[Senate Hearing 115-373]
[From the U.S. Government Publishing Office]
S. Hrg. 115-373
THE HISTORY AND CURRENT REALITY OF THE U.S HEALTH CARE SYSTEM
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HEARING
before the
COMMITTEE ON
HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
ONE HUNDRED FIFTEENTH CONGRESS
FIRST SESSION
__________
SEPTEMBER 6, 2017
__________
Available via the World Wide Web: http://www.Govinfo.gov/
Printed for the use of the
Committee on Homeland Security and Governmental Affairs
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
U.S. GOVERNMENT PUBLISHING OFFICE
29-443 PDF WASHINGTON : 2018
COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
RON JOHNSON, Wisconsin, Chairman
JOHN McCAIN, Arizona CLAIRE McCASKILL, Missouri
ROB PORTMAN, Ohio THOMAS R. CARPER, Delaware
RAND PAUL, Kentucky JON TESTER, Montana
JAMES LANKFORD, Oklahoma HEIDI HEITKAMP, North Dakota
MICHAEL B. ENZI, Wyoming GARY C. PETERS, Michigan
JOHN HOEVEN, North Dakota MAGGIE HASSAN, New Hampshire
STEVE DAINES, Montana KAMALA D. HARRIS, California
Christopher R. Hixon, Staff Director
Gabrielle D'Adamo Singer, Chief Counsel
Kyle P. Brosnan, Counsel
Margaret E. Daum, Minority Staff Director
Courtney C. Cardin, Minority Counsel
Laura W. Kilbride, Chief Clerk
Bonni E. Dinerstein, Hearing Clerk
C O N T E N T S
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Opening statements:
Page
Senator Johnson.............................................. 1
Senator McCaskill............................................ 5
Senator Tester............................................... 14
Senator Carper............................................... 17
Senator Peters............................................... 21
Senator Harris............................................... 24
Senator Daines............................................... 26
Prepared statements:
Senator Johnson.............................................. 41
Senator McCaskill............................................ 42
WITNESSES
Wednesday, September 6, 2017
Melissa Thomasson, Ph.D., Professor and Director of Graduate
Studies, Department of Economics, Miami University............. 9
Katherine Baicker, Ph.D., Dean, Harris School of Public Policy,
The University of Chicago...................................... 11
Sabrina Corlette, Research Professor, Center on Health Insurance
Reforms, Georgetown University Health Policy Institute......... 13
Alphabetical List of Witnesses
Baicker, Katherine, Ph.D.:
Testimony.................................................... 11
Prepared statement........................................... 54
Corlette, Sabrina:
Testimony.................................................... 13
Prepared statement........................................... 64
Thomasson, Melissa, Ph.D.:
Testimony.................................................... 9
Prepared statement........................................... 45
APPENDIX
Chart 1.......................................................... 73
Chart 2.......................................................... 74
Chart 10......................................................... 82
Chart 11......................................................... 83
Chart 12......................................................... 84
Chart 24......................................................... 96
Chart 25......................................................... 97
Document submitted by Senator McCaskill.......................... 99
Chart submitted by Senator Daines................................ 171
Article referenced by Senator Johnson............................ 173
Responses to post-hearing questions for the Record
Ms. Thomasson................................................ 177
Ms. Baicker.................................................. 188
Ms. Corlette................................................. 228
THE HISTORY AND CURRENT REALITY OF THE U.S. HEALTH CARE SYSTEM
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WEDNESDAY, SEPTEMBER 6, 2017
U.S. Senate,
Committee on Homeland Security
and Governmental Affairs,
Washington, DC.
The Committee met, pursuant to notice, at 10:03 a.m., in
room SD-342, Dirksen Senate Office Building, Hon. Ron Johnson,
Chairman of the Committee, presiding.
Present: Senators Johnson, Daines, McCaskill, Carper,
Tester, Heitkamp, Peters, Hassan, and Harris.
OPENING STATEMENT OF CHAIRMAN JOHNSON
Chairman Johnson. Good morning. This hearing will come to
order.
I want to welcome the witnesses. Thank you for your
testimonies. I certainly enjoyed reading it, and I am looking
forward to your oral testimonies and getting into a discussion
on America's health care system.
Now, earlier this morning, I attended an open, I guess,
meeting with Senator Alexander and Senator Murray, who with
their Health, Education, Labor and Pension (HELP) Committee are
going to be holding a hearing actually at this exact moment
grappling with what Congress should do to basically stabilize
insurance markets: cost sharing reduction (CSR) funding,
offering States some flexibility, those types of things. It was
noted that 25 percent of the Senate was in attendance at that
prehearing meeting, which I think gives us a pretty good sign
that I think there is a strong desire to recognize that we have
some problems in our health care system and those problems need
some fixing, and hopefully on a bipartisan basis.
Members of my Committee have kind of asked some questions:
``You do not have jurisdiction over health care. Why would you
hold health care hearings?'' We do have oversight jurisdiction
over certainly government health care programs, and that is
certainly part of it. But, I come from the private sector. I
have solved an awful lot of problems, and I know my fellow
Committee Members have heard me say this repeatedly. There is a
process you follow in terms of solving a problem. You define
the reality. You describe the problem, define the problem. It
starts with a lot of information. Then you set yourself
achievable goals. Once you have gone through that robust
process, then you start designing solutions.
Unfortunately, what I have witnessed here in Washington,
D.C., is people hop right to the legislation and they start
fighting over what their legislative solution is, and we are
often void of an awful lot of information. I kind of witnessed
that during our whole effort to repeal and replace Obamacare.
So, seeing as that effort failed, we are what we are. We
have certainly some real issues, and what I would like to do is
use the hearing of this Committee to lay out that problem-
solving process, gather the information, do it in hopefully a
very thoughtful, hopefully very bipartisan fashion. Facts are
facts. Hopefully we can agree on the reality, the fact-based
definition of the problem. Where we do not necessarily agree,
we should probably get that on the record as well. But, I just
basically want to build up that record, and that is really the
purpose of this hearing and hearings in the future.
In preparation for this, we have been gathering an awful
lot of information, quite honestly, over a number of months,
and we have put together for this hearing just a group of
charts that we have developed on the basis of that information
gathering, and I would just kind of like to highlight a couple
of them, starting with page number 1, because I think--and this
really does not have anything to do with health care, but it
has everything to do with health care. The financial condition
of America. We are currently $20 trillion in debt. Over the
next 30 years,\1\ according to the Congressional Budget Office
(CBO), our accumulated deficits will exceed at least $100
trillion. We have taken CBO's percentage of gross domestic
product (GDP), and we have converted it to dollars. I have
actually been PolitiFact'd on this. We are using a 2015 model.
It is really whatever it is, only $107 trillion it is massive
over the next 30 years as the baby-boom generation retires and
we do not have enough people paying into these programs.
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\1\ The chart referenced by Senator Johnson appears in the Appendix
on page 73.
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So, we have huge deficits, and how does this relate to
health care? By the way, who is doing our charts here?
OK. Put up chart 2\2\ on page 2?
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\2\ The chart referenced by Senator Johnson appears in the Appendix
on page 74.
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The reason health care falls into this is, in my written
testimony--which, by the way, I would ask consent to be entered
into the record.\3\
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\3\ The prepared statement of Senator Johnson appears in the
Appendix on page 41.
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Medicare, Medicaid, and Obamacare represent $87 billion out
of a total outlay of about $328 billion. About 26.5 percent of
all the outlays over the next 30 years are in Medicare,
Medicaid, and Obamacare.
If you take a look at what drives the deficit, over 30
years $129 trillion is comprised of about $18 trillion of
Social Security benefits--in other words, we are going to be
paying out $18 trillion more in benefits to Social Security
than we bring in through the payroll tax; Medicare, about $39
trillion. The Urban Institute did a study a number of years ago
that said that for every $1 that is paid into Medicare through
the payroll tax, beneficiaries get $3 in benefits. It is a
program that is just simply not sustainable. Interest on the
debt is about $65 trillion.
So, if we do not want to pay our creditors $65 trillion in
interest payments over the next 30 years, we do need to address
the deficit in Social Security and Medicare and just the entire
Federal Government.
If you want to hop to page 10, when the staff put together
this chart, to me it was pretty stunning. All this shows is
that health care spending from 1960 until 2015 has gone from
$27 billion to $3.2 trillion.\1\ Now, had that spending just
grown by the rate of inflation, we would be spending a little
more than half a trillion dollars a year.
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\1\ The chart referenced by Senator Johnson appears in the Appendix
on page 82.
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So, one of the things I would like this Committee to
explore--and I might ask witnesses whether you have seen any
studies on this--that is a differential of $2.66 trillion. What
is that comprised of? How much of that $2.66 trillion of
increase over inflation in health care spending is just due to
advances in medicine? Obviously, we can do a whole lot more
today than we could in 1960. But, how much is that through a
very inefficient financing mechanism? How much of that is
because of all the middlemen now with a third-party payer
system has that added to our health care expenditures? I think
that is kind of a table stakes piece of information that we
need to try and glean.
If you turn to page 11,\2\ who pays? And, here you can see
the progression over time. Back in the 1940s the vast majority
of health care expenditures was paid for directly by patients.
There was a lot of consumer payment, a lot of consumer
involvement in terms of what they pay in health care. Of
course, there was not as much stuff to buy, but they were
really involved, and over time you can see that the third-party
payer system has really taken over so that today--and this is
chart 12,\3\ and I am going quicker than my staff can replace
those charts. Today only 11 cents of every health care dollar
is paid for directly by the patient; 89 percent is either paid
by government or insurance, the third-party payer.
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\2\ The chart referenced by Senator Johnson appears in the Appendix
on page 83.
\3\ The chart referenced by Senator Johnson appears in the Appendix
on page 84.
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So, I always look at this as one of the root causes of our
problems is we have separated the consumer of the product from
the direct payment of the product. We have removed the benefits
of consumer-driven price competition out of health care. Not
only do we not care what things cost; we do not even know what
they cost.
We were just in the meeting with Senator Alexander and
Senator Murray, and a lot of people were talking about price
transparency. Well, when people have got to pay something
themselves, they are going to demand price transparency. Right
now we do not have it. So, about the only people that know what
something costs is the accounting department of the provider
and the accounting departments of insurance companies. That has
to change. Consumers really need to know what things cost.
The last two charts I just want to highlight are on pages
24 and 25, and this really talks about premiums.\4\ This is a
chart I honestly developed as we went through within the
Republican conference our whole effort of what we are going to
do with Obamacare, and it was frustrating to me that CBO scores
were talking about premiums going up 20 percent to the baseline
10 percent, and then the third year, 30 percent below, and
nobody knew what that actually meant in dollar terms. So, I
just put this chart together to try and show my colleagues what
that actually meant. But, I think this is an important chart
because if you take a look at the bottom line, that was the
baseline in terms of premiums prior to Obamacare. In 2013, on
average--and I believe this relates to a 40-year-old male. On
average, nationally, somebody would be paying $232 per month. A
couple of years into Obamacare now, that average has increased,
according to a Department of Health and Human Services (HHS)
study, 105 percent, up to $476. And, if you just grow that
baseline--CBO does not tell us what baseline they are actually
comparing it to, so we had to make some assumptions, grow that
based on consumer price index (CPI) medical. You can see really
what the Republican Senate bill, what little it did to bring
those gross premiums down. And, the reason I concentrate on
gross premiums, by the way, is because we are talking about CSR
payments; we are trying to stabilize the market. But so much of
our discussion was about government funding to bring down net
premiums, which means that for every $1 premiums have increased
on a gross level, the American taxpayers are picking that up,
or individuals, the forgotten men and women in health care who
are not getting subsidies, do not get any cost sharing, they
cannot afford coverage because their premiums have doubled. In
Wisconsin, oftentimes I have heard people say premiums have
tripled or more. So, I think our focus as we move forward has
to be on gross premiums. What can we do to stabilize the
markets, bring those down?
