[Senate Hearing 111-347]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 111-347
 
                   ACHIEVING HEALTH REFORM'S ULTIMATE
  GOAL: HOW SUCCESSFUL HEALTH SYSTEMS KEEP COSTS LOW AND QUALITY HIGH

=======================================================================


                                HEARING

                               before the

                       SPECIAL COMMITTEE ON AGING
                          UNITED STATES SENATE

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                             WASHINGTON, DC

                               __________

                           SEPTEMBER 30, 2009

                               __________

                           Serial No. 111-12

         Printed for the use of the Special Committee on Aging



  Available via the World Wide Web: http://www.gpoaccess.gov/congress/
                               index.html



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                       SPECIAL COMMITTEE ON AGING

                     HERB KOHL, Wisconsin, Chairman
RON WYDEN, Oregon                    BOB CORKER, Tennessee
BLANCHE L. LINCOLN, Arkansas         RICHARD SHELBY, Alabama
EVAN BAYH, Indiana                   SUSAN COLLINS, Maine
BILL NELSON, Florida                 GEORGE LeMIEUX, Florida
ROBERT P. CASEY                      ORRIN HATCH, Utah
CLAIRE McCASKILL, Missouri           SAM BROWNBACK, Kansas
SHELDON WHITEHOUSE, Rhode Island     LINDSEY GRAHAM, South Carolina
MARK UDALL, Colorado                 SAXBY CHAMBLISS, Georgia
KIRSTEN GILLIBRAND, New York
MICHAEL BENNET, Colorado
ARLEN SPECTER, Pennsylvania
AL FRANKEN, Minnesota
                 Debra Whitman, Majority Staff Director
             Michael Bassett, Ranking Member Staff Director

                                  (ii)




                            C O N T E N T S

                              ----------                              
                                                                   Page
Opening Statement of Senator Herb Kohl...........................     1
Statement of Senator Bob Corker..................................     1
Statement of Senator Al Franken..................................     3
Statement of Senator George LeMieux..............................     5

                           Panel of Witnesses

Statement of Mark Pearson, Head of Health Division, Organisation 
  for Economic Co-Operation and Development, Paris, France.......     7
Statement of Honorable Carolyn Bennett, Official Liberal 
  Opposition Critic for Health and Former Canadian Minister of 
  State (public health), Ottawa, Canada..........................     9
Statement of Cathy Schoen, Senior Vice President for Research and 
  Evaluation, the Commonwealth Fund, New York, NY................    30
Statement of Arnold Epstein, Chair, Department of Health Policy 
  and Management, Harvard School of Public Health, Boston, MA....    69
Statement of Michael Tanner, Senior Fellow, Cato Institute, 
  Washington, DC.................................................    84

                                APPENDIX

Prepared Statement of Senator Robert P. Casey, Jr................   113
Statement submitted by Premier Healthcare Alliance...............   114

                                 (iii)




ACHIEVING HEALTH REFORM'S ULTIMATE GOAL: HOW SUCCESSFUL HEALTH SYSTEMS 
                    KEEP COSTS LOW AND QUALITY HIGH

                              ----------                              --



                     WEDNESDAY, SEPTEMBER 30, 2009

                                       U.S. Senate,
                                Special Committee on Aging,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 11 a.m. in Room 
SD-106, Dirksen Senate Office Building, Hon. Herb Kohl, 
Chairman of the Committee, presiding.
    Present: Senators Kohl [presiding], Franken, Corker, and 
LeMieux.

     OPENING STATEMENT OF SENATOR HERB KOHL, RANKING MEMBER

    The Chairman. At this time, we'd would like to call this 
hearing to order and commence.
    We thank you all for being here today. Obviously, as we all 
know, there's a lot happening on health reform. The debate is 
shifting and progressing every day, and we've been at this for 
a long time, as you know.
    Today, our committee will discuss one of health reform's 
most important goals, which is to get healthcare costs under 
control. The United States spends $7300 per person per year on 
healthcare, while the other 29 most developed countries in the 
world spend an average of just $2900. That's $7300 here in the 
United States versus $2900 per year elsewhere in the world. 
That means that we're spending nearly two and a half times what 
these other countries spend. It's not acceptable that we have 
so much more of our money tied up in healthcare, when we are 
not delivering demonstrably better healthcare than many of 
these countries.
    Studies show that the United States ranks below average on 
major health indicators, including infant mortality and life 
expectancy, when compared to the rest of the world, and we'll 
be hearing more about that today.
    Several of our witnesses will shed light on the ways in 
which other nations deliver high quality care at a cost much 
lower than we do here in the United States. We must be willing 
to learn from the many examples of successful healthcare 
systems around the world that are doing it as well or better 
than we are. But, it's also vital that we understand why our 
healthcare costs are higher. Our panel of witnesses will 
outline some of the reasons we pay more for physician services, 
prescription drugs, medical equipment, and hospital services.
    We also expect to learn about why our administrative costs 
are so much higher across the board. In 2004, the United States 
paid more than seven times the average of other developed 
countries on administrative costs. Very importantly, we'll also 
hear today about the need to reconfigure our healthcare system 
in a way so that it prioritizes the quality of care provided 
instead of the amount of care provided; in other words, value 
of care over volume of care. I support the provisions included 
in the Senate Finance Committee health reform bill that would 
transform the Medicare system to pay for value over volume, and 
I am hopeful that they will remain in the final health reform 
bill.
    But, more must be done in order to get healthcare costs 
under control. With so many industries and special interests 
tied up in our healthcare system, reining in healthcare costs 
is not an easy task.
    I urge my colleagues to be open, and to stay open, to the 
lessons that we hope to learn today, and take them into account 
as we make tough decisions and carry healthcare reform through 
to the finish line. If we pass a piece of healthcare reform 
legislation without sufficiently addressing the issue of 
healthcare spending, then we will have failed.
    So, we thank you all, our witnesses particularly, for being 
here today.
    At this time, it's an honor and a pleasure to turn to my 
new partner on this committee, our ranking member, Senator Bob 
Corker.
    Senator Corker.

                STATEMENT OF SENATOR BOB CORKER

    Senator Corker. Mr. Chairman, first of all I want to thank 
you for the kindness you've extended through your staff to us 
as we've come on board. I certainly look forward to working 
with you and other committee members.
    I think this hearing, by the way, is most appropriate. I 
think the timing of it is excellent and I certainly appreciate 
the testimony that each of the witnesses have put forth.
    I, you know, constantly was throughout our State in 
townhall meetings during August, and the whole issue of the us 
being ranked the 37th in the world, as it relates to health, 
continued to come up. I brought it up, myself, of course. But, 
I think, also, when you look at the comparisons, there are a 
lot of things that just aren't apples to apples. I'm sure that 
this testimony will certainly lead to that conclusion.
    The fact is that if you happen to have a cancer episode, 
you want to be here in the United States of America. You have a 
heart issue, you want to be in the United States of America. If 
you want something electively done quickly, you want to be in 
the United States of America.
    So, much of the comparison obviously is not accurate; on 
the other hand, I think much of your testimony has--will point 
out that there certainly are huge areas of improvement that 
need to occur in this country. I thank you each for those 
contributions.
    The whole issue of our country being the third largest in 
the world, and having the most diverse population compared to 
other countries that we are compared to, certainly creates much 
of the distortion, if you will, as it relates to our health. 
But, again, I think much of what you have brought forth in your 
testimony, and will again orally today, will be helpful to us. 
I think it's appropriate that, when we hear numbers like 37th 
in the world as it relates to health, as we hear things as it 
relates to how much we pay, which is exorbitant--and I think 
all of us want to focus on that--that we deal with facts, and 
not myths. That's why I look forward so much to your testimony 
today.
    So, Mr. Chairman, thank you for calling this hearing, and I 
look forward to hearing from the witnesses.
    The Chairman. Thank you very much, Senator Corker.
    Senator Franken.

