not to
offer coverage and to pay the fee then the employees still get
to pick the plan so there is no way that employers can opt to
put people in any of the plans available in the exchange. It is
always up to the individuals.
Mr. Whitfield. Are you saying that employers cannot just
decide to refuse to offer a plan?
Ms. Pollitz. Employers first make an election are they
going to play or pay. Are they going to offer a plan or are
they going to pay, and if they are outside of the exchange they
could offer a plan and they would only have the choice of
buying private plans, and then if they come into the exchange
it becomes kind of a defined contribution but the employees get
to pick the plan that are offered between public and private.
Mr. Whitfield. Ms. Trautwein.
Ms. Trautwein. I just wanted to add to that there is
language in the bill that after a period of time even employees
that are a part of a program where there is an employer-
sponsored plan can elect to spin off of that plan to go into
the exchange. This is a direct threat to employer-sponsored
coverage. We are very concerned about this because you have to
maintain a decent participation level inside an employer group
to have that balance of risk that I was talking about earlier.
So I think that that is something that we should really look at
whether that is a good idea to keep that in the bill language.
Mr. Whitfield. I guess my time has expired. Can I just ask
one other question? I know you have been here for hours but
just one other question. Ms. Trautwein, in your testimony you
talked about it is critical that there be a financial backstop
to accompany reforms of the individual and group insurance
markets, and I was curious what do you mean precisely by
backstop?
Ms. Trautwein. Well, it could take many different forms. It
is kind of what I talked about earlier, this idea of
reinsurance. You know, some states today use a high risk pool
to backstop their individual market but it doesn't have to be
that. It is just something to make sure that we address the
cost of high risk individuals. This is a particular problem
during the first 5 years, I am guesstimating that amount,
because it is going to take us a while to get the hang of this
individual mandate and enforcing it. We won't have everybody in
overnight and so there will still be initially adverse
selection, the same that we have today in this market, and we
have got to do something to make sure that those high cost
cases don't make the cost of coverage go up for everybody else
so we are not trying to wreck the proposal. We are saying you
need to have this thing in here to stabilize your proposal so
you will not have these unintended consequences.
Mr. Whitfield. Thank you, Mr. Chairman.
Mr. Pallone. Thank you. And I know different members
mentioned that they are going to submit written questions and
we ask them to get them to you within the next 10 days or so
and get back to us as soon as you can.
Mr. Burgess. Mr. Chairman, I was also supposed to ask
unanimous consent that the Blue Cross/Blue Shield data be made
part of the record.
Mr. Pallone. Yes, let me see. I have something too here. I
am glad you mentioned it. I almost forgot. So you have, what is
this, Blue Cross/Blue Shield, you called it?
Mr. Burgess. Yes. Ms. Fox testified--as part of her
testimony she----
Mr. Pallone. I am told that it already has been but if it
hasn't, then we will do it. And I also have to submit for the
record this study by Health Care for America Now showing that
94 percent of the country has a highly concentrated insurance
market. This is from the American Medical Association so
without objection we will enter both of these in the record.
[The information appears at the conclusion of the hearing.]
Mr. Pallone. Thank you very much. I thought this was very
worthwhile. It is a complex issue but we appreciate your input
and your optimism as well. It is very important so thank you
very much. And the 3-day marathon of the subcommittee is now
adjourned, without objection is adjourned.
[Whereupon, at 6:45 p.m., the Subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]