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\4\ The chart referenced by Senator Johnson appears in the Appendix
on page 96.
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And, the final chart\1\ is a McKinsey study commissioned by
HHS, and this was quite disappointing to me. This information,
I just have to say honestly, was being suppressed. A
whistleblower had come to my office that this study was done,
this information was available in May, and we could not get it.
We finally had to write some letters, threaten to make those
things public before I got this information.
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\1\ The chart referenced by Senator Johnson appears in the Appendix
on page 97.
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Now, it is a limited study, but it is the kind of
information we need. This one chart only shows one State. The
study had four. This State is Tennessee, and what it shows,
again, for a male 40 years of age, prior to Obamacare, they
were paying about $104 per month in health care premiums. As of
2017, that insurance premium had increased 3.14 times, 314
percent, had gone up to $431. And, they explain what caused
that, what elements of Obamacare caused premiums to more than
triple in Tennessee for that 40-year-old male, and 73 to 76
percent was because of increased risk, which was guaranteed
issue and community rating.
Now, we ignore that basic reality at our own peril if we
are actually going to try to solve the problem. Now, I realize
how popular guaranteed issue and community rating is. I think
the good news from my standpoint by examples in Maine--I just
read an article in the New York Times, with Minnesota, things
like invisible high-risk pools. We had a high-risk pool in
Wisconsin. It was not perfect. But, if we start looking at
those things, recognizing what has caused these premiums to
double nationally, triple in many cases, maybe we can start
finding some solutions.
So, again, I will end my comments here, but hopefully what
I have demonstrated is here is some information. I am not
saying it is perfect. I want to encourage the Members of this
Committee to provide more information focused on finding areas
of agreement on the definition of the problem so we can
actually move forward, because my belief is if we can agree on
what the problem is, if we can really define it properly, I
think it is going to be a whole lot easier finding common
ground on a bipartisan solution, which I think we just realized
now we are going to have to find bipartisan solutions, probably
in multiple iterations of this thing going into the future.
So, again, I want to thank the witnesses. I want to thank
Committee Members for attending, and I will turn it over to our
Ranking Member, Senator McCaskill.
OPENING STATEMENT OF SENATOR MCCASKILL\1\
Senator McCaskill. Thank you, Mr. Chairman. I am glad we
are having this hearing today. I am even more excited about the
hearing going on in the HELP Committee this morning. Many of us
have said from the beginning of the year that the way to get at
this was an open hearing process where people can contribute
and we can find the way--``regular order'' is short-cut for
``finding the middle.'' It is an elegant way of--``regular
order'' does not mean anything to most Americans, but ``finding
the middle'' means something to them. And, the way the Senate
has worked over the years is there has been a group on the far
right that has been left behind and a group on the far left
that has been left behind, and about 60 to 70 folks in the
middle hammered out some kind of common-sense compromise that
did not make everybody happy. That
is what has been missing in this effort so far, and I am
encouraged--I think we have wasted a lot of time and a lot of
angst and uncertainty for Americans getting to this point.
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\1\ The prepared statement of Senator McCaskill appears in the
Appendix on page 42.
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So, first, even though I think this is unusual to have this
kind of hearing in this Committee, I want to applaud your
motivation because I do think you understand that we are not
going to get there just with those on the opposite ends of the
spectrum. We have to find the middle.
I also acknowledge that we have made some mistakes in the
way that we passed the Affordable Care Act (ACA). It became
political the minute the final vote was tallied and it was all
one party. And, we are never going to have an accepted health
care solution in this country if it is just one party or the
other. It is too easy to make it into a political football. It
is too easy to try to win or lose elections around it when it
is just one party. And so, I think that we tried to come up
with a plan that would allow people who could not get
insurance--and make no mistake about it, the increase in
premiums was going on before the ACA. It was double-digit every
year. Every small business--you are aware of this because you
were probably buying insurance for your company. It was going
up every year before the ACA, and those premiums were getting
hijacked, and in most States that were trying to do some kind
of high-risk pool for those who were being shut out of the
insurance market, they simply were not working. They were
excessively unaffordable. That certainly was the case in my
State.
So, we now know that we have the uninsured rate at a
historically low level. You have one chart that talks about the
increase in insurance, but there are not really a lot of charts
in here that say that we have a historic low uninsured level.
Chairman Johnson. There is one in there.
Senator McCaskill. There is one. It is kind of hard to
read.
Chairman Johnson. And, we will add to it.
Senator McCaskill. Yes, I mean, I found it. It was bar
graphs that are a little hard to read.
Chairman Johnson. It is really not intended to be hidden,
but, again, we will build on this.
Senator McCaskill. OK. All right. And then, the other thing
is, about your graph I wanted to ask this question: In the
government pays part, are you including the payroll taxes that
individuals are paying for Medicare in that figure?
Chairman Johnson. First of all, understand that taxpayers
pay all of this. I mean, individuals pay for all of this.
Senator McCaskill. No, I understand.
Chairman Johnson. It is just, how is it done indirectly.
Senator McCaskill. Yes, I understand. I think it would be
helpful for us to get a graph of how much we are paying out in
Medicare is actually supported by the people that are receiving
Medicare through payroll taxes, the taxes they have paid in,
and how much of it are we actually going in the hole for. I
think it would be really helpful for us to know how out of
whack is the actuarial numbers in terms of what people are
paying into the Medicare system and what the government is
paying out.
Chairman Johnson. But, again, what I am saying, Americans
pay for 100 percent of this. It is just like we do not pay--so
this is who pays directly for it.
Senator McCaskill. Right.
Chairman Johnson. Who is the payer of, let us call it,
``last resort''?
Senator McCaskill. Exactly. So if, in fact, we have
somebody who decides to buy a Harley Davidson motorcycle
instead of buying health insurance, and we have no mandate for
that man to buy health insurance, and he has traumatic brain
injuries on that motorcycle, we all pay because it all comes
through higher premiums. So, doing away with the individual
mandate, I think it would also be helpful to look at what
impact that has on how much more everybody is going to have to
pay, because when we do away with that personal responsibility
piece that we require with car insurance, then all we are
saying is you get to choose that other people pay for your
health care, because you know you get bankrupt in 10 minutes
with some kind of severe diagnosis.
So, I think these are really helpful. I think there are a
lot of other charts we need to look at if we are really going
to get our arms around this issue.
I do not think I can finish my opening without talking
about the urgent concern we have immediately in front of us,
which is stabilizing the individual market. In less than 2
months, Americans are scheduled to begin enrolling in 2018
plans. That is why I wish we would have started this much
earlier, because this is really impacting people's lives. They
are going to have to sign up. And, I just finished 25 town
halls in my State, and I can tell you people are very worried.
And, they understand that one of the reasons these premiums are
going up is because the cost-sharing payments are not being
made. They understand that advertising is not going on for
healthy people to sign up for the markets. They understand that
they are paying a higher bill because of these things. And, it
is inexcusable that we are tagging them with this kind of
increase in premium when it is all avoidable in the short term
if we could get busy in the next 30 days and do the basic step
that needs to be done on both cost sharing and acknowledging
that until we have some other way to get healthy people into
the pool, just unilaterally doing away with enforcing the
individual mandate just means higher costs for everybody. That
is all it means. And, it allows somebody to decide not to buy
it, and then they surf off of all of us, and that is just not
fair to many Americans who are paying, especially those who do
not qualify for subsidies that are on the individual markets.
I certainly understand and agree with you that transparency
is really important we get to work on that. You and I are in
total sync on that. I tell this story, but it is a true one. I
had my knee
replaced as a U.S. Senator, so I thought it would be a good
exercise--Americans are great shoppers. I know when an outlet
mall is BS, when an outlet mall is really not outlet mall
prices, they are just, kind of pretending they are, because I
am a pretty good shopper. I mean, Groupon has been wildly
successful because Americans love coupons. But, you cannot
figure out what you pay for anything in health care, and so,
when I had my knee replaced, I thought I would try. So, I did
not let my staff call. I called myself, after my surgery was
over, and I called my surgeon, I called the hospital, and I
called the insurance company. And, I just asked a simple
question: ``What did it cost to replace my knee?''
Well, you would have thought I asked them, ``Where is the
Holy Grail located? And, can I get there in a week?'' This was
a very stumping question for them. They were stumped. They did
not know what to tell me. The insurance company did not know
what to say. The doctor did not know what to say. The hospital
did not know what to say. I kept pressing them for numbers. I
finally ended up with some numbers, and none of them matched.
So, if I cannot figure out what a knee replacement actually
costs as a sitting U.S. Senator, what shot does the American
consumer have? Why do we have apps? I can go online right now
and find out where the best cheeseburger is within a 1-mile
radius of where I sit. But, I cannot figure out what a knee
replacement would cost. And, by the way, am I getting the right
artificial joint or am I getting that joint because the doctor
has a deal with the artificial joint replacement company? Why
am I paying $60 for a pill in this location and paying $600 for
a pill in that location?
It is crazy the way we have made this system so secret in
terms of what hospitals are paying, what insurance companies
are paying, and what people who do not have insurance are
paying. And, I agree with you. If we could work together and at
a minimum come up with some kind of mandatory transparency on
medical pricing, then that is the first step in making the
American shopper in control of health care. And, once we do
that, you are right, costs will come down. And, I certainly
agree with you on that.
Thank you to the witnesses for being here. I look forward
to your testimonies and questions.
Chairman Johnson. So, I think right there you are seeing an
awful lot of areas of agreement, which is what we will focus
on. And, again, this is just the starting point. I welcome
additional information, provide charts, graphs, and
information. I want to build that into the record.
Just so you understand, on the whole issue of CSRs, I was
very vocal.
Senator McCaskill. You were.
Chairman Johnson. When we began the process, we should have
funded those CSRs because that is hurting everybody. And let me
make this point publicly because it is important, because there
is pretty harmful rhetoric on my side of the aisle saying, ``We
are not going to bail out insurance companies.'' The truth of
the matter is we either spend money on CSRs to stabilize the
market or we will spend money on the increased premiums the
insurance companies will charge. And, the forgotten men and
women I have spoken an awful lot about, the people that Bill
Clinton talked about that are busting it, working 60 hours a
week, they have seen the premiums doubled, tripled in some
places. You have seen the coverage cut in half. They will not
be able to afford insurance.
So, I have been supportive of funding that, but also
hopefully everybody recognizes on my side, if we do not fund
that, the government through the mandatory Obamacare will fund
higher premiums. I do not know the exact dollar for dollars. It
is probably pretty close to dollar for dollar, quite honestly.
So, anyway, this is all about finding those areas of
agreement, and hopefully we can do it over the course of a
number of hearings here.
With that, again, I want to welcome the witnesses. It is
the tradition of this Committee to swear in witnesses, so if
you will all stand up and raise your right hand. Do you swear
that the testimony you will give before this Committee will be
the truth, the whole truth, and nothing but the truth, so help
you, God?
Ms. Thomasson. I do.
Ms. Baicker. I do.
Ms. Corlette. I do.
Chairman Johnson. Please be seated.
Our first witness is Dr. Melissa Thomasson. Dr. Thomasson
is the Julian Lange Professor of Economics at Miami University.
Her work on the economic history of health insurance and health
care has been published in top journals and featured in the New
York Times, the Financial Times, and other news outlets.
And, just for the record, what I have asked the witnesses
to do is lay out the history, lay out the reality, lay out
facts. I have not asked for any solutions to this. We are a
long ways from really getting solutions. And, by the way,
reading their testimony, they did a great job of that.
So, again, Dr. Thomasson, if you will begin.