                STATEMENT OF SENATOR AL FRANKEN

    Senator Franken. Thank you, Mr. Chairman and Senator 
Corker, welcome----
    Senator Corker. Thank you.
    Senator Franken [continuing]. In your new role as ranking 
member.
    Senator LeMieux, this is, I think, the first hearing I've 
been in when I've had someone junior to me-- [Laughter.]
    Senator Franken [continuing]. So, I'd like to point that 
out, if you don't mind. But, welcome to the committee.
    It's an honor to be here today, and I'm glad you're holding 
this hearing, Mr. Chairman, on such a critical and timely 
topic.
    Since I've been in Washington, I've been disheartened about 
how little discussion there's been about containing healthcare 
costs. When I travel around Minnesota, people ask me over and 
over again, ``What is Congress doing to make healthcare more 
affordable?'' They know that, unless we get to the source of 
what's driving up healthcare costs, health reform will be 
incomplete.
    I look forward to hearing, today, about models from other 
countries, and from within our own country, that can show us 
the way to bring down healthcare costs for everyone.
    One of the most logical ways to get costs under control is 
to transform how we pay for and incentivize healthcare. Right 
now we have perverse incentives in Medicare, which actually pay 
doctors more if they just provide more procedures. There's no 
accountability for the quality of services or for getting and 
keeping patients healthy. In fact, there's incentive, in some 
ways, to not keep them healthy. But, the Finance Committee is 
making progress, and I commend Chairman Baucus for including an 
amendment to incentivize value in Medicare. The provision is 
called the ``Value Index,'' and it's designed to move Medicare 
toward rewarding providers who provide high quality care at 
lower costs. I believe this is the only way to make the rest of 
the country more like the Mayo Clinic, in my State, improving 
healthcare delivery and bending the cost curve.
    Even though I'm a proud Senator from Minnesota, I know that 
no other system is identical to Mayo, but Mayo is not alone in 
Minnesota. We have other great examples of high quality 
integrated systems in our State, like HealthPartners, Allina, 
and Fairview. We know, from systems like Geisinger and 
Cleveland Clinic, and Kaiser, that this high-value healthcare 
is possible in other parts of the country.
    These coordinated health systems distinguish themselves by 
focusing on patients, and not profits. They have physicians 
engaged in leadership, high levels of teamwork and 
collaboration, and more sharing of electronic medical records 
and information.
    Perhaps more importantly, systems like Mayo have much 
greater use of what's called the ``science of healthcare 
delivery.'' This means that their leaders are systematically 
looking at how patients flow through the organization in order 
to reduce waste and reduce errors. I look forward to hearing 
from the witnesses about policies that will foster this type of 
patient-centered care.
    Administrative simplification is another area for cost 
savings that seem like just a no-brainer to me. In 2004, the 
U.S. paid an average of $465 per person for these expenses, 
seven times more than other developed nations, as the Chairman 
noted. It's unbelievable to me that every insurance company has 
different forms and processes that providers have to navigate 
in order to get paid. If you or your doctor, or your doctor's 
administrative assistant, fills out something wrong, the 
insurance companies simply, sometimes, deny payment. Maybe 
that's why they do it.
    In Minnesota, the providers and nonprofit insurance 
companies have gotten together and decided that this madness 
has got to end. They developed a common payment and billing 
procedure that everyone is now starting to use. This will save 
millions of dollars in Minnesota. If we require all insurance 
companies to use a common payment system, we will save billions 
of dollars in administrative costs and prevent lots of 
headaches for doctors, other providers, and for patients.
    Since we're here in the Aging Committee, I also want to 
mention that AARP in Minnesota has been holding regular tele-
townhalls to get accurate--accurate--information out about 
health reform. During these discussions, there is unanimous 
agreement that our health system needs to be reformed. But, 
there's also some confusion about how we save money in Medicare 
Advantage without cutting benefits.
    I want to be very clear that the discussion we're having 
today is about increasing efficiency in Medicare, and 
healthcare overall, not about cutting benefits. The more we can 
clarify this for folks, I think, the better off we'll all be.
    Another topic I hope that will be discussed today is the 
importance of prevention in lowering healthcare costs. The cost 
of obesity in this country is a $147 billion dollars per year, 
half of which is direct cost to the Federal Government. This is 
a public health issue, and one that the prevention is really 
part of a medical system in a country, and should be considered 
part of healthcare, and not just be considered part of the 
culture. Obesity can lead to diabetes, heart disease, and even 
cancer. There's no other country that is facing the chronic 
disease epidemic that we're facing as a result of obesity. 
Again, this is something that can be targeted through public 
health measures, and should be considered as part of our 
healthcare system, and not divorced from it.
    The current proposals to eliminate copays for preventive 
services like mammograms and colonoscopies are crucial. But, 
healthcare reform must also support community health, like the 
Senator--Senator Harkin's Prevention and Public Health 
Investment Fund. I look forward to hearing from witnesses about 
how prevention fits into this discussion on cost containment.
    In closing, I'd like to share the words of a young woman I 
met when I was back in Minnesota in August. She's a cancer 
survivor, worried that she won't be able to pay for the care 
that she needs. When I go back to Minnesota, I want to be able 
to look her in the eye and say, ``We've done everything we can 
in Washington to make health reform work for you, from ending 
preexisting-condition exclusions to bring down the cost of 
healthcare for everyone.'' Her words explains--explain far more 
eloquently than I can why we have to pass health reform this 
year. She says, ``Healthcare reform means people not having to 
choose between their life and their life savings. Healthcare 
reform means that no American loses their life because they 
can't afford screenings or treatment. Healthcare reform means 
cancer patients receiving care that is available, adequate, and 
affordable, and it means getting rid of the fears that we are 
faced with every day.''
    Thank you, Mr. Chairman.
    The Chairman. Thank you very much, Senator Franken.
    Now we would like to hear from the newest member of this 
committee, and our newest United States Senator from Florida, 
Mr. George LeMieux.

              STATEMENT OF SENATOR GEORGE LeMIEUX

    Senator LeMieux. Thank you, Mr. Chairman. Thank you.
    It's great to be here this morning, and I look forward to 
working with you and the other colleagues here on this 
committee.
    With more than 3 million seniors living in Florida, the 
issue of healthcare reform is tremendously important to our 
State. We like to think that all seniors will eventually live 
in Florida. So, it will be a more---- [Laughter.]
    Senator LeMieux [continuing]. Important issue as time goes 
on.
    This issue of addressing healthcare cost is crucial to a 
successful reform effort. If we do not address rising costs, we 
won't get at the core of the healthcare crisis. As my colleague 
just said, ``No American should be turned away from treatment 
because they can't afford a procedure.''
    These hearings come, as you know, at a pivotal time, as we 
are currently debating healthcare reform legislation. I support 
affordability and access to quality healthcare. Right now the 
costs are too high, and too many people do not have health 
insurance.
    I've heard from, and my office has heard from, a number of 
Floridians who are dealing with skyrocketing healthcare costs. 
Last week, I met with some cancer survivors from Florida, one 
of whom is--has a husband who's employed, so she still has 
insurance, but is scared, if he were to lose his job, what it 
would mean for her; the other, who has lost her job and now is 
on COBRA and struggling to be able to provide for the 
healthcare, and they are making life decisions about not having 
healthcare procedures done in order to be able to keep some 
life savings for their family if they are not able to win the 
fight against cancer. Those are decisions that no Floridian, no 
American, should have to make.
    But, I believe there are a number of measures that we can 
look at to control costs. I hope that the panelists will talk 
about them today. One of them is, every patient has the right 
to know what a procedure costs. Requiring transparency would 
allow families to make better decisions about which doctor they 
see, which healthcare provider they go to. We must ensure 
families can obtain information about price and quality of 
healthcare services. Informed decisions are better decisions.
    No one knows what these procedures cost right now. We have 
divided the patient from the process. We need a consumer-driven 
healthcare system to increase quality and to drive down costs.
    We also need to address fraud, waste, and abuse. We have a 
Medicare system, where escalating costs are driven, in part, to 
out-of-control waste, fraud, and abuse. Florida, really, is 
ground zero for these problems, especially southeast Florida. 
There are as much, it's estimated, as $60 billion wasted every 
year in the Medicare program because we don't have 
transparency, and we don't know what's going on with this 
money.
    When I was the deputy attorney general in Florida, we were 
responsible for the Medicaid Fraud Control Unit. We were able 
to recover $100 million in one year in Medicaid fraud just in 
Florida alone, and Medicaid is not near the program that 
Medicare is.
    So, we need to learn from the private sector and other 
industries, industries like the credit card industry. The 
credit card industry handles as much money as the healthcare 
industry does in this State--in this country, and yet, they 
have a 0.01-percent fraud rate, when it's estimated that in 
healthcare it might be 10, 20, or even 30 percent of all the 
dollars that we spend. Everyone, Democrat and Republican alike, 
can agree that we should not be wasting these dollars on fraud, 
waste, or abuse.
    I look forward to hearing from the panelists on this 
comparison between our health system and those of other 
countries. I, too, saw this ranking of 37th. I look forward to 
that discussion today. I don't buy it. I know that we train the 
world's doctors. I know that we create the drugs that help save 
the lives of people around the world. I know that people who 
have means from around the world choose to come to our country 
to have healthcare.
    So, don't get me wrong, I know we can do better, I know 
that we can learn, I know that there are other models, and we 
always should have an open mind about it.
    So, I welcome the panelists here today. I'm the new kid on 
the block. I've got the temporary sign, here. But, I look 
forward to being---- [Laughter.]
    Senator LeMieux  [continuing]. Part of this committee. As I 
said, it's such an important issue for Florida.
    So, thank you very much, Mr. Chairman.
    The Chairman. Thank you very much, Senator LeMieux.
    Now we turn to our panel. Our first witness today will be 
Mark Pearson, who heads the Health Division at the Organisation 
for Economic Co-operation and Development, or OECD. In this 
role, he helps countries improve their health systems by 
providing internationally comparable data, state-of-the-art 
analysis, and policy recommendations on a wide range of health 
issues. He is the leading healthcare expert at the OECD.
    Next, we'll be hearing from Dr. Carolyn Bennett, who's 
served as the Canadian Minister of State for Public Health and 
is now a sitting member of the Canadian Parliament. Prior to 
her becoming involved in politics in 1997, Dr. Bennett was a 
Family Physician. She is currently the leading spokesperson for 
her party on healthcare.
    Next, we'll be hearing from Dr. Cathy Schoen, Senior Vice 
President at the Commonwealth Fund for Research and Evaluation. 
She has authored numerous publications on health policy issues, 
national and international health system performance.
    Next, we'll be hearing from Dr. Arnold Epstein, Chairman of 
the Department of Health Policy and Management at the Harvard 
University School of Public Health. Dr. Epstein's research 
focuses on quality of care and access to care. He recently 
chaired the OECD's International Working group on Quality 
Indicators.
    Then we'll be hearing from Michael Tanner. Mr. Tanner is a 
Senior Fellow at the Cato Institute, where he has led the 
health division for 16 years. Mr. Tanner conducts research on a 
variety of domestic policies, including healthcare reform, 
social welfare policy, and social security.
    We welcome you all here today. We'll start out, Mr. 
Pearson, with your testimony.