TESTIMONY OF MELISSA THOMASSON, PH.D.,\1\ PROFESSOR AND
DIRECTOR OF GRADUATE STUDIES, DEPARTMENT OF ECONOMICS, MIAMI
UNIVERSITY
Ms. Thomasson. Thank you. Good morning, Chairman Johnson,
Ranking Member McCaskill, and Members of the Committee. My name
is Melissa Thomasson. I am the Julian Lange Professor of
Economics at Miami University, and I want to thank you for the
opportunity to appear here today to discuss the evolution of
the health insurance market and its effects on health care
costs in the United States. This is obviously a brief summary
of my remarks, and more detailed discussion can be found in my
written testimony.
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\1\ The prepared statement of Dr. Thomasson appears in the Appendix
on page 45.
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We know that over half of Americans obtain their insurance
through their workplace. While historiography suggests that
this development occurred as a result of a series of rulings
during World War II, the market actually centered on employment
much earlier, beginning in the late 1920s. At the time, medical
technology was advancing, and more people started being treated
in hospitals. As a result, their health expenditures rose, and
they started having trouble paying their bills.
Yet even though health expenditures were rising,
traditional insurance companies refused to offer health
coverage because they feared it would not be profitable if only
sick people bought the insurance. That is, they worried about
the same problem that we worry about today: adverse selection.
But, consumers at the time were not the only ones
struggling. Hospitals were struggling, too because patients
were having trouble paying for their care. An enterprising
hospital administrator, seeking to increase revenues, came up
with the forebear to Blue Cross plans, and he offered Dallas
teachers the opportunity to pay $6 per year and have up to 21
days in the hospital covered. The plan was simple. In any given
year, the revenues collected from the premiums paid the bills
of the few people likely to be hospitalized. The plan succeeded
because most of the people who bought the coverage were healthy
enough to work. By offering insurance to groups of healthy
workers, the plan mitigated the problem of adverse selection.
Soon commercial insurance companies began offering their own
plans and competing with Blue Cross and Blue Shield (BCBS).
Now, government policy in the 1940s did cement the
employer-based system that had earlier taken root. Fringe
benefit packages were exempted from wage and price controls
enacted during World War II, so employers turned to them to
recruit workers. The government further encouraged firms to
offer health insurance by providing employer-sponsored health
coverage with favorable tax treatment. This so-called tax
subsidy introduced a number of distortions into the market. For
example, it makes it difficult for people without jobs to get
coverage. Moreover, it induces health insurance plans to be
more generous and to offer more complete coverage. And, as we
have seen, over time coverage has become much more
comprehensive. The share of health care expenses paid by
consumers has decreased from 65 percent in 1950 to 12.4 percent
today. And, as out-of-pocket costs have fallen, consumers have
responded by increasing their use of medical care.
This situation, that economists call ``moral hazard'', is
problematic if the health care consumers purchase is not
necessary or cost-effective. Moral hazard is significant.
Research suggests that up to 50 percent of the increase in
health expenditures between 1960 and 1990 can be explained by
the spread of health insurance. But, cost sharing does reduce
moral hazard. For example, the RAND Health Insurance experiment
found that people enrolled in a high-deductible health plan
(HDHP) spent 30 percent less on medical care than those who
received their care for free.
The billing practices initially designed by Blue Cross and
Blue Shield exacerbate moral hazard. These payment mechanisms,
that still predominate today, reimburse physicians and
hospitals for each service they provide. As a result,
physicians and hospitals have incentives to perform as many
services as possible. Insurance pays the bill, so neither
consumers nor providers have incentives to weigh costs and
benefits. The result is that consumers often receive care that
is not cost-effective, may be unnecessary, and leads to
escalating health care costs.
Expanding insurance also creates incentives for increased
technological development, and while some technologies are
good, some do not improve outcomes compared to existing
treatments, yet cost more. Again, since consumers are not
paying the bill and providers are paid, these technologies end
up being adopted and further drive up health care costs.
History suggests that the problem of adverse selection
presents a longstanding challenge to the effective provision of
insurance in the non-group market. It also indicates that
constraining cost growth will be difficult as long as health
care providers profit from providing volume-based care.
Research shows that consumers do respond to cost sharing by
significantly reducing spending both in the short run and over
time, but that high-deductible plans need to be carefully
structured to motivate consumers to obtain necessary and high-
value care, while at the same time minimizing the use of low-
volume services.
Thank you.
Chairman Johnson. Thank you, Dr. Thomasson.
Our next witness is Dr. Katherine Baicker. Dr. Baicker is
the Dean of the University of Chicago Harris School of Public
Policy. Her research on health care policy has been published
in top journals such as the New England Journal of Medicine and
the Quarterly Journal of Economics. Dr. Baicker.
TESTIMONY OF KATHERINE BAICKER, PH.D.,\1\ DEAN, HARRIS SCHOOL
OF PUBLIC POLICY, THE UNIVERSITY OF CHICAGO
Ms. Baicker. Thank you so much for the opportunity to meet
with you today and discuss this really important issue. Dr.
Thomasson did a wonderful job of laying out how we got to this
situation where so much of our health care is insured and where
there is a disconnect between the quality and value of the care
that we are getting and what we are paying for it.
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\1\ The prepared statement of Dr. Baicker appears in the Appendix
on page 54.
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There is very little debate that we spend a lot of money on
health care, much more than our trading partners and other
developed countries, and that we are not getting as much value
out of the system as we ought to. You can do international
comparisons. You can even look within the United States. And,
for example, the parts of the country where we spend the most
per Medicare beneficiary are the parts of the country where
those beneficiaries are the least likely to get high-quality,
high-value care. It is that disconnect that suggests that we
really could do better, we could get a lot more health for
every dollar that we spend.
So, what is driving this inefficient use of health care
resources that we can ill afford over the long run? Well, it is
the way we finance health care. It is how we pay for it. I am
an economist, so there are always two hands here. It can be
supply and demand or the patient side and the provider side,
maybe costs and benefits. It is very useful to have both hands.
On the patient side of things, there is this a disconnect
between the cost that the patient sees for insured care and how
much resource use there really is for that care.
Now, that seems like a problem, but it comes from a
balancing act inherent in providing insurance value. Insurance
is a really good thing to have. When health care is potentially
catastrophically expensive, you need to protect yourself
against financial ruin if you or a family member falls sick.
And before we had Medicare, seniors who fell ill and had not
been able to get insurance from their employers were likely not
only to go without the care they needed but to be destitute and
to bankrupt their families. So, the insurance protection that
insurance provides is really valuable, but it comes at the cost
of the moral hazard that was outlined. When you have insurance,
you get less sensitive to the price of things. You think that a
service is worth it if it is worth the $10 co-pay, not if it is
worth the real resource cost, which could be hundreds of
dollars. We are very good shoppers as Americans. But, we do not
think, ``Hey, after the hearing, do you want to go get magnetic
resonance imaging (MRIs)? I heard they are on sale.'' No, of
course, we do not shop for health care that way. It sounds
counterintuitive that prices would affect how we go about
buying health care. But, we are sensitive to prices, and the
fact that we are paying a small fraction of the cost of the
health care services that we use really does drive us to use
more care. There are decades' worth of evidence that that is
the case, that when we pay less, we use more. So, there is a
balancing act. You want to insure things because you do not
want to risk financial ruin if something really expensive
happens. You do not want to overinsure them because then you
end up using more care that is of questionable health value.
That extra care actually drives up the cost of health care for
everyone, because insurance premiums rise to cover all this
care that is of questionable health value.
So, the right answer is balancing those two things and
designing nuanced cost sharing in a way that gives patients the
protection they need, but does not encourage use particularly
of low-value services. Moral hazard suggests that you want to
have higher co-payments for things that patients are more
sensitive to the price of.
There are psychological factors as well. When patients make
decisions about health care, it is in the real world, and none
of us is a perfectly rational economic agent. So, you may also
want to have higher co-payments for services that are of lower
value. You may want to subsidize preventive care or low-cost
preventive care that is really cost-effective. You may want to
have higher co-payments for that third MRI that is not really
indicated medically, that is not improving your health, that is
driving up expenses for everybody.
Having more innovation in insurance coverage, having
competition between insurers to drive down premiums by offering
a higher-value product could help produce a better use of
health care resources.
Now, that is the patient side of things. On the provider
side of things, it turns out that providers are human beings as
well, and they are also sensitive to the incentives that they
face. When providers are paid more for a service, they do more
of it. When they are paid less for a service, they do less of
it. So, the way we purchase health care from providers also
drives utilization. For example, we could have incentives for
innovative payment structures to providers so that the provider
chose the joint for your knee replacement based on which one
was the highest value, the highest quality, and the right joint
for you, not the one that was most highly reimbursed or where
they had the best deal with the manufacturer. That would be a
better way to pay for health care than fee-for-service (FFS)
that is based strictly on the quantity of care. We want
competition to drive higher-value care by providing the right
services that the patient really values.
Now, both those mechanisms on the patient side and the
provider side rely on there being real choices for people. If
there are not choices among insurers, we are not going to get
innovation. If there are not choices among providers, we are
not going to drive prices down and quality up. So, how we
finance the system is going to be a major determinant of the
value and health that we get and the financial sustainability
of the system.
Chairman Johnson. Thank you, Dr. Baicker.
Our final witness is Sabrina Corlette. Ms. Corlette is a
research professor at the Center on Health Insurance Reforms at
Georgetown University's Health Policy Institute. She has
published numerous papers relating to the regulation of private
health insurance and health insurance marketplaces. Ms.
Corlette.
TESTIMONY OF SABRINA CORLETTE,\1\ RESEARCH PROFESSOR, CENTER ON
HEALTH INSURANCE REFORMS, GEORGETOWN UNIVERSITY HEALTH POLICY
INSTITUTE
Ms. Corlette. Thank you, Mr. Chairman, and thank you,
Senator McCaskill and Members of the Committee. And I
particularly want to thank you for holding this timely hearing
and your willingness to engage in a thoughtful and bipartisan
effort to understand some of the root causes of the challenges
facing our health care system. And, as I sat listening to my
fellow witnesses, I think we probably agree on more than we
disagree about some of the true challenges facing our health
care system.
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\1\ The prepared statement of Ms. Corlette appears in the Appendix
on page 64.
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Both critics and proponents of the Affordable Care Act can
reasonably ask why it was structured the way it was, with an
array of insurance reforms, an individual responsibility
requirement, income-related subsidies for the purchase of
private insurance, Medicaid expansion. Part of the reason it is
such a complicated law is because it did not sweep away our
existing system; rather, it was designed to fill gaps in the
sort of patchwork quilt system of coverage that has evolved in
our country over a century and more, and that Ms. Thomasson
covered very well in her testimony, and she is absolutely
right. I mean, in the early 20th Century, there was not much
insurance as we understand it today. Most people paid their
doctors in cash or in kind. But, remember, too, that health
care at that time was much more primitive. You went to the
hospital to die, not to get treated.
But over time, as new treatments and technologies came
online, these saved lives, but they also increased the costs.
And, as Ms. Thomasson noted, most commercial insurers were not
willing to provide insurance because of the concerns about
adverse selection.
I will not review, because she already did, some of the
growth of the Blue Cross/Blue Shield plans and the Internal
Revenue Service (IRS) rule that caused sort of this explosive
growth of the employer-based system that we have today. But, I
would note that just as our employer system was expanding,
there were some really important changes taking place overall.
First of all, the Blue Cross/Blue Shield plans were
initially community rated. No matter what type of employer
group you had, you paid the same price. But, a number of
commercial insurers, mostly for-profit, started to come into
the market, and they recognized that they could make more money
if they deterred enrollment among older or sicker individuals
and groups. So, the types of things that they engaged in were
outright denials of coverage, preexisting condition benefit
exclusions, and premium surcharges based on factors such as
health status, age, and gender.
Over the years, Congress and other policymakers recognized
that our employer-based system left a lot of groups out, such
as the elderly, disabled, and poor. So, of course, we had in
1965 major reforms with Medicare and Medicaid. But, for many
decades after that, we really only had piecemeal changes to
fill in gaps in coverage, such as Consolidated Omnibus Budget
Reconciliation Act (COBRA), Emergency Medical Treatment and
Labor Act (EMTALA), some Medicaid eligibility expansions,
Health Insurance Portability and Accountability Act (HIPAA),
Children's Health Insurance Program (CHIP), an alphabet soup
leading up to Medicare Part D. But, in spite of these gap-
filling efforts, on the eve of enactment of the ACA, we had 45
million Americans uninsured. An estimated 26,000 people per
year died prematurely because they lacked insurance, and 60
percent of the uninsured reported having problems paying
medical bills. The high and rising uninsured rate also led to
high and rising uncompensated care costs for providers,
estimated at $1,000 worth of services per uninsured person.
Thanks to the ACA, an estimated 20 million people have
gained coverage, and what does that coverage mean to those
families? Well, the percentage of Americans reporting that they
did not see a doctor or fill a prescription because they could
not afford it has declined by more than one-third. More people
are reporting that they have a primary care doctor or had a
check-up in the last 12 months. The number of families who say
they are having problems paying medical bills has fallen
dramatically since 2013, particularly among low-income
families. And, we have also witnessed a significant reduction
in uncompensated care costs borne by providers.
Even so, the most ardent supporter of the ACA would likely
agree that the law faces challenges, not least of which is the
continued policy uncertainty created by threats to cutoff the
CSR reimbursement, and concerns among insurers that the
individual mandate will not be enforced.
I believe that a bipartisan consensus on a set of policies
that could boost and maintain enrollment in the ACA
marketplaces and stabilize participation is not out of reach.
For Federal policymakers who want to improve the individual
markets and build on the coverage gains launched by the ACA,
these fixes would include: long-term commitment to paying the
cost-sharing reductions; a reinsurance program or invisible
high-risk pool; higher funding for outreach and enrollment; a
fix to the family glitch; and affordability improvements,
particularly for those forgotten folks who are unsubsidized and
working hard and paying into the system.
Thank you very much, and I look forward to the discussion.
Chairman Johnson. Well, thank you, Ms. Corlette.
Listen, I appreciate Committee Members showing up, so I am
happy to move on to--Senator McCaskill, are you ready to ask
questions?
Senator McCaskill. I am happy to defer also to Senator
Tester.
Chairman Johnson. Senator Tester then. It is your lucky
day.
OPENING STATEMENT OF SENATOR TESTER
Senator Tester. That is why we love the leadership on this
Committee. Thank you very much.
First of all, thank you for your testimony. I have a number
of questions, and you guys kind of all hit the same thing, so I
am just going to pick on you, Katherine. And, the question is
how to finance the system.
You have looked at the current method, and I think you have
all spoken to the problems with the current method. My folks
never had health insurance on the farm. They retired in 1978,
never had health insurance ever. Their first insurance they had
was Medicare. There is a reason for that. In the mid-1960s,
when that happened, it was $400. I do not know what it would be
today, but it would be a lot more than that.
So, the question is--there has been a lot of debate, there
have been amendments offered on single-payer for political
purposes. There has been--but maybe not. I mean, maybe it is
something we should, quite frankly, take a solid look at. And,
there has been the subsidy issue, CSR and others. So, the
question is: How do we finance the system? And, ultimately, can
we make the finance system control the costs?
Ms. Baicker. That is a great question, and, clearly, the
central issue----
Senator Tester. Yes.
Ms. Baicker [continuing]. Of sustainability for the system
is how do we pay for all this care and how do we make sure that
we are only buying care that is actually improving health
sufficiently to warrant the expense?
I would like to distinguish between private insurance and
social insurance, concepts that are frequently intertwined in
the debate. To me, private insurance is about financial risk.
Insurance in other realms that we buy--homeowners' insurance,
auto insurance, renters' insurance--protects against big
expenses that are a surprise. It does not protect against
routine expenses that are affordable or even big expenses that
are known. You do not buy homebuyers' insurance to protect you
against the risk of buying a house or college insurance to
protect you against the risk of purchasing a college education.
It is supposed to be for unexpected expensive things.
Similarly, we do not buy insurance for mowing the lawn of the
house because it is a predictable and affordable expense.
Health insurance that we buy today does not look like that
at all, partly because of the Tax Code provisions that favor
having more generous employer-sponsored insurance. That is
something that I think could be improved by having insurance
that is more value-based. But, that is private insurance. That
is about protecting yourself against future risk, pooling risk
with other people who also have unknown expenses.
Social insurance is about redistribution. Social insurance
is about moving money from high-income people to low-income
people, from healthy people to people who are known to be sick,
who were born with disabilities, who have forecastable high
health expenses. So, social insurance can do that kind of
redistribution that private insurance can never do. When you
try to design a private insurance market to move money from
rich people to poor people, that does not work. That has to be
a government action.
So, it would be helpful to have a separate debate about how
much money we want to spend on social insurance programs, and
reasonable people can differ on that. There are opportunity
costs; there are lots of competing public demands on resources.
How much do you want to spend on education? How much do you
want to spend on infrastructure? This is a real debate we need
to engage in.
How can we finance private insurance with higher value in a
sustainable way? I think the improvements in design that we
have been hinting at in terms of having better, more nuanced
cost sharing to drive higher-value use, more competition among
providers, and more competition among insurers. That would
ensure that we are at least getting high value for what we are
spending.
Senator Tester. So, you are talking about value-based
versus fee-based?
Ms. Baicker. On the patient side, I would like value-based
insurance to be more prominent. On the provider side, I would
like value-based payments rather than quantity-based payments
to be more prominent.
Senator Tester. And, who determines that? Who determines
the value?
Ms. Baicker. It should be the patient's valuation in terms
of his or her own health outcomes.
Then there is the social insurance part where I think we
have to decide how much we want to redistribute.
Senator Tester. The problem is that the value may not be
able to be determined until long after the bill is paid.
Ms. Baicker. There is a lot of uncertainty in this, and it
is never going to be perfect. You do not know ``I am buying one
extra year of life with this heart procedure.''
Senator Tester. Yes. The other thing I would say is this,
that everybody, if not for the grace of God, could be in the
emergency room tomorrow.
Ms. Baicker. Which is why insurance is incredibly valuable
for all people who want to protect against that risk.
Senator Tester. Yes. And, even if you have a situation
where, say, your kid has croup and you end up with a breathing
treatment, I mean, it is so much money. And so, how do we drive
those costs down? That is one thing the ACA was starting to do,
but after it got butchered up some, it was not very effective
at it, and that is, helping drive the cost down. And, what do
we do to do that?
Ms. Baicker. Well, enlisting provider----
Senator Tester. And, I got what you are saying, but I
really did not hear how we hold--because that is--and, look, I
was going to ask you, who is driving the bus here? Is it
hospitals? Is it doctors? Is it prescription drug companies?
Who is really driving the cost of health care? Is it all three?
And why?
Ms. Baicker. The bulk of our health care dollars are going
to hospitals and physicians and related services. There are
other parts that are perhaps growing more quickly, but if you
want to tackle the whole health care system, you have to
address hospitals and physicians as the lion's share of what we
are spending our money on. Having providers paid differently
would serve a second function of giving them a much more active
role in driving the bus. You want patients in consultation with
their providers to drive the bus. You cannot expect patients to
be doctors. They do not know whether they need that heart
treatment, they need that procedure, which knee replacement
joint is better for them. They need their providers to be on
their side in thinking about what is right for them, and we
need their providers to be thinking about how to do it most
cost-effectively. Quality thresholds are vital to measure and
incorporate to ensure getting good quality. You want the
provider to steer patients to the hospital that is going to get
them home healthier sooner.
Senator Tester. You are correct, and I guess the cost issue
is the big issue in my head, because we have seen the charts.
We all know from personal experience how health care continues
to go up. And, when we go in as patients, we want the best
health care. We do not want a prescription drug that is a
generic that might not be quite as good as the one that does
not do much more but costs 10 times more. And so, part of it is
on us, and I think the co-pay issue is an important issue. You
have to have some skin in the game.
But, the problem also is that for those people that do not
have any money to put skin in the game, it becomes a real
problem. And, I think it is really easy to talk about undoing
Medicaid expansion and those kinds of things, but the truth is
it has real-world impacts and it is going to cost more money
somewhere else if we do not deal with it up front. And, we have
not even gotten into prevention. So, thank you all for being
here. This is a very important issue, especially at this moment
in time.
And thank you, Mr. Chairman and Ranking Member, for your
courtesy.
Chairman Johnson. Happy to, but let me quickly chime in. I
want to give a real-world anecdotal example of kind of how this
could potentially work.
In my business, as Senator McCaskill was saying, our health
insurance rates were skyrocketing, and Congress did pass what I
thought was a pretty good law, the health savings account (HSA)
law. And so, what we did is we shifted to a higher-deductible
plan. Now, back then I think it was $1,500 or maybe $2,500.
But, that was considered a high-deductible plan that you had to
shift to in order for HSAs.
In my medium-size group, we were able to cut premiums so
much--I did not pocket that money. I invested that money into
HSAs, $3,000 per year per employee, which we just continued.
So, people that work for my business now--I do not know what my
brother is doing, but, things have probably been kicking up
further, but just one year's savings was $3,000 per year per
employee into an HSA. Now they are in control of money, and the
question from my standpoint is how much of the total $3.2
trillion can be paid for directly by the consumer versus what
do you need in terms of insurance? And then, how do you control
those costs? I mean, this is very complex. There is no doubt
about it. I think you are asking great questions. But, I just
wanted to throw out that anecdote in terms of starting to move
us in the right direction.
Is Senator Carper here? Oh, there. You are up to the plate.
OPENING STATEMENT OF SENATOR CARPER
Senator Carper. Welcome. I am a Senator from Delaware, a
recovering Governor from Delaware, who thought a lot about
these issues. I am delighted that the Chairman and Ranking
Member have called this hearing. We appreciate very much your
being with us here today.
I have a Bible study group that meets most Thursdays here.
If you can imagine Democrats and Republicans reading the
Scripture together, praying together, and sharing things
together. We have a chaplain named Barry Black that my
colleagues know pretty well, and he is always reminding us of
something called Matthew 25 which talks about ``the least of
these.'' ``When I was hungry, did you feed me? When I was
naked, did you clothes me? When I was thirsty, did you give me
to drink? When I was sick or in prison, did you come to visit
me? When I was a stranger in your land, did you welcome me?''
It does not say one thing about when my only access to
health care was the emergency room of a hospital or else I just
did without. I think it is pretty clear the inference, though.
If we are going to care about people having enough to eat,
drink, clothing, that sort of thing, we probably ought to care
about whether or not they have access to health care. I call
that a moral obligation. A moral obligation. And, I think while
we have that moral obligation to the least of these in our
society, we also have a fiscal imperative to meet that moral
obligation in a fiscally sustainable way.
I was out at another meeting, and I apologize. I missed
your testimony. But each of you, just give us one good, clear
example that you think might be transferable either among
States or a good thing for us to do federally through
legislation that attempts to fix those aspects of the ACA that
need to be fixed, preserve those aspects that need to be
preserved, and, frankly, drop those aspects that ought to be
dropped. So, help us with just a good example how we can better
meet that moral imperative in fiscally sustainable ways.
It is not every day we have a Sabrina Corlette come before
us, and I am going to ask you to lead us off.
Ms. Corlette. Thank you, Senator. Well, I am glad you
mentioned the States because we are seeing come up from the
States some of the more pragmatic, thoughtful, innovative ideas
right now in terms of how to stabilize the Affordable Care Act,
how to make it work for their citizens. So, there are many
State leaders, both States you would consider red, States you
would consider blue, sort of coming up, stepping up to the
plate, and saying, ``We are going to devise a solution that
works and keeps people covered.''