      STATEMENT OF MARK PEARSON, HEAD OF HEALTH DIVISION, 
ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT, PARIS, 
                             FRANCE

    Mr. Pearson. Thank you very much. Honorable Senators, 
ladies and gentlemen, it's a great honor for me to be allowed 
to talk with you today.
    As you've heard, I head up the work on health at the 
Organisation for Economic Co-operation and Development. The 
OECD grew out of the Marshall Plan. Secretary of State 
Marshall's vision was about a flow of money to war-torn Europe 
to help us recover. The OECD today doesn't do that, of course. 
We're about the flow of information and of ideas. We don't 
presume to tell countries what to do; instead, we help our 30 
member countries, the world's economically developed 
democracies, to learn from one another. This is as true in 
health, as it is in other areas of policy.
    We've worked hard over the years to collect comparable 
information on healthcare policies and outcomes, and our work 
shows, as you all well know, that the United States spends more 
on healthcare, relative to national income, than any other 
country--about 1 dollar in every 6. France and Germany, for 
example, spend just under 1 euro in every 9 of their national 
income on health. Japan, just 1 yen in every 12. These 
countries, of course, have full insurance coverage for their 
citizens.
    America's a rich country, and rich people are willing to 
spend a lot more on healthcare than poor people. Even after 
allowing for this, America still spends up to $750 billion more 
than we would expect.
    There's no reason to think that America's sicker than other 
countries, and--other OECD countries have to cope with an older 
population.
    So, where does all the money go? We know some things. 
America spends more on inpatient care than any other country, 
more on pharmaceuticals, and more on administration. But, the 
biggest difference relative to other countries is spending on 
outpatient care, particularly day surgery, where America's 
spending here is about two and a half times as much as 
Canada's, and over three times as much as that in France.
    So, the key question then is, Why does America spend so 
much more than other countries? Of course, there's no simple 
answer, but there are many clues in the OECD's databases. The 
total amount spent on health depends, of course, obviously, on 
the price that you have to pay for those services and the 
amount that you buy. Starting with prices, our most 
comprehensive data show American prices for healthcare about 25 
percent higher than other OECD countries, well over 50 percent 
higher than in Japan. These data, I have to admit, are not as 
reliable as we would like them to be. As we dig deeper, we 
find, for example, that pharmaceuticals here cost maybe 40 to 
50 percent higher than elsewhere, despite generic drugs being 
cheaper.
    Preliminary results of our latest work show that a range of 
hospital procedures cost nearly twice as much here than in 12 
other countries. Of course, doctors in the United States are 
paid $25- to $40,000 more per year than in Canada, Germany, and 
the United Kingdom; about $60,000 per year more than in France.
    Moving on to the quantity of healthcare services provided, 
the picture's mixed. There are not that many doctors in the 
United States. America's see their doctors less than in most 
OECD's countries. Acute hospital-care beds are few. Stays in 
hospital are short. However, once people are in the medical 
system, they receive far more diagnostic tests, that cost a lot 
of money, such as MRI and CT scans, than in any other country. 
There are many more caesareans, knee replacements, and 
tonsillectomies--there are four times as many, of these than 
the average--procedures that are driven by doctors' judgments.
    The balance of evidence is that high American spending on 
health is mainly the result of high prices, with a greater 
number of procedures and interventions playing an important, 
but lesser, role. Other OECD countries are striving to bend the 
cost curve, to slow the seemingly inexorable growth in health 
spending. They regulate various healthcare prices, 
pharmaceuticals, doctors' fees, payments for hospital services, 
or sometimes they regulate the kind and quantity of healthcare 
services available. These policies have kept healthcare costs 
well below the level in the United States without compromising 
health outcomes.
    If the United States were to take additional steps to 
control health spending, there is indeed much to be learned 
from international experience.
    I look forward to questions from the honorable members. 
Thank you.
    [The prepared statement of Mr. Pearson follows:]

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    The Chairman. Thank you very much, Mr. Pearson.
    Doctor Bennett.

STATEMENT OF HON. CAROLYN BENNETT, OFFICIAL LIBERAL OPPOSITION 
CRITIC FOR HEALTH AND FORMER CANADIAN MINISTER OF STATE (PUBLIC 
                HEALTH), OTTAWA, ONTARIO, CANADA

    Dr. Bennett. I speak to you this morning from the 
perspective of a mother, a daughter, a doctor, the former 
Minister of Public Health, and an author of--about primary care 
in Canada.
    Like other observers in our country, I believe the debate 
here in the United States has become less about debate about 
healthcare than about the role of government in your lives. 
But, for American families, the real question is a simple one, 
Should a man go bankrupt because his child gets leukemia? 
Should a woman hit by a drunk driver have to pay more for 
healthcare than those lucky enough to escape such an injury? Is 
it fair to make family genetically predisposed to cancer pay 
greater share of their health costs, to deny treatment to 
children with asthma or diabetes because their parents are 
poor?
    As a family doctor in Canada, I almost never had to worry 
about what patients could or couldn't afford, or what level of 
insurance they had. You have asked me to focus today on the 
issue of costs and quality in comparing our systems. As 
Chairman Kohl has said, in 2007 the United States spent 16.2 
percent of its GDP on healthcare; Canada spent 10.6 percent. 
That works out to $7,421 per American and $5,170 per Canadian. 
For that extra $2,200 per person per year, your health outcome 
should beat ours every time. But, they don't. Your infant 
mortality rate is 6.9 per 1,000 births, compared to 5.4 in 
Canada. Male life expectancy is 75.2 years here, compared to 78 
years in Canada.
    Please don't misunderstand me, our system is far from 
perfect. It still needs constant tinkering, and we're still 
struggling to realize the original goal of Canadian Medicare, 
which is to keep people well, not just patch them up once they 
get sick. As Senator Franken has said, we also are struggling 
to take the perverse incentives out of our system that reward 
quantity instead of quality.
    In a survey of the ten OECD countries, your citizens are 
the least satisfied with the care they receive. Canadians, 
despite their criticisms we have of our own system, are 
apparently five times as likely to be satisfied with the care 
we receive than you are. Costs, as you've pointed out, are an 
integral part of the differences between the U.S. system and 
ours.
    So, I have seven clear reasons why I think we pay less and 
feel better:
    Insurance companies. As Congressman Weiner has said, 30 
percent of your cost, almost a third, go to insurance 
companies. Your patients and taxpayers have to support massive 
organizations, the insurers, that set the premiums, design 
packages, asses risk, review claims, decide who to reimburse 
and for how much. But, they don't deliver healthcare. The 
administration, as Mr. Pearson has said, is much simpler in our 
country. Our single-payer system allows us to run the 
administration in our offices and our hospitals with much fewer 
staff. We don't have to deal with multiple payers or chase bad 
debts. We don't have to charge higher fees to compensate for 
the unpaid-for procedures.
    As was said, the pharmaceutical prices are very different 
in our country. Although drug costs are rising in Canada, as 
here, we're able to exercise much more control over the cost of 
brand-name drugs, as a result of our Patented Medicine Prices 
Review Board, and we also have a process for establishing the 
cost--its cost effectiveness of all new technologies.
    In our country, almost all physicians receive medical 
liability protection from the not-for-profit Canadian Medical 
Protective Association. Its not-for-profit status, combined 
with its educational efforts to reduce the risk profile of its 
members, contributes to relatively low medical malpractice 
costs. This both reduces overall system costs and encourages 
physicians to provide the full spectrum of medical care.
    Evidenced-based care is, again, what we are hoping to 
reward. But, from vaginal births after caesarean sections, to 
lumpectomy, to X-rays for sprained ankles, applying evidence to 
determine the appropriateness of tests and procedures 
translates into fewer unnecessary tests and procedures and less 
defensive medicine. We are committed to moving from the era of 
pure cost-containment approach of the early 1990's into a true 
evidenced-based cost-effective care in the future.
    As was said before, prevention is extremely important, as 
are the social determinants of health. Diseases are cheaper to 
treat if they're caught early. Since all Canadians are insured, 
they're more likely to have pap smears, mammograms, and other 
early detection visits and tests than the U.S. patients who are 
not covered.
    My last point is about the longstanding specialty in Canada 
family medicine. Family doctors in Canada are trained to help 
outpatients navigate their care. We interpret the difference 
between what patients think they want and what they actually 
need. It's a point of first contact, a trusted coach to explain 
the evidence and the choices. As Dr. Barbara Starfield has 
shown with her research here in the United States, the stronger 
the family medicine base in any healthcare system, the better 
the system is.
    But, don't take my word for it. Harvard Dr. David 
Himmelstein wrote, recently in the New England Journal of 
Medicine, that, ``A Canadian single-payer system would save 
your country $400 billion a year.''
    In conclusion, I want to leave you with the story of Barry 
Lamar Head, a Vietnam-decorated vet who married a Canadian, got 
sick, and had to remain in Canada because he could not get 
health insurance in the--in your country, at any price. Before 
he died, he made his Toronto friends promise that they would 
find a way to tell his story, the story of a hero who had 
served his country honorably, but could not afford to die 
there, and the excellent care that he received in the Canadian 
system. I am proud to leave you with a copy of his full story 
this morning, and also a document on myths versus reality on 
the Canadian healthcare system, that I hope you will read.
    Thanks very, very much. I look forward to your questions.
    [The prepared statement of Dr. Bennett follows:]
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    The Chairman. Thank you very much, Dr. Bennett.
    Dr. Schoen.