The primary example of that--and we are seeing it from
States as diverse as Alaska, Oklahoma, Minnesota, New
Hampshire--is a reinsurance or an invisible high-risk pool. For
example, in Alaska, when they implemented it last year, the
proposed premium increases went from 42 percent to 7 percent,
and they are finding that that has been--it is sustainable.
But, they need the Federal Government to partner with them on
that, and I have been pleased to see that the Administration
thus far has been willing to do it.
Senator Carper. Thank you.
Katherine, how do you pronounce your last name?
Ms. Baicker. ``Baker.'' There are just some extra letters
in there for no good reason. [Laughter.]
Senator Carper. Your parents did not even know how to
pronounce their name.
Ms. Baicker. Ellis Island fabrication.
Senator Carper. Oh, OK. Thank you.
Ms. Baicker. So, Ms. Corlette had mentioned in her
testimony fixing the family glitch. There are a bunch of small
provisions that I think just do not really work as the
legislation is currently written. I would also argue for giving
a little bit more bite to the tax on employer-sponsored health
insurance. A lot of the reason that we have so much of our
insurance subsidized through employers that might look so much
more like prepaid health care than like true insurance is that
we favor the premiums paid by employer-sponsored plans over
out-of-pocket payments or lots of other non-group purchases,
with the exceptions of carve-outs for things like HSAs.
So, I would like to see a more level playing field between
employer insurance, other insurance, and out-of-pocket costs to
really take the thumb off the scale there.
Senator Carper. All right. Thanks. Melissa Thomasson.
Ms. Thomasson. No Ellis Island glitch.
Senator Carper. OK, good.
Ms. Thomasson. I have to agree with Dr. Baicker in that the
tax treatment of employer-provided health insurance is a
problem. But, what we see is that adverse selection is a
problem, so we are all brought together in employment-based
groups, and that makes it much cheaper for those of us who are
healthy in employment-based groups to get insurance.
But, as Senator Johnson indicated, as Senator McCaskill
indicated, there are uninsured people who have a motorcycle
accident who really honestly get treated in this country, and
that is our moral obligation. As a society, we have decided
that is our moral obligation. I am in favor of expanding risk
pools, either through reinsurance or by increasing the
incentives for individuals to buy insurance in order to spread
those costs among everybody and to make sure that people who
need the insurance can afford it. People need to buy insurance
so that they are paying their share of their costs when they
are actually sick.
But, along with that, I do think we need provider-based
reform. We cannot continue to pay providers a fee for every
service that they do because, otherwise, we will have more and
more services at increasing costs.
Senator Carper. All right. Thank you.
Senator Johnson and I am not sure if our colleagues were
there as well, but we had sort of a roundtable coffee with the
insurance commissioners from five different States. They are
testifying as we speak before the HELP Committee. And, one of
the things that I asked them to think out loud about was
reinsurance, and they seemed to be suggesting that one in terms
of doing is stabilizing the exchanges, and they suggested do
that now. If you are going to do anything, do that now. And,
they suggested among the ways to do it, make it clear that the
cost-sharing payments will be made available not just for the
remainder of this year but also for a full year beyond in order
to give the insurance companies some sense of permanency and
predictability.
A number of them called for retaining the individual
mandate. I think one of them said if you do not require the
individual mandate, make sure it is going to be enforced, come
up with something as good or maybe better and maybe give the
States some flexibility on that.
The last thing they said is reinsurance. In fact, they all
said do reinsurance. They talked about what they are doing in
Alaska. Senator Kaine and myself have offered legislation that
does this on reinsurance: one, it provides for the Federal
Government to pay for the next 3 years expensive claims, cover
80 percent of the amount between $50,000 and $500,000; and for
the years after that, the Federal Government would cover
everything between $100,000 and $500,000. Everything else was
on the insurance companies. Would you just react to that,
whether that is a reasonable starting place on reinsurance? Go
ahead.
Ms. Corlette. Yes, I would agree with the insurance
commissioners. I have not closely studied your bill, but, in
general, I think it is reasonable to assume that the individual
market will always be a somewhat sicker risk pool than the
employer-based market simply because there are people who,
because of their health, cannot work full-time. So, I think it
is reasonable to subsidize the risk in that market. You showed
that chart showing that the premium increases accountable for
that increase in risk are pretty dramatic. So, it is reasonable
to say that subsidization should not come on the backs of
farmers and entrepreneurs and ranchers, but maybe by society as
a whole.
And so, I think a reinsurance program is the right thing to
do, and it can be done at the State level or at the Federal
level, and there are lots of details about how it can be done.
But, I would support a Federal program.
Ms. Baicker. Yes, I agree that risk pooling is vital to
insurance working at all. That is the whole point of insurance.
And, the employer market is one natural place for risk pooling,
although it is particularly regressive and inefficient given
that it is based on the Tax Code. So, in the non-group market,
you need lots of participation and you need really good risk
adjustment. If you are not able to correctly risk-adjust, then
insurers are always going to be in the business of trying to
get healthier enrollees, and that is how they will make money
instead of by providing higher-value services and lowering the
premiums by being more effective.
Now, you need a lot of enrollees, but you also then may
need to induce insurers to participate by having some guard
rails, whether that is risk corridors or reinsurance, which
serve slightly different functions. I would like to think that
in the long run, once the market stabilizes and insurers know
what the pool looks like and risk adjusters catch up, insurers
ought to be able to protect themselves against having a handful
of high-risk people if the system were well designed and risk
adjusters were working well.
In the intermediate term, where they are not working so
well, I think they probably do need those guard rails to feel
comfortable participating.
Senator Carper. Mr. Chairman, could Ms. Thomasson respond
to this as well, please? Thank you.
Ms. Thomasson. Yes, both of the witnesses are correct.
Imagine, Senator Johnson, that you are starting a business, and
you are entering a market where you know that it has been
difficult for people to be profitable in the past. Then you are
going to go out with a price that you are not sure will work
and you can adjust it over time. In this case, there is a lot
of money on the table. The mandate did not function as well as
we wanted. We know that that risk pool ended up being sicker
than we thought, and right now there is a lot of uncertainty
introduced by political goings-on here that makes it difficult
for insurance companies to decide how to price insurance. Is
there going to be continuation of the CSRs? Risk corridors were
mitigated. The value of reinsurance has proven itself
necessary, but it has fallen short.
So in this case, we need to stabilize the markets for the
markets to continue. I definitely agree with reinsurance. As
far as those numbers, suggested by Senator Carper they are
higher than they are today, so that is a starting point. But,
hopefully over time this is like any experience. As we get more
people to participate in the market, and it is a competitive
market, then we will see the market mechanisms kick in, and
hopefully things will be better. And so, the role of government
will be a more short-term thing.
Senator Carper. Good. Thank you so much.
Thanks, Mr. Chairman.
Chairman Johnson. Well, thank you. And, by the way, just in
the nick of time, I sent my staff out. This is from the
Foundation for Government Accountability and really describing
what happened in Maine. They instituted guaranteed issue. They
did not repeal it. They just supplanted it with this invisible
high-risk pool, a different concept than Wisconsin. Now I guess
Minnesota has enacted something. I am not sure of the details.
But, the results are pretty dramatic. Their premiums were cut
by two-thirds to a half by putting in this reinsurance, this
invisible high-risk pool. Again, I will not get into the
details of it, but this is the kind of information that we need
to bring to the table to hopefully on a bipartisan basis solve
the problem.
Senator Carper. Mr. Chairman, did you say the premiums were
cut by two-thirds to a half?
Chairman Johnson. Yes----
Senator Carper. Or the increases in premiums?
Chairman Johnson. Take a look at this. For somebody under
19, it went from $617 to $204. For somebody 60 and above, it
went from $1,233 per month to $645 by instituting the invisible
high-risk pool.
So, again, I think this is an accurate study. We will take
a look at what happens in Minnesota. Those laboratories of
democracy, the States, we need to take a look at best practice
and what actually works, and I think this is hopefully some
pretty solid information that will inform our future
discussions.
Senator Carper. All right. Again, thank you all very much.
Chairman Johnson. Senator Peters.
OPENING STATEMENT OF SENATOR PETERS
Senator Peters. Thank you, Mr. Chairman, and thank you
Ranking Member, for passing on your questions to allow us to
have an opportunity to talk to this excellent panel. Thank you
for being here today.
There is no question this is an incredibly important topic,
and the fact that we can discuss this on a bipartisan basis,
trying to get to the actual facts, I think is absolutely
essential. I think I am as frustrated as everybody in this
country with the partisan bickering and entrenchment that we
see on both sides. We cannot solve this problem unless we are
doing this together, and it is certainly a source of
frustration for me when we cannot get to those practical
solutions, when I believe that in this great country of ours
that everybody, no matter who you are and no matter where you
live, should have access to quality, affordable health care.
And, that should not be asking too much given the fact that all
of our trading partners, as you mentioned, do that. Other
countries that we deal with every single day do that. They do
it with less cost and, even more significantly, they do it with
better outcomes. They are actually delivering better-quality
care to their citizens, and all of their citizens, at a lower
cost. So, we have to get to this. We are a bunch of smart folks
here in the United States of America. We can figure this out.
But, we have to get past the partisanship. So, thank you for
having the hearing. Thank you for your testimony here today.
A couple of issues. One that I hear a lot and one that I
would like to get your sense on deals with our sensitivity to
cost. And, there is no question that higher deductibles have an
impact in lowering premiums. As the Chairman mentioned with his
company, having co-pays is significant. But, when we are
dealing with the health care market, it is different than going
to an outlet store. We have a difference in opinion. When you
are talking to a physician, it is different when you listen to
his or her recommendation as to what you need. It is not simply
a matter of cost that is involved.
Now, I have often heard the example of laser eye surgery
(LASIK) as an example of a surgery that has dropped in cost
dramatically over the years, and it is certainly very
competitive, and people can shop for cost for their eye care.
That has not happened with all other surgeries that continue to
go up at a rate well in excess of the rate of inflation.
But, I would like the panelists to address how would it
look to bring consumers involved in cost, given the
asymmetrical relationship between a physician and other health
care providers and the patient, even if they are paying out of
their own pocket, it is difficult to make those decisions. So,
we need an answer--my point is we need an answer more than
just--as important as transparency is, and I believe we should
know what everything costs. As important as transparency is and
everybody having some skin in the game, how does it really work
given the complexity of the health care market? We do not see
that in other countries that have lower costs and higher
outcomes. How would it work here? What is the practical aspect
of it? We can just start with Ms. Thomasson and work down, if
that is appropriate.
Ms. Thomasson. That is an excellent question because
depending on the kind of procedure, it is more difficult for
consumers to shop. If I am going to an outlet store, I
typically know what I want. I can visit several stores. The
other day I was dutifully trying to get some exercise, and I
ran into a tree while I was hiking, and I was covered in blood,
and I have one emergency room in my town, and I was thinking,
``Oh, no, this is going to cost me $4,000 for two staples.'' I
guess that is $2,000 per staple. In that case, I could not
really price shop. Thank goodness I have a health savings
account with money in it, and off I went. I am still trying to
get the blood out of my seat belt.
But for things like LASIK, for MRIs, for drugs that are
maintenance medications, consumers can and they do price shop
if prices are transparent. For things like knee replacements
and hip replacements, our university now offers bundles where
we have had providers on a competitive basis bid so we know
exactly what a knee replacement would cost. It costs $28,000 at
Miami University, and consumers pay $750 of it.
Senator Peters. How does that compare to other places? What
is the range that you have seen?
Ms. Thomasson. That was actually lower than what we have
paid in the past, and I do not know nationally because that is
just data from our university. But for the other things, if I
go into the hospital and I need a stent put in or something
else, you are right, we do not shop as well. We do not get
second opinions when we are having a heart attack. In that
case, we do need to rely on providers, and that is why payment
reform is so key here, and evidence-based medicine. We were
talking about an infant who goes to the hospital who needs
treatment for croup. Well, there is a way that we treat croup
that doctors know works. We do not need a Computerized Axial
Tomography (CAT) scan. We do not need an X-ray. And so it is up
for payment reform to incentivize providers to provide value-
based care in those circumstances so that consumers do not have
to shop while they are having a heart attack.
Senator Peters. Ms. Baicker.
Ms. Baicker. Yes, I very much agree that patient cost-
sharing and transparency is necessary but far from sufficient.
People also need to rely on their doctor's advice, which is why
the doctor's incentives also have to be lined up with
delivering high-value care. And, those pieces I think work much
better together than in isolation. You can think of the example
of accountable care organizations where doctors share in the
savings if they meet quality and effectiveness thresholds of
steering their patients to the hospital that is going to get
them home healthy soonest, of getting to the right post-acute-
care setting instead of staying in a more intensive or longer-
duration place.
The providers have to take an active role in helping their
patients manage through that. If the patient incentives are
operating at odds to that, even if you get the provider
incentives right, they are not going to be able to steer their
patients toward the right sites of care. If both are working in
concert, then maybe the provider says, ``You know what? I do
not think you need this as an inpatient procedure. I think you
can get this as an outpatient procedure.'' And, the patient is
going to be happier because of that--again, contingent on
having good quality metrics to make sure that there is no
incentive for stinting.
That said, it is surprising the circumstances in which
patients do respond to information about prices and quality.
You are having a heart attack. You are in an ambulance. Of
course, you are in no position to price shop or think about
where you should go. Yet hospitals develop reputations for
being high quality or for being very expensive and not being
any better. Ambulance drivers know it. Patients have heard
about it. And so, when you see quality ratings improve for even
emergency care for some hospital systems, you see patient
volume shifting to those higher-quality and higher-value
places. So, I do think that having that information plays a
vital role, but it has to work with both levers at the same
time.
Senator Peters. Thank you. Ms. Corlette.
Ms. Corlette. I agree with my co-presenters here, but I
would also just add one thing that we have not talked about is
the issue of provider consolidation, which has been growing
considerably. So, the whole issue of patients being active
shoppers is dependent on them having choice. In a lot of
communities, because of both vertical and horizontal
integration by providers, hospitals buying up physician
practices, hospitals merging, that choice just is not there.
And, those providers are using their market clout to charge
higher and higher prices. So, that is another issue that we
need to be looking at far more aggressively than we are.
Senator Peters. Thank you very much.
Chairman Johnson. Three quick points.
First of all, I would love to have a hearing on other
systems around the world, Singapore, whatever, so I would like
to have you contribute to that.
Walmart is actually flying their employees to Centers of
Excellence for some of these major--and they have dramatically
driven down the costs of some of these big procedures. So,
again, the marketplace works there.
And then, I hope we can get into Medicare policies driving
private insurance policies, the Diagnosis Related Groups (DRGs)
and that type of thing, what that is all resulting in as well.
Senator Harris.
OPENING STATEMENT OF SENATOR HARRIS
Senator Harris. Thank you, and thank you for this hearing.
I could not agree more, Senator Peters, and I know Senator
Johnson feels the same way, which is that we need more
transparency in the system.
I would like to focus my question on asking each of you
what you believe we in Congress can do to create policy that
creates incentives, or perhaps disincentives, where
appropriate, but with the goal of creating more transparency
around pricing. What would we craft? What would that policy
look like? And, why do we not go in reverse order and start
with you, Professor Corlette. What do you believe we can do in
Congress to increase transparency so that the consumer has a
much better idea of what they are paying for? And, I would
suggest that we obviously cannot ask or expect the consumer to
shop around if they do not have metrics to then determine what
exactly it is that they are being given. So, what would you
recommend we do here?
Ms. Corlette. Well, the biggest lever, I think, currently
that Congress has is Medicare, which is the sort of 800-pound
gorilla in any given health care market. So, using the Medicare
payer as a lever with providers, get them to be more
transparent, I think would be the place to start. And then, I
also think that some States have done some very interesting
work around all-payer claims databases. I do not know if folks
are familiar with those, but essentially it is requiring payers
to submit claims data into one big database so you can start to
look at what providers are getting paid across multiple
different care settings.
Senator Harris. Do you know which States are doing that?
Ms. Corlette. It is several at this point. There has been
an issue with--some employer-based plans have challenged the
requirement to submit, and so there was actually a Supreme
Court decision that has dampened the ability of these all-payer
claims databases to really take off, and I think that would be
another thing for Congress to look at, is to clearly get at not
just the individual insurance and Medicare payers but also what
employer-based plans are paying as well.
Senator Harris. And so, you are essentially talking about
an open data system.
Ms. Corlette. An open data system that anybody can access
to see what Dr. A is charging versus Dr. B versus Hospital A
versus Hospital B. And, I think that there is a lot that could
be done around those claims databases, yes.
Senator Harris. Please follow up with the Committee on the
States. And any feedback you have about which among them
presents best practices.
Ms. Corlette. Sure. Dr. Baicker, you are nodding. Maybe you
know at this point how many--I cannot remember, but it is over
a dozen States that have these databases.
Ms. Baicker. There are differences across types of care.
There are richer hospital databases than there are outpatient
databases, so it is not an easy question to answer on the fly.
I draw a distinction between price transparency to the
patient versus revealing prices negotiated between insurers and
providers. I think we all agree patients absolutely need
complete information on what it costs them to get care in
different settings so that they can make good decisions. There
is a little bit of a debate about whether the prices that
Insurer A negotiates with Hospital 1 ought to be public or not.
I still have my two hands. On the one hand, you might think
``why those prices should not be revealed, too, and help drive
prices down?'' On the other hand, there is a saying that in a
world where everyone gets a discount, no one gets a discount.
There is a hypothesis that if you make insurers and providers
reveal the prices they have negotiated amongst themselves, then
there is diminished incentive to give a discount to one insurer
by, say, a prominent hospital because they know they would have
to give that discount to everyone. So, it is a little bit
ambiguous.
Senator Harris. But, you would not agree that greater
transparency actually encourages competition in the spirit of
all that we want, which is that we ultimately bring the best
product to the market for the consumer and in the interest of
innovation in all of these areas?
Ms. Baicker. I would absolutely agree on the patient side.
I think that is going to work best on the provider/insurance
side when there is real competition----
Senator Harris. Well, are we trying to create incentives
for the patient or the insurer?
Ms. Baicker. Both. I am trying to address those levers
separately. I agree with you we want incentives on both sides,
that we want full information for patients, and every incentive
for competitive pricing between insurers and providers, and
that requires a lot of insurers and a lot of providers. So, I
think we are totally agreed on the goals, but the levers may be
a little different for those two sides of the equation.
Senator Harris. What policies would you recommend we
consider in terms of our legislative opportunities to create
the incentives?
Ms. Baicker. I very much agree with whatever we can do from
a regulatory or statutory perspective to make full information
available to patients. I think one thing that would help with
that is having the freedom for patients to reap as much of the
benefit of their wise choices as possible, because that will
then add patients to the mix in agitating for better
information.
I had a similar experience to Senator McCaskill when I
first had an HSA in trying to get information about how much a
shot cost. I had a sore elbow. I needed a shot for the elbow,
apparently, and I said, ``Oh, OK. How much does that cost?''
And, they looked at me like I had just questioned their medical
integrity, like, ``That is not your business. Why are you
asking me that?'' Of course, it was my business.
Senator Harris. Right.
Ms. Baicker. So having patients enlisted in that----
Senator Harris. Sure.
Ms. Baicker [continuing]. To have the information available
and have patients agitating to say, ``You need to be able to
tell me how much that costs.''
Senator Harris. So, for example, Professor Corlette
mentioned doing that through Medicare. Do you agree with that
as a recommendation?
Ms. Baicker. I definitely agree with having Medicare
beneficiaries have all that information about all their care.
Senator Harris. And in an open data type system?
Ms. Baicker. I am being slightly hesitant just because of
patient confidentiality. In the aggregate, yes. We have to be
very careful about revealing too much information about
patients' individual care and individual situations. So,
assuming that all of that was taken care of, then I think that
information is really valuable and ought to be available much
more quickly than it is now. Even researchers have a many-year
lag in getting information from the Medicare system. So, that
is the least we can do, and then let patients share in the
benefit of opting for cheaper, high-quality service.
Senator Harris. So, would you agree, though, that the
concern is that it is not about the information in terms of
what type of illness, what type of patient demographically is
being charged? The issue in terms of confidentiality is that we
not identify the patient, but anything short of identifying the
patient should be the subject of an open data system. Would you
agree with that?
Ms. Baicker. Yes.
Senator Harris. OK. Thank you.
Thank you, Mr. Chairman.
Chairman Johnson. Senator Daines.
OPENING STATEMENT OF SENATOR DAINES
Senator Daines. Thank you, Mr. Chairman and Ranking Member
McCaskill.
Dr. Thomasson and Dr. Baicker, you both stated that one of
the major drivers in health care costs is the way we finance
health care by limiting the knowledge of the patient of what
the true costs of health care are by financing through a number
of structures that encourage the patient to get as much health
care as possible, sometimes needed or even not needed, and for
the driver to drive up the quantity of services they provide.
In fact, I was taking my smartphone, used the example of LASIK
eye surgery, googled ``LASIK eye surgery.'' What do you see,
the first three hits, the top of it? All deal with the price,
incentives, $400 off per eye. Google ``knee surgery,'' and you
will see technical issues related to knee surgery, but there is
nothing about the cost if you look at the top hits on Google.
You also indicated that a major reason for this is the
financial structure of government-funded programs that
typically require nothing of the patient. I appreciate the line
of questioning we have seen here around when you responded
about you asked how much the shot was going to cost. Well, it
is not that complicated why that information is not available
and why it is not being asked, because the patient ultimately,
it is not coming out of their pocket. And, that is why when it
comes out of the patient's pocket, when there is skin in the
game for the patient, you start asking questions like, ``What
will it cost?'' It is one of the few financial transactions
where the first thing that you do not ask is, ``How much will
this cost?'' But, everything else we do in life, that is the
first question, except when it relates to health care most of
the time.
As we know, health programs represent nearly half of all of
our entitlement spending, 46 percent this year, 51 percent by
2026, and nearly 30 percent of our total Federal spending, and
this is clearly unsustainable.
So, for Drs. Thomasson and Baicker, how do you recommend
restructuring our government programs to disincentivize
overutilization and incentivize the patient asking the
question, ``How much will this cost?''
Ms. Thomasson. That is an excellent question. To be fair,
we did not--I, at least, did not talk about out-of-pocket costs
for government-sponsored insurance, and there are some
deductibles. But, the truth is that high-deductible health
plans, incentivizes us to ask questions. My insurance company
does not cover LASIK.
Senator Daines. Right, and that is, in terms of zeroing it
to--distilling this, the reason the LASIK is the number one
hit, why? Because insurance companies do not pay for it. It is
coming out of either the pocket directly, HSAs, or some
combination of the two.
Ms. Thomasson. Right. And you are right, I would not show
up to buy a car and just turn over the money.
Senator Daines. Right.
Ms. Thomasson. But, I would do that if somebody else were
paying the bill. Economists are generally in agreement that
cost sharing is a good thing, and the question is how you
structure that. We have right now, for example, a Medicare
deductible that is equal to a one day stay in the hospital. To
some extent, for things that are not emergent, we need to
structure high-deductible health plans, perhaps give Medicare
beneficiaries the opportunity to contribute to HSAs that do put
skin in the game. But, we also have to be aware of the fact
that evidence shows that consumers cut down on the purchase of
all kinds of spending when they have a high-deductible health
plan. And so, the high-deductible structure itself may be a
little bit of a blunt object. We want to encourage the use of
high-value care. We do not want to give, in this case, the
elderly incentives to not take their diabetes drugs so that
they end up in the hospital later at a cost that is much
greater to us. But, certainly, incentivizing the use of high-
value care, like taking medicines for diabetes and
hypertension, and disincentivizing the use of care that is not
necessary nor effective, for example, MRIs for back pain.