 STATEMENT OF CATHY SCHOEN, SENIOR VICE PRESIDENT FOR RESEARCH 
      AND EVALUATION, THE COMMONWEALTH FUND, NEW YORK, NY

    Ms. Schoen. Thank you, Mr. Chairman and members of the 
committee, for the invitation to testify.
    As the United States confronts the urgent need for Federal 
action to expand access and slow the increase in costs, we 
might well ask, How is it that other countries insure everyone, 
get outcomes that often rival or even exceed the United States, 
yet spend far less than we do?
    We stand out, when we look at other countries, for our 
failure to cover everyone, our complex, inefficient insurance 
system, our fragmented healthcare system, with very weak 
primary care, lack of information that's an essential for 
markets to work, and incentives to increase volume, 
irrespective of quality.
    I want to focus right in on the strategies we see other 
countries using. They all do it differently. They've adopted it 
to their own institutions and policies. But, there're some core 
themes and strategies where we stand out in comparison to them.
    First, when we look at the payment systems in these other 
countries, it's clear, as we just heard from the OECD 
testimony, that the U.S. spends more. We're notable for paying 
higher prices, including very high prices for more specialized 
care and for incentives to do more, irrespective of value.
    Unlike other countries with multiple payers--and there are 
several: Switzerland, Germany and the Netherlands--we lack a 
mechanism to coordinate those payers so they have a consistent 
set of price signals and they all move in the same direction. 
We lack a mechanism for group purchasing power, particularly in 
monopolized markets. Instead, U.S. private insurers often act 
as pricetakers to maintain networks, and they simply pass 
through higher prices, with a markup for marketing 
administrative costs and margins.
    As a result, the U.S. tends to pay much higher prices for 
devices and specialized services, such as prescription drugs. A 
McKinsey study estimates that we pay, on average, about 50 
percent more for brand-name drugs, and buy more expensive mix, 
which results in $90 billion in excess cost, compared to what 
other countries do.
    Second, we have a very weak primary care system. Overall, 
we stand out for having an insurance system that does not 
promote continuity, and does not promote choice of primary care 
providers. Many countries encourage all their patients to 
identify a medical home, which is their main source of care, 
helps coordinate, stays with the patient for a lifetime, unless 
they move away. They've set up after-hour cooperatives; you 
don't have to go to the emergency room. You can talk to a 
doctor. Doctors are rewarded for talking to patients, including 
on the phone. Fundamentally, their insurance systems have a 
value-based benefit design which rewards effective, efficient 
care. They lower cost-sharing if they know a drug works very 
well, even if it's a high-priced drug. They want people to 
enforce chronic-care management.
    Recent--other countries recently have adopted incentives 
particularly targeted at primary care, to strengthen it as all 
face rising rates of chronic disease. I've provided a range of 
examples in my testimony. These include direct payments for 
nonvisits, for talking to patients, for team-based care, for 
putting patients in a team with nurses.
    Third, we have an information deficit. We lack an HIT 
system that cuts across and binds everyone together. Many other 
countries have even smaller practices than the United States--
onsies and twosies--but they've said, ``Let's integrate a flow 
of information,'' and they've done it with standardized 
information systems so that we see nearly all primary care 
practice having a system, and they're building that up so they 
can exchange information. Their national governments were 
supportive of making it possible for everyone to start to 
communicate with each other.
    Fourth, we lack comparative information and transparency. 
As we just heard from Canada, but there are multiple other 
countries, there is assessment going on to provide physicians 
and hospitals and clinicians with independent sources of 
information on what works well for which patients, but there's 
also an effort to track performance. I believe Dr. Epstein will 
talk about some of this, but I can talk more later. In Germany, 
there's benchmarking, with multiple indicators of hospital 
performance, and feedback systems, where higher-performing 
hospitals talk with less---lower-performing hospitals in a 
dialog to bring everyone up. There's transparency on public 
websites that is meant to encourage choice. But, also, people 
learn from each other when they can see someone else doing 
well.
    As was mentioned, we have a very expensive insurance system 
with high administrative costs. We often look just at the part 
that's inside the insurance system. This is due to marketing, 
underwriting, churning, a variety of benefit designs. But, 
we've also imposed very high costs on our primary care doctors 
and our hospitals. You can see administrative staff in our 
practices that just don't exist in other countries. Instead, 
the people in the practice are delivering care.
    To close, we have much to learn from shared strategies, and 
there are core strategies that really do span very different 
countries. They each do it in different way. Insurance for 
everyone provides a foundation for payment and system reforms. 
It's not just coverage, but it's also a foundation.
    The way they buy care is as a group. They use group 
purchasing power, coordinated incentives focused on value. 
There is information system and system reforms that are really 
trying to guide markets. Markets don't work well if you don't 
know the price and you don't know what works well for which 
people. They're building that up. There's leadership to bring 
all of this together, including in multipayer systems, to bring 
the payers back together.
    We have an opportunity for major change in the United 
States, and we can look at the variations, and have the benefit 
of saying, ``This works relatively better, relatively worse,'' 
as we all seek to move forward.
    Thank you.
    [The prepared statement of Ms. Schoen follows:]
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    The Chairman. Thank you very much, Dr. Schoen.
    Dr. Epstein.

STATEMENT OF ARNOLD EPSTEIN, CHAIR, DEPARTMENT OF HEALTH POLICY 
  AND MANAGEMENT, HARVARD SCHOOL OF PUBLIC HEALTH, BOSTON, MA

    Dr. Epstein. Good morning, Mr. Chairman, distinguished 
committee members. I speak to you this morning as someone who 
has studied quality of care and related issues for well more 
than two decades, as someone who's a primary care practitioner 
today with an ongoing clinical practice, as someone who has 
chaired the OECD panel comparing international quality 
indicators, and as someone who, in a former administration, 
worked in the Executive Branch with policy responsibility for 
quality of care.
    At the end of the day, I want to make three simple points. 
First, that we have, in the last few years, developed increased 
ability to measure quality of care; and, while not 
comprehensive or perfect, we can now start to talk about how to 
gauge quality of care across different regions within our 
country, and across countries.
    Second, the overwhelming amount of the evidence--and I'll 
present a good deal of it very specifically to you--suggests 
that, in some cases, the U.S. has the best quality in the 
world; in some case, we're at the bottom of the heap; and 
often, we're right in the middle.
    Third, juxtaposing with the data you've already heard about 
on costs, is that these figures raise important concerns about 
value.
    Let me start by just trying to puncture two important 
myths:
    The first myth is one that probably everyone in this room 
shares. If I was to ask all of you, ``Is your doctor average or 
better than average?'' almost all of you would say your doctor 
is average or better than average. Even though statistically, 
that's just not plausible.
    The other myth we share is the often-repeated refrain that 
care in the United States is the best in the world. I'm going 
to show you some data which suggests that that may not be the 
case.
    Starting in 2001, I chaired a group for a few years, that 
was dedicated to comparing quality of care internationally. The 
OECD has continued that work, covering representatives of 
approximately 30 countries across the world to compare measures 
of quality of care. The measures are not comprehensive, but 
they are broad and cover important aspects of care and 
prevalent clinical conditions. As I've said, the bulk of those 
data show very variable quality of care. The measures are 
scientifically valid and have been based on data that are 
comparable across countries or as much so as possible.
    Let me start--and I hope you have a set of displays from 
me--exhibit number 1 really identifies--and I won't, in 
interest of time, call them out one by one--23 different 
measures that cover care for chronic conditions, acute 
exacerbations, mental health disorders, cancer care, and 
communicable disorders. What you should take away is that there 
are a broad range of quality measures that we can now examine.
    On exhibit number 2, I've listed asthma admission rates 
across different countries in the world. Asthma is a chronic 
condition with a lot of morbidity. We now have treatments that 
can effectively treat the inflammation, and bronchial spasm 
that accompanies asthma. So, among quality experts, the belief 
is that, high rates of hospitalization for asthma are a sign of 
inadequate access to care and inadequate quality of care. The 
United States is, deplorably, number 1 in the world, with the 
highest rates of hospital admission for asthma.
    Exhibit number 3 displays diabetic lower-extremity 
amputation rates. Glycemic control is associated with vascular 
side effects from diabetes. WHO reports suggest that up to 80 
percent of diabetic lower-extremity amputations can be 
prevented. If you look at the rates across countries, again the 
United States is No. 1 in the world.
    Exhibit number 4, shows in-hospital case fatality rates 
after acute myocardial infarction. We know that aspirin 
therapy, beta-blocker therapy, thrombolysis, and coronary 
revascularization can all be very helpful therapies for someone 
with an acute myocardial infarction. So, there's a lot we can 
do to bring down mortality rates. The United States rate, in 
the middle of the pack, is 5.1 percent, far higher than 
Iceland's 2.4 percent, far better than Korea's 8.1 percent, 
13th out of 20.
    If you go to Exhibits number 5 and number 6, these are for 
breast cancer, the most common malignancy for females in our 
country. One out of nine women in our country has breast 
cancer. It is certainly a plague. Exhibit 5, shows mammography 
rates. There is hard evidence that mammography allows us to 
diagnose breast cancer earlier before it's spread, when it's 
more treatable, when we will have better outcomes. The United 
States rate is 72 percent, far less than the Netherland's, at 
89, although we're better than many other countries.
    Exhibit number 6, shows breast cancer 5-year relative 
survival rates, and the United States is far and away the best, 
an instance where in--we're really leading the pack and doing 
well, and we think other countries can learn from us.
    Finally, to conclude, exhibit 7 and 8 are two vaccination 
rates; the first, for Hepatitis B, a vaccination that we think 
is very important 95-percent efficacy, highly cost effective. 
Our rate is 92 percent, trailing a whole host of other 
countries.
    On the last page, exhibit number 8, shows data on influenza 
vaccination timely vaccination can overt tremendous morbidity 
and mortality for the elderly. It can also reduce work loss 
among the working population. Our rate, again, 65 percent, is 
far less than optimal.
    I've put those exhibits, and labored through those, so you 
can get a sense of the hard data, and the variability of it. 
But, I think the takeaways here are very clear: We can, now 
measure quality of care--not perfectly, but better than even 
before; there is a lot of variability in quality, 
internationally, and there is strong evidence that we're just 
not, far and away, consistently the best in the world, taken 
together these data raise very important questions about how we 
spend our money and the value we obtain for it.
    In the interest of time, I'll stop there. If there are 
further questions, I will be happy to field them.
    Thank you for the opportunity to address the committee.
    [The prepared statement of Dr. Epstein follows:]

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    The Chairman. Thank you very much, Dr. Epstein.
    Mr. Tanner.

  STATEMENT OF MICHAEL TANNER, SENIOR FELLOW, CATO INSTITUTE, 
                         WASHINGTON, DC

    Mr. Tanner. Thank you, Mr. Chairman, Senator Corker, 
members of the committee.
    I've been studying healthcare for over 20 years, including 
16 years with the Cato Institute, author of a number of books 
on the issue, and a number of studies, including those looking 
at healthcare in other countries.
    I'd like to say, to start, that, in examining how other 
countries handle the tradeoff between controlling costs and 
preserving quality, it is very important to remember that each 
country's system is a product of its unique conditions, 
history, politics, and national character. These systems range 
from the managed-competition approach of the Netherlands and 
Switzerland to the more rigid single-payer systems of Great 
Britain, Canada, Norway, and others, with great many variations 
in between.
    Some of these countries have a true single-payer system, 
prohibiting private insurance and even restricting the ability 
of patients to spend their own money on healthcare. Others are 
multipayer systems, with private, competing insurers in varying 
degrees of government subsidy and regulation. Some countries 
base their systems around employment, while others have 
completely divorced work and insurance. Some require consumers 
to share a significant part of healthcare costs through high 
deductibles or high copayments, others subsidize virtually 
first-dollar coverage. Some allow unfettered choice of 
physicians, others allow a choice of primary care physicians, 
but require referrals for specialists. Still others restrict 
even the choice of primary care physician.
    Even so, I believe it's possible to draw some important 
lessons and some important comparisons. First, when it comes to 
healthcare quality, on various measures the United States 
actually fares quite well, despite many of the criticisms we've 
heard. Measures such as life expectancy and infant mortality 
are actually very poor measures of a country's healthcare 
system and the quality thereof. Much better is to look at 
outcomes for specific diseases and whether your--what your 
survival rates are if you actually get sick. Here, the United 
States fares very well.
    Recently, the British medical journal, The Lancet, looked 
at 5-year survival rates for cancer, to cite just one example. 
For both men and women, the United States was not only No. 1, 
in terms of survival rates, but it was far superior to most of 
the other countries that we are compared with.
    Second, while the United States clearly spends far more 
than other countries when it comes to healthcare, healthcare--
the rising healthcare spending is not a uniquely American 
phenomenon. Both as a percentage of GDP and per capita, 
healthcare costs are rising in many other countries. To cite 
just one example, in 2004, the year in which I was conducting a 
survey, healthcare spending in OECD countries rose at about 
5.55 percent, and the U.S. was about 6.21 percent. We're 
higher, but theirs is still rising significantly, putting 
significant strains on their budgets, leading to increased debt 
and tax increases or benefit cuts.
    Third, universal health insurance does not necessarily mean 
universal access to care. In practice, many countries promise 
universal coverage, but ration care or have extremely long 
waits for treatment. Some countries with ostensibly universal 
systems actually fall far short of true universal coverage. 
Even the best tend to leave a small remnant, 1 or 2 percent, of 
the population as uninsured.
    Fourth, those countries that have single-payer systems, or 
systems heavily weighted toward government control, are the 
most likely to face waiting lists, rationing, and restrictions 
on the choice of physician or other barriers to care, while 
those countries with national healthcare systems that work 
better, such as France, the Netherlands, and Switzerland, are 
successful to the degree that they incorporate market 
mechanisms such as competition, cost consciousness, cost 
sharing, market prices, and consumer choice.
    Finally, while no country with universal coverage is 
contemplating abandoning a universal system, the broad and 
growing trend across countries with national healthcare systems 
is to move away from centralized government control and to 
introduce more market-oriented features. As Richard Saltman and 
Josep Figueras of the World Health Organization put it, to 
quote, ``The presumption of public primacy is being 
reassessed.''
    Alan Jacobs, of Harvard--I'm sure, a colleague of yours--
has--points out that, ``While there are significant differences 
in goals, content, and strategies, there is a general 
convergence toward market practices among European nations when 
it comes to healthcare.'' Thus, even as we are talking about 
moving in a more European direction, toward more government 
control of our healthcare in this country, many European 
systems are debating how to add more U.S.-like market-oriented 
features into theirs.
    Mr. Chairman, members of the committee, I believe that 
there is a great deal we can learn from the successes of other 
countries in controlling costs and improving quality, but 
probably even more that we can learn from their failures. We 
should bear those in mind, as well.
    Thank you. I look forward to the committee's questions.
    [The prepared statement of Mr. Tanner follows:]
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    The Chairman. Thank you very much, Mr. Tanner.
    We'll now begin our questioning with 5-minute rounds.
    My first question is to the whole panel. Where OECD 
countries have chosen to use private insurance companies to 
administer healthcare benefits, the insurance companies, unlike 
most of the United States insurance companies, are nonprofit. 
Does this distinction have an effect on the cost of healthcare 
or barriers to access to healthcare for the United States?
    Mr. Pearson.
    Mr. Pearson. I would expect that it would have some effect. 
I don't think it's the most important feature in health 
systems, about whether we're talking about profits or 
nonprofits. I think what really matters are the incentives and 
the fees that are paid for the services by the insurance 
companies. So----
    Thank you.
    The Chairman. What do you think, Dr. Bennett?
    Dr. Bennett. We used to have an insurance that was run by 
the physicians, before we had----
    The Chairman. Your mic.
    Dr. Bennett [continuing]. Medicare that--it was a--sorry--
it was a--the physicians themselves came together to develop a 
system such that they wouldn't have to worry about whether 
people could pay or not. I think profit gets in the way, where 
we're what many Americans have described to me as denial-based 
care, that--where the sick people are cutoff if there is a 
desire for profit in the insurance, so that you watch, if--the 
majority of people don't need healthcare--80 percent--20 
percent are the high users. If you can get rid of those people, 
because of preexisting conditions or because they've gotten 
sick and now changed jobs, you are going to take--that is an 
incentive, if you are responsible to a board of directors that 
wants you to have profit.
    I must say that--to Mr. LeMieux, that my parents used to 
love going to Florida, every year for 40 years, but when my 
mother got cancer and my father had arrhythmia, they could 
never--they could not any longer find insurance that would 
cover them at all, so they stopped coming to Florida. That's 
bad for you.
    The Chairman. Dr. Schoen.
    Ms. Schoen. I think, when you look closely at other 
countries that do rely on private insurers--in fact, the 
Netherlands and the Swiss systems use those carriers--you find 
several things that dramatically lower overhead costs. One, the 
benefits are very standardized; you can really compare plans. 
They go out of their way to avoid churning, so you can stay 
with a plan for as long as you want to stay. Marketing costs 
are extremely low, because there are public websites, where I 
can get on and compare. There's accountability for the type of 
insurance market behaviors that we've just heard about. Those 
are prohibited, any sort of risk rating or turning down, and 
they're doing risk adjustment. They're very aggressively trying 
to get the carriers focusing on quality and value.
    When we asked the Swiss people how it is the Swiss private 
insurance run for 5 percent overhead, the Germans run for 5 
percent, the Netherlands do, and ours average 15 percent, they 
said, ``No one would tolerate more than 5 percent in 
Switzerland.'' I mean, ``What are you talking about?'' So, the 
margins are extremely low, there's a large amount of public 
transparency that's going on, and the competition is around 
quality, so you can't really have a big margin, even if you're 
for-profit. So, these systems have sort of done nonprofit or 
for-profit, but the way they compete with each other forces 
that overhead down.
    The Chairman. Thank you.
    Dr. Epstein.
    Dr. Epstein. I will say something, if I'm permitted, about 
national data on this question we are all aware of potential 
concerns about for-profit medicine prior studies have examined 
use of high-cost procedures among elderly persons in the 
Medicare population who are in Medicare Advantage plans both on 
for-profit plans and not-for-profit plans. They show no 
evidence of skimping in the for-profit sector. But that is just 
evidence from our country.
    The Chairman. Mr. Tanner?
    Mr. Tanner. Yeah, likewise, looking at the evidence largely 
in our country, about 40 percent of insurers are actually 
nonprofits in this country, and there's no significant evidence 
that I've seen, in terms of difference in cost between the for-
profits and nonprofits, or in the quality that they produce.
    I would also just note that insurance company profits are 
not particularly high as a percentage of healthcare costs. If 
you look at the actual profit margin that insurers make, they 
range from about 3 percent in the--for HMOs, to about 5 and a 
half percent under fee-for-service plans, which is relatively 
modest by most corporate standards. So, they're--it's not 
insurance company profits that are really driving healthcare 
costs in this country.
    The Chairman. All right.
    Senator Corker.
    Senator Corker. Well, thank you, Mr. Chairman.
    Thank each of you for your testimony. I'm not going to 
pursue the OECD comparisons, because I don't think that really 
helps much, and--it's interesting to look at, but the 
characteristics of the--countries are so different, I'm not 
sure it's useful as far as helping us look inward and figure 
out what we need to do. I think Mr. Tanner's done a good job of 
sort of teasing some of that out.
    What I do want to focus on, though, are some of those 
things that, within our own country, create issues. Again, I 
really do appreciate all of the testimony. I read all of it 
early this morning.
    Dr. Bennett, one of the things that has troubled me greatly 
about our system is the fact that we pay more for 
pharmaceuticals and devices than other countries. Yet, it--it's 
not really our country so much that's the problem, it's the--
sort of the parasitic relationship that Canada and France and 
other countries have toward us; meaning that you set prices, 
and, unfortunately, all the innovation, all the technology 
breakthroughs, just about, take place in our country, and we 
have to pay for it. So, you're living off of us. What you use 
typically is older, but--I just had a meeting--I've met with 
our former Trade Representative; I met, this morning, with 
PhRMA to, you know, if you will, put a stick in their eye over 
this. But, I will say that you benefit from us, and we pay for 
that. I resent that, and I want to figure out a way of solving 
that. I wonder if there's a way that--if you have any ideas in 
that regard.
    Dr. Bennett. Well, Senator, I think--with due respect. 
These are multinational corporations and that--when we don't 
treat our pharmaceuticals companies properly, they invest 
somewhere else, and they take their----
    Senator Corker. They invest here.
    Dr. Bennett [continuing]. Research dollars somewhere else.
    Senator Corker. That's right. That's right.
    Dr. Bennett. So, it is a global issue, and that whether 
it's Switzerland or whether it's the United States or whether 
it's Canada, we're all in this together. We want the 
breakthrough drugs, we want--and, frankly, in our country, our 
generics are way too expensive----
    Senator Corker. Ours are less.
    Dr. Bennett [continuing]. Yours are less. So, you know, I 
think it's a matter of us learning from one another as to how 
this works. But, we want the research, we want--we need drug 
companies to be making more. I mean, in my country, quite often 
they say, ``We're now spending more on drugs than we are on 
doctors.'' You're going, ``Well, maybe that's a good thing,'' 
that--you know, that my father is now on a drug that previously 
would have required a pacemaker. So, it is a shared----
    Senator Corker. I think----
    Dr. Bennett [continuing]. But, I think that we are, I 
think, very in favor of our price controls. In some of our 
things, like even bulk buying, you know, on pandemic 
preparedness, we have got a good price because we've decided to 
buy, as a country, enough vaccine for the whole country. 
Therefore, we are self-sufficient as we come forward looking at 
the pandemic.
    Senator Corker. I think my goal would be, over time, to--
for us not to pay more than you, because you set prices and 
cause us to pay more, when we're doing all the innovation. So, 
I hope that we can figure out, on a world basis--have you--and 
I want to move on to another question.
    Dr. Bennett. Well, I just want to say, please don't think 
that you can import cheap drugs from Canada. It'd last us about 
36 days.
    Senator Corker. No, no, no. That's a----
    Dr. Bennett. OK.
    Senator Corker [continuing]. That's a silly way of dealing 
with it, but a way to at least get it started, because, in 
essence, the Canadian government and its citizens are taking 
advantage of our citizens by virtue of setting prices that are 
lower than competitive prices.
    Dr. Bennett. No, I think it's the drug companies, sir.
    Senator Corker. Well----
    Dr. Bennett [continuing]. They're multinational. It's 
nothing about the----
    Senator Corker. Yeah.
    Dr. Bennett [continuing]. United States of America.
    Senator Corker. Yeah. All right. Well, thank you for that. 
I think that's something we all need to work together on and 
even it out across the world, so that our citizens are paying 
less.
    Dr. Schoen, I appreciated the contributions you made about 
the frailties in our system. I agree with most of those, as far 