Senator Daines. So, when you chat with, as I have had
several discussions with, say, some of the neurosurgeons, they
will tell you their fear of lawsuits oftentimes drives some of
these additional tests, because the patient will say, ``I want
to have an MRI.'' So how much do you think costs are influenced
by practicing defensive medicine?
Ms. Thomasson. Well, the most recent estimates that I have
seen suggest that up to 10 percent of costs are driven you
defensive medicine practice. So, there is some of that,
certainly. But, we have seen that providers can help educate
consumers. For example, we all used to give antibiotics to
every little kid with a sniffle or an earache, and providers
who did not want to have to explain to a patient that that was
not necessary, they just wrote a prescription. But, the culture
is changing. Now we have kind of a discussion, a dialogue, so
my pediatrician will say, ``I do not know. Let us give it a few
days. Let us not write a prescription.'' Providers can have
those conversations.
Senator Daines. Let me shift gears for a moment here. There
is so much to talk about here and so little time. We have just
heard that a significant contributor to the increasing cost of
health care is the size of the government footprint in the
health care space. From what we have heard, this is through
incentivizing overutilization of health care. It does little in
the way of recognizing that health care does not have an
unlimited supply, as we are currently seeing, certainly over in
Europe, particularly in England.
In my home State of Montana, we have seen that to be true
with the Affordable Care Act. I have spoken to many Montanans
that are now bearing the cost of increasing expansion of
government into health care. One small business owner had to
pay $35,000 in premiums and deductibles for a bronze plan
before anything is covered, and my Montana farmers and Montana
ranchers are facing similar costs.
This poverty tax has been a huge problem for Montana. In
fact, 40 percent who pay this penalty on the mandate earn less
than $25,000. We have a chart\1\ here: 80 percent made less
than $50,000. The very people that can afford it the least are
getting hit with billions of dollars in what we call a
``poverty tax.''
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\1\ The chart referenced by Senator Daines appears in the Appendix
on page 171.
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Your recommendation is that we continue to infuse taxpayer
cash into government programs. That seems to go against the
very goal of decreasing health care costs and availability. How
do you square or reconcile those two positions?
Ms. Thomasson. Well, with all due respect, Senator, I have
also indicated that more people need to buy insurance--there
needs to be more teeth in the mandate. What we are seeing
here--and all the premiums that we have talked about so far are
average premiums. For these people suddenly facing higher
premiums, there is a whole group of people who can now actually
buy insurance who could not even get it before. In essence, the
price was infinite. These are average premiums. When healthy
people buy insurance, too, then that is what it does. It will
lower average premiums. It is going to stabilize risk. We look
at this with flood insurance right now. If you are in a flood-
prone area, it is very expensive. But if we pool nationwide and
we average the non-flood areas with the flood areas, the
average cost goes down.
It is my belief that premiums are rising because, one,
insurance companies did not have any experience with the
market, and that is why I recommended increased stabilization;
and, two, that premiums are rising because they are still being
selected against in those non-group markets.
Senator Daines. But, if we get back to the point around it,
if the patient is not asking the question, ``What will it
cost?'' as the first question--or maybe at least the first
couple. Obviously, if your situation as you described there
when you had your staples, the first thing is you want to get
treated, you want to get well, you want help. But, if it is not
part of the calculus in terms of what will it cost, I am just
concerned that we never, ever will bend the cost curve. It
comes back to accountability and responsibility and ensuring
you are asking, ``What is the price?''
Ms. Thomasson. And, you are absolutely right, and that is
why we need more accountability, we need more skin in the game
for consumers, and we need a health culture, frankly, where we
start to ask questions about cost. And, I believe that will
only happen when consumers have to pay more costs and they
recognize that. It is not going to happen instantly, but
markets can evolve over time with information and competition.
Senator Daines. Yes. Thank you. I am out of times.
Chairman Johnson. Thank you, Senator Daines.
I have always said that if there is one metric in terms of
fixing this whole health care mess, one metric we would look at
telling us we are moving in the right direction, it really is
that. We say 11 cents, you said 12.4 cents of every dollar paid
directly by the patient. If we could move that up to a higher
percentage where you actually have patients demanding the price
transparency, ``What am I going to pay for this service?'' that
really starts my--first, an anecdote in terms of what I had
staff take a look at and then my question.
I literally had my brother outside of his normal area get
sick and have to go to a clinic and he wanted to pay cash
rather than insurance. He got a 75-percent discount, which
prompted me to ask my staff to start calling up clinics. They
called up 748 different clinics on two different conditions--an
ear infection and strep throat. Only about 20 percent of the
clinics, 21 and 20, knew what the price was. In other words, 79
and 80 percent of the clinics did not know what the price was.
The discount for cash when they asked for it was about 20
percent, 20 to 21 percent, which kind of shows you the whole
middleman cost of this completely dysfunctional financing
system.
Let me go to my question. Of the $2.66 trillion I was
talking about, the difference between inflated spending from
1960 to the $3.2 trillion we spend, do you know of any studies
that have kind of quantified how much of that is because of
what we can do nowadays, the advances in medical technology and
science, versus just an inefficient financing marketplace?
Anybody on that? Dr. Baicker.
Ms. Baicker. It is a harder question to answer than it
ought to be, in part because there have been studies that have
shown the spread of insurance has very much led to higher
spending on health care, but some of that is driving innovation
in new medical technologies that did not exist before, building
infrastructure that did not exist before. So then maybe even a
simpler breakdown might be how much of it is price and how much
of it is quantity. When you look at spending, it is number of
units times price per unit. But, even that is harder than it
ought to be because it is hard to define the quantity. A day in
the hospital means something different now than it used to mean
in terms of the intensity of services.
So, surely it is some of both, which is a really
unsatisfying answer to give, I know, but we are treating people
a lot more intensively. A lot of that is flat of the curve
medicine, where we are delivering more services of diminishing
value, and then some of it is the price per service. But, I
think a lot of it is technological innovation, some of which is
very high value on average but very low value on the margin. In
the MRI example for low back pain, MRIs are good. I am glad
there exists an MRI technology. But, the marginal person on
whom it is deployed is probably not getting much benefit from
it.
Chairman Johnson. So, I would ask you, after the hearing,
if you know of studies or can search for studies or indicate to
our staff where we could kind of look to start getting some
quantification of that $2.66 trillion, where that is all broken
out.
You mentioned staying in a hospital room. A question I
always have, just basic, a really nice Hampton Inn costs less
than $100 a night versus I do not know what they are charging
for hospitals now but it is outrageous. Now, I realize there
are costs spread--you got nurses at stations, that type of
thing. But, let us face it, I do not know how much you spend
for an aspirin, but generally those hospital charges are pretty
well quantified, and they are covering their costs.
We need to explore what is the cost of the middlemen in
this third-party payer system. I am a private sector guy. I am
not going to beat people up and try to make a profit. But,
because we have this third-party payer system, we have a lot of
people involved in actually paying the bills. And, they all
make a cut, and they all have salaries and it just continues to
increase that.
I do want to ask to what extent has the Medicare policies,
DRGs, contributed to this process. Dr. Baicker, as long as you
are--whoever wants to go, but you seem ready.
Ms. Baicker. I was poised, fast finger. The Medicare
payment system I think drives a lot of the care that we get.
One thing that you mentioned is the insurance payment versus
the underlying cost, and it is misleading in Medicare to look
at something like hospital margins and say, ``Oh, they are not
so big.'' Well, the payment is actually driving a lot of the
investment that is driving the costs up, and the reason it is
so expensive to treat certain conditions is because we are
paying so much for them. There is a chicken-and-egg problem
there. And, a lot of the policies in Medicare that might help
dampen down overuse of low-return care are undermined by the
ubiquity of Medigap policies. Senator Daines asked about
whether there were other things, other government policies that
could improve that allocation problem. Well, a lot of the
innovation you might do in Medicare payments really has no bite
on the patient side because more than 90 percent of Medicare
beneficiaries have a wrap-around policy, whether it is a
retiree plan or a Medigap plan. So, even when you try to change
cost sharing, it gets undone by those policies. That would be
one thing to potentially reform.
Also, you see a lot of innovation on Medicare Advantage,
private plans offered to Medicare beneficiaries that have a
little more room to maneuver in innovative benefit design in
selective contracting with providers to help drive down prices.
But, there is a limit to how much Medicare beneficiaries can
save in that. They cannot actually get cash back in terms of
premiums if they choose the highest-value, lowest-cost policy
available to them. Reforming that might allow them to do a
little more shopping among plans that are delivering innovative
policies.
And, if you look at spending on health care, Medicare
coverage decisions and Medicare payments drive a lot of what
happens even in commercial markets. Medicare is a huge share of
our health care system, and it has an even outsized impact
because other providers follow the Medicare rules and coverage
provisions.
Chairman Johnson. Does anybody want to comment on that?
Ms. Corlette. Well, the only thing I would say--and I say
this a little bit as a former Senate staffer myself--is let us
not underestimate how challenging it is for Congress to go
after some of the historic payment methodologies that are in
the Medicare program. I mean, history is littered with examples
of efforts either by the Centers for Medicare and Medicaid
(CMS) or by Congress, whether it is the sustainable growth rate
(SGR) or the Part B demo--I mean, the list goes on and on and
on--of efforts to try to rein some of these----
Senator McCaskill. Death squads.
Ms. Corlette [continuing]. Disincentives and cost drivers
out of the system. And, the problem is, one person's cost is
another person's paycheck. And so, that is just a reality that
you all need to grapple with, and it is not----
Chairman Johnson. OK. I want to keep going back to that.
How much of health care really could be paid directly by the
patient? I think we really underestimate that. I can just
tick--whether LASIK--certainly what I saw in my business career
because of HSAs we had Walgreens, Walmart, CVS, walk-in
clinics, $35. There is a doctor in Wisconsin that just really
primarily focuses on farmers, charges $55, cash, basically to
the rural community for a half-hour appointment. Now, he has
the infrastructure. He has hospitals with the equipment and
stuff. But, there is an awful lot of innovation. Dermatology,
there are so many things in our health care system that I think
really could be paid directly. You have the patients demanding
the price. And, I really want to explore how much can be used--
really use the consumer-driven free market competition to, as
you said, agitate for better pricing, better quality, better
service. I mean, it works in every other area of our economy,
consumer-driven free market competition. I know there is a
breakdown because you have the high cost, you have the
catastrophic instances where you need insurance. But, I think
it has just gotten completely out of whack. And so, again,
anything you can do to help us, point this Committee in the
direction of what those things could be. Go ahead.
Ms. Thomasson. I am trying not to appear too eager here,
but I think----
Chairman Johnson. No, I appreciate that. Otherwise, I will
just keep yakking. [Laughter.]
Ms. Thomasson. This is definitely a case--well, you were
kind enough to say that there were no bodies littering the
floor where politicians are concerned with trying to tackle
some of these issues. But, I think history can be illustrative
here.
When Medicare was enacted, its chief opponents were
physicians. They wanted nothing to do with it. They were very
vocal. I have recently been reading Senate testimony on the
Medicare hearings for a book I am writing, and the American
Medical Association (AMA) came out staunchly opposed.
Part of the way that the reimbursement structure for
Medicare was set up was to placate physicians and get them to
participate. And so, we set it up on this fee-for-service basis
with extra costs for capital depreciation and replacement,
which was a bonanza, and we saw health expenditures increased
37 percent in the first 5 years of Medicare alone, and it was
just more services being done. I mean, I think you could argue
that in 5 years technology did not change significantly to lead
to that kind of rise in medical expenditures, although, true,
some patients did actually see the doctor for the first time,
as Senator Tester was suggesting, and have it be paid for with
insurance.