as the incentives go. I noticed that one of the things you 
alluded to was capitation or some hybrid thereof, where we have 
capitation plus, maybe, incentives.
    I came into a situation after a capitation program had been 
put in place in Tennessee. It was called, TennCare. I came in 
about a year later. What I saw in that--and that was 
interesting to me, by the way; you pay so much per member, per 
month, to keep people healthy--what I saw happening, though, 
was something very different. By the way, a lot of these 
providers were nonprofits, I might add. But, in essence, what 
they were doing is denying care. I mean, in essence, what you 
had was the private sector, through capitation--you might get 
paid a $110 per member, per month, or whatever the number was--
$6 of that was supposed to go to prevention. Never happened. In 
essence, what happened was, there was a denying of care that 
took place so that there was a profit margin. So, I agree that 
we pay for activities here, and that's problematic, cause 
there's a lot of self-referral, and we inflate costs. On the 
other hand, I don't know yet what the solution is, and I'm 
wondering if you might shed some light on that.
    Dr. Schoen. I think, when you look at what other countries 
have been doing, one of the things that's interesting is how 
much variation there is on payment methods, both from what they 
did two years ago and what they're doing now. The U.S. is, in 
fact, the only one that does full capitation, like you've just 
described, where the whole risk is underneath one risk-bearing 
entity.
    What other countries have started to do is what many of our 
very innovative care systems are doing is saying, ``If you have 
a heart attack, let's give you a global fee that covers all of 
your treatment, including--we're going to be at risk that we 
did it right the first time so you don't have a readmission.'' 
Geisinger is doing that, with a proven care--around very 
specific episodes of care, and the bundled care for that, with 
a high-quality promise. We see Germany experimenting with that, 
moving from more tightly budgeted hospitals to something like 
our DRGs, and expanding.
    What other countries are doing with primary care is paying 
doctors in a mixed way. They're paying them an average amount 
per month to help them support teams, support nurses, support 
after-hours-care systems, so when you call up, someone answers 
or comes to see you, has time to talk to you; you don't have to 
have a visit; but, they're also paying a fee for service to 
make sure you respond to patients. They're paying more for 
after-hours care. So, it's a blended capitation fee-for-service 
that's trying very much to push a very responsive--patient 
responsive system.
    Increasingly, in countries like the Netherlands, they're 
saying, ``How can those primary care doctors in the community 
also work with the hospital, have transition-care nurses, that, 
as I leave the hospital, someone's there to take care of me, 
and someone know what's happening? '' So, there's a very 
interesting mix of how do we get a more integrated care system, 
when it's fragmented, and using the payment systems to move 
with the quest to value.
    Every single one of these initiatives has an accountability 
feature, where an outcome is being measured to make sure that 
there is not a shirking. But, what you see is a very responsive 
system. Visits rates are higher in a lot of these other 
countries. What's starting to be wonderful is, in the 
Netherlands, you don't have to go to the doctor's office, you 
can get a visit by an e-mail. The physician can fill a 
prescription for you, if that's a better way of getting it. You 
can contact through multiple sites. We're seeing this in the 
U.S., some experiments. The difference is, the other countries 
take it nationwide.
    The Chairman. Thank you.
    Senator Corker. My time is up, I apologize.
    The Chairman. Senator Franken.
    Senator Franken. Thank you, Mr. Chairman.
    So many things I want to ask about. Mr. Tanner, how many 
people have gone bankrupt in the last 10 years in Switzerland 
because of a medical crisis?
    Mr. Tanner. I don't have a number, but I would assume it's 
relatively few.
    Senator Franken. I believe it's zero.
    Mr. Tanner. That's quite possible.
    Senator Franken. How many in Germany?
    Mr. Tanner. I assume you're going to say zero, as well. I 
don't have bankruptcy numbers on any of the European countries.
    Senator Franken. You don't.
    Mr. Tanner. No.
    Senator Franken. You've been studying this for 20 years.
    Mr. Tanner. But, I have not looked at the bankruptcy 
numbers in those countries.
    Senator Franken. OK. Thank you, sir.
    Mr. Tanner. I will say----
    Senator Franken. No.
    Mr. Pearson, your testimony mentions high administration 
costs as a primary reason that our healthcare spending is so 
high. What's included in these administrative costs?
    Mr. Pearson. Yeah, there's international standards that we 
agree what is included and what isn't included. So, the OECD 
definition is actually more narrow than the one that you 
usually use in the United States. It concentrates very much on 
the payment systems and the reimbursement systems and misses 
out some of the things that you would use in your national 
definition, which is why, when we do the international 
comparisons, you see a smaller number in the--when we look at 
the OECD, what the United States spending on administration 
than you're used to seeing. So, on our figures it's about, if I 
remember rightly, 7 percent of your total health spending. I 
think you're used to seeing a much larger number. But, 
relatively, it is still by far and away the highest in the 
OECD, together with some of the multipayer--multipayer systems 
are also similarly expensive.
    Senator Franken. Ms. Schoen, we were talking, before, about 
nonprofits--insurance. Minnesota is covered all--it's all 
nonprofit. We--for every dollar, in Minnesota, that goes to 
health insurance, 91 cents comes back in healthcare. There's a 
thing called ``medical-loss ratio,'' that--our medical-loss 
ratio is 91. For private individual plans in this country, it's 
60.
    Voice. 70.
    Senator Franken. Can we pay for healthcare if we bring up 
that number from 60 to 90?
    Ms. Schoen. If you--I've included a chart in my testimony, 
figure 26, the McKinsey study, that compared our excessive 
costs. We're looking at those kinds of medical-loss ratios, as 
well as transaction costs. They estimate that the excess is in 
the neighborhood of $90 billion per year. It's a lot of money. 
Those high medical-loss ratios that you mentioned, particularly 
in the small group and individual market, you're actually even 
on the low side. When Maine opened up its books, it found one 
that's only paying 40 cents out in claims.
    Senator Franken. OK.
    Ms. Schoen. The highest, particularly in the individual and 
small group market. Other--every other country--and we can see 
it in our large group--when you bring group risk back together, 
the running of the health plan, the overhead comes way down, 
and when you simplify. It's critical we do both.
    Senator Franken. Let me continue, cause I don't have that 
much time. Some estimates--continue with you, Ms. Schoen--show 
that we can save billions by streamlining the claims process so 
clinicians waste less time on paperwork and redundancies. Do 
you think there'd be a benefit in this country having a unified 
system for billing and payments in healthcare?
    Ms. Schoen. Absolutely.
    Senator Franken. If we were to create a streamlined system 
for all payers, would the Medicare administration structure for 
billing and payment be a good option to buildupon? Just to be 
clear, I'm talking about Medicare's administrative system, not 
Medicare's payment schedule.
    Ms. Schoen. Well, it's--as I think you know, Medicare uses 
private carriers to pay claims. So, I think any effort that 
would say, ``Let's have our claims form use common codes, let's 
start to make it electronic''--I often hold up my insurance 
card and say ``It's plastic, but we Xerox it; in Germany, they 
swipe it.'' It's electronic. It just--we know what you're going 
to pay. If we could move toward that, we remove layers in the 
physician's office, in the hospital office, as well as the 
insurance companies.
    All I've talked about so far is the overhead in insurance. 
So, yes, I think we don't even--we can't even foresee how many 
layers are there that don't need to be there.
    Senator Franken. Right.
    Dr. Tanner, are you aware of--I--in your written testimony, 
you talked about 7,000 patients coming from abroad to Mayo. Are 
you aware that there are 750,000 Americans who traveled abroad 
for medical care in 2007?
    Mr. Tanner. Yes, I am.
    Senator Franken. That they went to places like Mexico and 
India because they found less expensive healthcare in those 
countries?
    Mr. Tanner. Yeah, the primary destinations are India and 
Thailand, but----
    Senator Franken. Do you find anything wrong with that----
    Mr. Tanner. No, they are not getting----
    Senator Franken [continuing]. Picture?
    Mr. Tanner [continuing]. The quality of care that Indians 
and Thais get in their country. They are getting a specialized 
care that's available for tourists who pay with U.S. dollars in 
those countries. It is not the quality----
    Senator Franken. Why are they leaving the----
    Mr. Tanner.--the overall quality of care.
    Senator Franken. ``Why are they leaving the United 
States?'' is the question, but I've run out of time.
    Thank you.
    The Chairman. Thank you so much.
    Senator LeMieux.
    Senator LeMieux. Thank you, again, for all the folks on the 
panel. It's been very educational this morning.
    I want to ask two sort of open-ended questions, and 
hopefully there will be enough time for everyone to respond.
    My first question is, is, What do other countries do to try 
to prevent fraud, waste, and abuse? What procedures do they 
have in place? We obviously have a huge problem with that in 
our Medicare system and our Medicaid system in this country. 
So, I would love to hear what other countries are doing to 
address those issues.
    I'll start with Mr. Pearson.
    Mr. Pearson. I'm afraid I'm going to plead ignorance here. 
I actually have no knowledge of this area of policy.
    Senator LeMieux. Dr. Bennett.
    Dr. Bennett. We now have a----
    Senator LeMieux. Microphone, please.
    Dr. Bennett [continuing]. Now have a photo ID card that 
actually has begun to eliminate the fraud that was happening. I 
am sorry to say that some of the fraud was not in--that the 
health clinics very close to the American border, there were a 
lot of Americans who had Ontario health cards and were coming 
up to St. Catherine's to actually get their--the license plates 
in those parking lots was filled with Americans. So, we ended 
up having to change our health card in Ontario to one with a 
photo on it, and we've begun to get there.
    But, I think that having primary care, having a family 
doctor who actually can coach somebody through the system, I 
think actually--and----
    Senator LeMieux. What about--if I can interrupt----
    Dr. Bennett. Yeah.
    Senator LeMieux [continuing]. Because I don't have much 
time--how about provider fraud? Do you require a background 
check for your healthcare providers or do extensive checks? We 
don't do that in this country. I was wondering what you might 
do in Canada.
    Dr. Bennett. Well, in our College of Physicians and 
Surgeons in--each of the provinces and territory does do a 
background check for the physicians before they even try and 
move provinces or come in. They're very serious, in terms of 
prosecuting any sort of billing fraud. It is very seriously 
dealt with.
    Senator LeMieux. OK.
    Ms. Schoen.
    Ms. Schoen. I can't speak in depth about it, but, when you 
look abroad, what you often find is systems that--- where the 
specialists are paid on salary. They work with a hospital, that 
there's a lot less of a fee-for-service incentive to just bill 
for things that you didn't do. There's less ownership of labs. 
The labs are more freestanding. They're in a nonprofit 
facility, so there's less that I could take something by 
prescribing you extra.
    So, some of the oddities of the way we have--in ownership 
arrangements, just do not exist in the same way. The 
physicians' offices look quite different. Again, if you pay 
primary care doctors, and have a very strong primary care 
system, where they're accountable for patients with registries, 
some of the fee-for-service ``just doing more'' goes away and 
there's a much higher emphasis on prevention and keeping people 
healthy.
    Senator LeMieux. Dr. Epstein?
    Dr. Epstein. Senator, it's a great question, but I can't 
enlighten us further.
    Senator LeMieux. OK.
    Voice. Yeah, I also can't go into great depth, but I will 
suggest that the level of fraud in various countries often has 
as much to do with sort of national character and history as it 
does with the actual system.
    Even in those systems that have sort of rigid payment 
systems so the doctors are sort of secondary corruption that 
goes on--Greece, for example--there's often doctors who refuse 
to treat patients during the day while they're on salary, and 
they take what's called ``informal payments'' to treat patients 
at night, off the books. A large portion of that goes on, as 
well.
    Senator LeMieux. Thank you very much. The last question I 
have--and I think it's a question that you'll like answering, 
which is, you know, we're trying to do a lot of things with 
healthcare in this country, but what would be the first thing 
that you would do? What's the lowest hanging piece of fruit to 
reduce cost and increase the quality of care?
    Mr. Pearson.
    Mr. Pearson. You're right, I love that question. Moving 
away from fee-for-service payments to episodic payments.
    Senator LeMieux. Dr. Bennett.
    Dr. Bennett. Well, I think having everybody covered, and 
then have a coordinator for the system. But, I did want to talk 
about the fee-for-service versus--the vets used to get paid for 
the downer cow and going out and looking after them one at a 
time. Now vets are being paid for herd health. They get paid if 
they are able to keep the herd healthy. I think that if we 
could look to a system where doctors were awarded for keeping 
people well, that--in terms of what Senator Franken had said, 
in terms of the--that they get rid of the perverse incentives 
for churning patients through more and more tests and actually 
reward them for keeping people well--do they have their 
immunizations? Did they get their mammogram? It is a system 
that is about health outcomes, not volume piecework.
    Senator LeMieux. Thank you.
    Ms. Schoen.
    Ms. Schoen. You've asked for one, but I have to give you 
two.
    Senator LeMieux. OK.
    Ms. Schoen. I think, unless we bring our insurance system 
back together, we can't pay in a way that's rational, and then 
we need to be starting to pay with a focus on value. We have 
pricing system that's unbelievable, when you look at it right 
now. You can't ask what the price is. It's behind a veil of 
secrecy. So, we really need to do the insurance side, bring 
everyone in, and start to focus on paying differently and using 
our group purchasing power.
    Senator LeMieux. Dr. Epstein.
    Dr. Epstein. I'm going to say something which is similar to 
Ms. Schoen. The usual shibboleths are primary prevention, the 
medical home, public reporting, paying for results, comparative 
effectiveness, information technology. I think they're all 
going to be helpful, but none will provide dramatic relief. If 
we're going to really make progress, we're going to have to 
move towards more highly integrated care. In the best of all 
worlds, we'd have certain parts of the population for whom they 
would find it compatible in fully capitated systems, and in 
other instances, we would use intermediate approaches such as 
bundling and accountable-care organizations and the like. But, 
I think we have to move in that direction.
    Senator LeMieux. Mr. Tanner.
    Mr. Tanner. I think what we need to do is have more 
competition within the healthcare industry, and more consumer 
involvement within the healthcare industry. The lowest hanging 
fruit would simply be to allow people to buy insurance across 
State lines. People should not be a captive of the insurance 
cartels within their State, nor should they be captive of the 
regulatory regimes within their State.
    In the longer term, we need to move away from an employer-
based healthcare system to one where individual consumers have 
healthcare, so that you don't lose your insurance when you lose 
your job and so that you can get insurance in a long, lifetime 
contract, where you can buy it when you're young and healthy, 
and keep it the long term, which means you need to change the 
tax incentives in the current tax code.
    Senator LeMieux. Thank you very much.
    Thank you, Mr. Chairman.
    The Chairman. We have a--time for just one more round, two 
minutes a Senator. I'd like to give one minute to Dr. Bennett 
and one minute to Mr. Pearson.
    Dr. Bennett, we hear, and we've heard today, about lines 
and rationing and people apparently not very happy with their 
healthcare in Canada. You said people in Canada are as much as 
five times more pleased with their healthcare as we are. I'll 
give you one minute to answer that.
    Then, Mr. Pearson, regulation. I think you indicated that 
countries that are doing a good job in controlling costs have a 
good deal of government regulation, perhaps to an extent that 
we do not have here. One minute.
    Dr. Bennett would you speak first?
    Dr. Bennett. I think that we are doing better on the wait-
times end, but, you know, as I was coming yesterday, one of my 
former colleagues said to me--his father's a very wealthy man, 
but had a heart attack and, within one hour, was on the table 
getting a stent operated on in extraordinary way that--in terms 
of a truly integrated system.
    So, in our system, if you're sick, you do very well. The 
``worried well,'' we have, sometimes, more trouble with. But, 
there's no one in our country who is dying because they don't 
have health insurance. I think the Harvard study, from two 
weeks ago, that had 45,000 people a year dying in the United 
States of America because they don't have healthcare, is, 
again, where we need to focus.
    The Chairman. Thank you.
    Mr. Pearson.
    Mr. Pearson. Yes, thank you. I will focus on, if you like, 
the multipayer systems, the systems most similar to the United 
States. It's not much point in me talking about the regulation 
in national health service systems. You're never going to be 
having one of those.
    Within those multipayer systems, they could use a lot more 
regulation than happens in the United States. There's ex-post-
risk adjustment to make sure that the competing providers 
compete on the grounds of price and quality. They don't try and 
get a better mix of people.
    So, in other words, what I think the regulations are doing 
is that they're trying to channel the competition in a way 
that's more productive for society. They're trying to channel 
the competition into, Can we make sure that we get prices down? 
So, they also regulate on making sure that the information is 
made available to insurees. They regulate, maybe, on where--
what sort of pharmaceutical prices can be charged. So, again, 
there's no, kind of, cost-gouging going on within the system.
    So, what they're trying to do is to make sure--they are 
regulating, but they're regulating to try and make sure the 
competition works, rather than people just trying to find a way 
around competition in order to maximize their profits.
    The Chairman. Thank you.
    Senator Corker.
    Senator Corker. Thank you, Mr. Chairman, and again, all of 
you, for your testimony.
    Dr. Epstein, I--my guess is--you talked, in your testimony, 
about racial minorities having difficulties getting the care 
they need. I assume that's a pretty major indictment of the 
Medicaid system itself. I saw you and Dr. Tanner sort of 
agreeing with each other on many of the competition, the 
notions that the nickels and the competition that ought to 
occur.
    I'd like for you, in the short time I have, to address two 
things. You mentioned the integrated system that we need to 
have. I think most of us agree with that. One of the things I 
don't like at all about the debate we're having right now is, 
you know, it's like a 100 folks sitting around the table, 
changing that, where, in essence, it's tough sledding. We need 
to figure out a--I agree that that needs to happen. It's tough 
work. It's hard to do it in a piece of legislation. But, 
working through Medicare and--not Medicaid so much--but, doing 
pilots and seeing what works and spreading it out probably is 
the best way to do it. Over an entire Presidential term, we 
could probably do a lot of damage.
    But, I'm wondering if you might--in a good way--and what 
we're doing now, probably the other way--but, could you address 
that, and also the fact that, in your testimony, you mentioned 
that, under our system today, people really don't have any skin 
in the game, they don't really have any money out, and so, 
therefore, its--the cost to them, they're not aware--it seems 
like, to me, that would be the same in the single-payer system, 
too. I wonder if you might educate us there a little bit.
    Dr. Epstein. I think you're asking a couple of different 
questions, and I'll try and do my best to address them both.
    I didn't address the latter, which is the issues that Mr. 
Tanner talked about, which is particular individual incentives 
and how they play out and where that goes.
    In terms of integration, it is my sense--and I say this, 
not only as someone who's studied health policy, but as a 
primary care provider--that integration is really key for 
providing better care. We see that in the appalling number of 
readmissions we have, because we don't get transitions to 
ambulatory care right or have proper incentives to keep 
patients out of the hospital. I think we need to align those 
incentives over time.
    We also need to do it in a way that is attractive, to 
patients who don't want to be constrained fully. So, I really 
want to pick up on the----
    Senator Corker. So, how do we make that happen in--you 
know, with the legislative process we have that--so much of 
what we do in the public sector affects the private sector--how 
do we actually do that? You know, we have great universities 
and Mayo Clinics and Vanderbilt and places like that, that talk 
about this all the time, but they can't make it happen. How do 
we do that?
    Dr. Epstein. Sure. Delivery-system change is going to be 
even harder and more difficult to accomplish than changing 
coverage. Delivery system is very difficult to change. I 
believe the current bills have funding and provisions for a 
series of what I would hope will be more rapid-fire-than-before 
demonstrations, which will lead to incremental knowledge and 
guide us as we think about strategies, like bundling, and 
creating organizations that are accountable for a broader range 
of services. We need to empower and incent hospitals, not only 
to do their job with inpatient care, but to do their job in 
transitioning patients to ambulatory care, they need to work 
with other providers to ensure that patients don't just cycle 
back and forth to the ambulatory-care and hospital setting. The 
exact details of that have got to be worked out.
    But, what you can do at the Federal level is invest money 
in it and give notice that you see the future being, not the 
perpetuation of entropic fee-for-service going on and on, but, 
in fact, changing the payment system and incentives so that we 
move towards more integrated care.
    Senator Corker. Thank you, Mr. Chairman.
    The Chairman. Thank you very much, Senator Corker.
    Senator Franken.
    Senator Franken. Yeah. Haven't we had--haven't we seen what 
works? Mr. Epstein--Dr. Epstein, haven't we seen what works? 
Doesn't Mayo work? Doesn't Cleveland Clinic work? Doesn't 
Geisinger work? Haven't we seen that?
    Dr. Epstein. I don't know that we have the model that we 
can bring to scale and transport comfortably across America and 
say, ``We've got it.
    Senator Franken. Yeah, but--but, I mean, do we need more 
pilot programs, or do we need to do what we're doing in this 
legislation, to try to encourage a quality and value versus fee 
for service, say?
    Dr. Epstein. I think, if I read the legislation correctly, 
that there is money in there for starting pilot programs, 
demonstrations, and evaluations of a host of different ideas 
that will be brought to scale. You know, the history of medical 
innovation is that you get a few zealots who can produce a 
model that seems effective either in providing better quality 
or lower cost, but it is hard to tease out the unique 
contextual factors that have allowed them to succeed. When you 
try and recapitulate the model elsewhere, it often doesn't 
work. But that's what needs to happen here.
    Senator Franken. But, aren't there things in common in 
these places that seem to deliver quality healthcare for a 
lower cost? Aren't there things in common? For example, let's 
talk about your primary care physician. What's the ratio of 
primary care physicians/specialists in this country?
    Dr. Epstein. Right now?
    Senator Franken. Yeah.
    Dr. Epstein. About 0.35, depending on what you call a 
primary care doctor. About 35 percent.
    Senator Franken. What would it be in Europe?
    Dr. Epstein. It's variable quite a bit in Europe. The 
prevailing wisdom is that is close to 0.5. In fact, if you look 
across multiple different countries, it's really quite 
variable.
    Senator Franken. So, we need more primary care physicians, 
wouldn't you say?
    Dr. Epstein. I think that. It's becoming vogue to believe 
that we do. But we've got a payment system that doesn't favor 
that, as you well know.
    Senator Franken. Right. Part of the health bill is for 
workforces to try to steer people into that, incentivize them 
to go into it, is it not?
    Dr. Epstein. It's less in the health bills and more in the 
popular dogma. What's in the health bills is the notion of a 
medical home, which we hope will move us towards greater 
emphasis on primary care--I think we could do much more.
    Senator Franken. OK. My time's run out. I have so many more 
questions, but, thank you, to all our witnesses.
    Thank you.
    The Chairman. Thank you so much, Senator Franken.
    Senator LeMieux.
    Senator LeMieux. I want to talk about the medical 
malpractice issue. There was a--Dr. Bennett, in your comments 
of the ways that--seven clear reasons why you pay less and feel 
better in Canada, No. 4 was malpractice insurance, and you 
mentioned that in your remarks.
    We have a situation, in this country, where our doctors are 
paying exorbitant amounts for medical malpractice insurance. My 
wife, Meike, and I are expecting our fourth child. We live in 
Tallahassee, FL, which is not a big town. I went to do the 
sonogram with her, with the OB-GYN, and he told me that he's 
paying $120,000 a year in Tallahassee, FL, for medical 
malpractice insurance. There's ten OB-GYNs in a practice 
together, so a million-two for medical malpractice. I wanted to 
get a sense of what you're doing in your country, that you 
outline, and then maybe hear from other folks on the panel of 
what we need to do to reform this problem so that we can drive 
costs down.
    Dr. Bennett. I, at the time, delivered about 150 babies a 
year, as a family physician, and my malpractice insurance was 
about $10,000. It was reimbursed by the province. It--so, I 
paid nothing. So, it is--what the Canadian Medical Protective 
Association has done is the two phases. One is to keep the 
premiums down--and it's an association and a board of 
physicians who manage it; but also do huge education on risk. 
Anybody who slightly got into trouble gets sort of taken to 
school and told how to reduce their risk in those. Also, our 
court system, that the jury system may decide whether somebody 
is guilty or not, but it is only the judge that makes the 
award. So, our tort system is very different, and so, the 
payouts are lower.
    But, I think that, again, nobody wants misadventure, and I 
think that we are--you know, we need to reduce the problems in 
our system. Yet, 100,000 people a year die because of medical 
misadventure in this country; 10,000 in ours. We've got to get 
that down.
    I think that, if I was allowed one more thing to say, the 
IT system, that--because of what Don Berwick says, in terms of 
our--our system is forgetful. We forget about allergies, we 
forget about many things that a really good IT system, like you 
put in place for your Veterans Administration, that turned the 
worst healthcare system to the best in less than 10 years--that 
we've got to have people--make it easier that they don't make a 
mistake, in the first place. If you've got a system that--- 
where you can push a button and get somebody's record, and can 
remember the patient, and--truly patient-centered care.
    The Chairman. Thank you, Senator LeMieux.
    Thank you so much for being here today. You've shed a lot 
of light on a very important topic in the United States today, 
as you know. So, we appreciate your being here.
    I--that's it, we're done.
    [Whereupon, at 12:33 p.m., the hearing was adjourned.]
                            A P P E N D I X

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           Prepared Statement of Senator Robert P. Casey, Jr.

    I would like to thank Chairman Kohl for scheduling this 
important hearing and welcome our new ranking member, Senator 
Corker to his new position. This hearing will examine how 
certain systems have kept the costs of health care low while 
keeping quality high. Right now we are in the midst of deciding 
how best to reform the health care system in this country and 
one of the most important questions we confront is how we can 
lower costs while increasing quality. To some this idea may 
seem contradictory, but it does not have to be.
    There are a number of models that we can examine when 
considering health care reform, and I would like to share a 
successful example from Pennsylvania. The Geisinger Health 
System stands out because of its commitment to quality and 
innovative care. Though the context for Geisinger's success is 
unique, surely the measures this hospital has taken to reduce 
patients' costs while increasing the quality of their care can 
be an example for the rest of the country. Geisinger is a 
comprehensive, integrated and physician driven health care 
network of 45 community sites across Pennsylvania with 
physicians who practice in more than 75 specialties and sub-
specialties.
    The focus of this network is quality patient care. 
Geisinger uses a system of quality metrics called Quality 
Measure Scores. Patients and consumers have access to these 
metrics on Geisinger's website. We know that the measure of the 
quality of one patient's care is unique to that patient, so 
Geisinger also allows its patients to score the hospital and 
allows potential patients to compare these scores to other 
institutions across the state and the nation.
    Geisinger also measures the level of patient satisfaction 
through an independent researcher, and they make the outcome 
and performance data of every procedure and course of treatment 
available online, once again so that patients can know and 
evaluate their options. Through an innovative program called 
ProvenCare, Geisinger was able to compile the data within the 
electronic medical records of consenting patients to compare 
what combinations of treatment work best for future patients 
with similar conditions. Through their research with the 
ProvenCare program, the average total length of stay at 
Geisinger fell 0.5 days and the thirty-day readmission rate for 
the hospital fell 44 percent.
    Ultimately, the success of this hospital can be summarized 
by two points. First, patients who are more informed about 
their care options are better able to participate in their own 
care. Second, doctors with a better knowledge of what 
combination of procedures has worked in the past are better 
able to streamline the treatment options they provide to their 
patients. As the Geisinger system has demonstrated, patients 
pay less because they're not receiving extraneous treatments, 
they stay in the hospital for less time and they return to the 
hospital less often. We can learn from this hospital, and I 
think that as we advance in the health care reform process we 
must consider examining what is working in Pennsylvania so that 
we can make the best possible policy decisions.
    Again, Mr. Chairman, I thank you for organizing this 
important hearing. I look forward to working with you and the 
rest of our colleagues on these important issues as we continue 
to debate health care reform.
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