So, I think that cost transparency is vital. I think
provider payment reform is vital, and the providers are still
actually opposing it. In Ohio, there was a State law that has
been proposed--it is currently subject to an injunction. A
State representative had suggested a bill where providers had
to provide consumers with a good-faith estimate when they
entered the hospital, like you would get when you repaired your
car. And like I said, providers complained. They do not want to
tell their prices, they said it would be bad for care. And,
they will argue that a lot of it has to do with the fact that
you do not know what you are going to do for that patient, and
so you cannot really commit to an estimate. But, there is still
opposition to transparency among the people who are providing
the services, clearly.
Chairman Johnson. One of you in your testimony I think said
that costs increased 70 percent after Medicare. Did I just read
that in something else or is that in the testimony?
Ms. Thomasson. Well, I said in my testimony, Medicare
provides a good laboratory experiment for trying to gauge how
much the spread of insurance has increased overall health
expenditures, and the best estimate is that up to 50 percent of
the increase in costs between 1960 and 1990 are due to the
spread of overall health insurance.
Ms. Baicker. Not just Medicare.
Chairman Johnson. Not just Medicare, right.
Chairman Johnson. OK. Senator McCaskill.
Senator McCaskill. I want to talk about why the market is
not working better. What are the barriers to the market working
better?
Now, the irony is, I have had a number of people say--and
one of you mentioned it this morning--that, well, you need to
ask your doctor and rely on your doctor's advice; and,
therefore, being able to shop on an app for a knew replacement
or being able to shop on an app for a cheap MRI does take the
doctor out of the equation. Well, then how can we explain the
billions of dollars of advertising that are flooding television
stations right now, telling consumers what prescription drug
they need? Why do we have this breakout? I mean, we now know
that some of these pharmaceutical companies are spending more
on trying to convince me I need Humira the number one
prescribed drug in America right now--that is abusing the
patent process, I might add. Why are they flooding magazines
and the air waves that I need this drug when a doctor is not
driving that? And why are we not seeing the same thing from
doctors about, ``You need to come to see me for your
allergies,'' or, ``You need to come see me, I can give you all
your allergy tests for free if you come and see me''? Why are
we not seeing loss-leader type advertising from doctors? We are
seeing it from hospitals, primarily in certain areas like for
cancer or for heart or for delivering babies, but not at all
from doctors. What is that?
Ms. Thomasson. There are big billboards between Oxford and
Cincinnati that advertise various hospitals, a few doctors,
mostly for plastic surgery and these things that are very----
Senator McCaskill. Or LASIK.
Ms. Thomasson. Right, or LASIK.
Senator McCaskill. Where people are paying.
Ms. Thomasson. I mean, the thing is that this is not a
competitive market, and there has been substantial provider
consolidation, which gives them room to advertise. And, since
consumers are not paying the bills and providers--it is much
easier for a provider to say, ``Oh, Humira, you want to try
that?'' ``Sure, why not?'' It is not going to cost you
anything. You advertise to consumers, and then consumers go to
physicians who are not likely to have any incentive to provide
a barrier there, and, in fact, it takes some time to explain
why that might not work. Patient satisfaction surveys: great
idea except that now doctors have to be pleasers, too. So,
there are not a lot of incentives for them to put the brakes on
drugs right now.
Senator McCaskill. Not only put the brakes on drugs, but
also begin--I mean, we have to figure out something on this
advertising. This is ridiculous. And, we are paying for it.
They get to deduct it all, right? What is the economic
rationale for being able to deduct the cost of prescription
drug advertising? Anybody?
Ms. Thomasson. See, this is why I am not an accountant.
[Laughter.]
I actually want to say that there are tradeoffs with
advertising. Advertising can communicate differences in price
or quality. In competitive markets, that is what its function
is. But, it can also, like you said, kind of drive demand and
drive extra use of services. The American Medical Association--
I think actually historically--I do not know whether it is true
now--actually prohibited members from advertising because they
did not want prices to get lower. They did not want people to
say, ``Oh, that doctor is offering this service for less.''
Senator McCaskill. I think that is something we need to
look at.
Ms. Thomasson. But, I do not think it is advertising that
is the problem. It can be beneficial.
Senator McCaskill. You can be, obviously, thin, wealthy,
run through fields with a smile on your face, play with your
grandchildren, and have sex whenever you want it based on these
ads. And, it is like so nuts that we are underwriting that; the
taxpayers are underwriting that kind of effort.
Let me address also end-of-life costs. You all have not
discussed what percentage of our health care costs are
attributable to the last 6 months or year of folks' lives.
Could you address that? Because I think it is an important
thing for us to talk about.
Ms. Baicker. This is a really important issue, and it is a
great example of a place where we spend a lot of money on care
that does not seem to make patients better off and in some
cases may make them substantially worse off. And, when we have
seen concerted efforts to implement joint decisionmaking
between patients and physicians where good information is
elicited about what patients and their families really want,
you end up spending less on end-of-life care because patients
would rather be at home. They would rather forgo some of the
more intensive treatments.
There is a great example from a commercial insurer that
experimented with changing requiring patients who enter hospice
care to sign something saying that they would forgo curative
care. It used to be that to get into hospice you had to say,
``I hereby give up on trying to be cured,'' and then you could
get hospice care, presumably to prevent people from using a lot
of extra hospice care----
Senator McCaskill. That is just bizarre.
Ms. Baicker [continuing]. Which seems like a very low risk.
But you can imagine saying to a patient and the patient's
family saying, ``Hey, will you just sign right here saying you
are definitely dying and you have given up on trying not to
die?''
Senator McCaskill. Right.
Ms. Baicker. What a terrible thing to ask someone to do.
When you say instead, ``You do not need to sign that, just let
us know that you would like to enter hospice care,'' patients
were more likely to enter hospice care because they were not
confronted with that horrible moment of giving up, and, in
fact, they were more likely to forgo curative care because it
was not improving their quality of life and hospice was making
them much more comfortable. That innovation saved money for the
system but, more importantly, created a better end-of-life
experience for patients and their families and did not curtail
their options at all. And, it is that kind of innovation that I
think could have us treating patients better, more kindly, more
carefully in the last----
Senator McCaskill. Yes, and, this is when I knew things
were going to go south fast, because the whole misinformation
about death panels was just us reimbursing doctors for them
taking the time to make end-of-life explanations about
nutrition and hydration so that patients could make those
decisions prior to the moment where their families are trying
to make them for them. That is all it was. It is a really good
idea. It had nothing to do with forcing anybody into any
forced--you do not get care at the end. And, it got so
misinformed, and that obviously is something--thank goodness my
mother, let us all know that we were going to burn in hell if
we put her on a feeding machine or artificial hydration, and so
she was able to come home and died with us around her. And, I
cannot imagine the costs that would have been incurred had she
not pounded that into our heads every day. But, a lot of
families do not have that.
I know I am out of time. I have one other thing that I want
to talk about, the poverty tax. I wish that Senator Daines was
still here. Every person on that chart that he talked about--I
do not know how many people were in the family, but basically
you have to make more than $80,000 a year for a family of three
to not get subsidies on the exchanges. So, when you choose not
to take those subsidies on the exchanges, you are making a
decision to have somebody else pay for your health care. You
are making the decision that--now, I guarantee you those people
that are paying those penalties are going to go to the
emergency room if their child begins to turn blue or if
somebody gets a broken arm or if there is a car accident, and
then all those costs are passed on to everyone else. And so,
the irony is that those are the people the subsidies are
designed to help, and they are just refusing to take the help
of the subsidies and say, ``I want somebody else to pay the
bill.''
So, I think to call it a ``poverty tax'' is terribly
unfair. It is not a poverty tax. It is trying to instill in
people the idea that you all discussed very eloquently, that if
you do not have responsibility to get insurance, then those of
us who have insurance are just going to pay more for what we
have. There is no escaping that--right?--in terms of the
economics of this issue. There is no way to get around that,
correct? OK. Thank you, Mr. Chairman.
Chairman Johnson. Two quick comments. I was involved in a
bipartisan group on end-of-life issues, and one of the articles
I brought to the table--and I will try and get it for the
Committee--was written by Dr. Murray. The title was, ``How
Doctors Die It's Not Like the Rest of Us, But It Should Be.'' A
really thoughtful piece.\1\
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\1\ The article referenced by Senator Johnson appears in the
Appendix on page 173.
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In terms of advertising, the reason we allow it to be
deducted is we let every business deduct marketing expenses.
Now, from my standpoint, when I watch those commercials, all
the caveats, all the disclaimers, all the warnings, I do not
know why anybody would ever want to, first of all, take one of
those drugs that is being advertised, because it is pretty
scary. But, anyway, Senator Carper, do you have further
questions?
Senator Carper. I do. Thank you. Thank you again for
holding this. I have been bouncing back and forth between this
hearing and the HELP Committee, where several of the Nation's
insurance commissioners are testifying. And, they have it
almost wrapped up, ready to put a bow on it, and send it our
way.
One of the great values of a hearing like this is for you
to help us develop consensus. And, the thing that we need to
develop consensus on right now, I am told, is the marketplaces,
stabilizing the marketplaces. And, we have heard a variety of
ideas suggested to do that. One made clear that CSRs are not
going away, not just for the rest of this year, but for at
least one more year, maybe for two--at least one more year, but
maybe even two additional years.
Two, reinsurance. Senator Johnson talked a little bit about
the invisible high-risk pool and the idea of maybe working
something like that into this. Some say it is just another way
to do reinsurance.
Three, individual mandate or something as effective as the
individual mandate in getting young people off the bench and
into the game so they are part of the high-risk pools.
Help us. Just very briefly, starting with you, Ms.
Corlette, for consensus, what should we do right now on
stabilizing the exchanges? Where do you think there is
consensus among the three of you? Thanks.
Ms. Corlette. My top three would be just that, number one,
insurers need certainty that they will be reimbursed for the
costs associated with the cost-sharing reduction plans that
they are required by law to offer to eligible enrollees.
Number two is they need to be confident that the individual
mandate will be enforced.
And, number three, I would do a little bit of reinsurance.
I think even though now we do not have any bare counties, knock
on wood, the States and insurers have stepped up to make sure
that everybody everywhere will have some option. But, I think
we do need to look at places where there is still only one
insurer, where costs are rising. So, those are the three things
I would do right now.
Senator Carper. Good. Dr. Baicker.
Ms. Baicker. I think we all agree that those rules also
need to be in place for more than just 6 months or a year, that
insurers participating in a relatively new marketplace need to
know what the playing field looks like for a good period of
time, whether rules that are on the books are going to be
enforced, that they are competing in a fair way with each other
to participate.
Senator Carper. All right. Dr. Thomasson, who comes from
the real University of Miami, which has been a university for
longer than Florida has been a State.
Ms. Thomasson. That is correct.
Senator Carper. I went to Ohio State. I have heard this
often.
Ms. Thomasson. I will send you the T-shirt.
Senator Carper. There you go. [Laughter.]
All right. What is the consensus here on stabilizing the
exchanges?
Ms. Thomasson. I agree with everything that has been said
so far, and I would actually add, too, that insurance companies
entered this market because they were incentivized with the
CSRs, the cost-sharing reductions, the risk corridors, and
reinsurance. To the extent that government does not fulfill its
end of the bargain, it is going to be difficult not only in
this endeavor but in future endeavors to come up with private
market-based solutions to some very thorny issues. And so, I
agree that we need to fulfill our terms of the agreement, and
we probably need to do it for more than a year to allow them to
have experience.
Senator Carper. I was on the phone with some folks from
Highmark, which runs Blue Cross/Blue Shield programs in
Delaware, Pennsylvania, I think West Virginia, maybe another
State or two, and talked with them and with other folks, folks
at the America's Health Insurance Plans (AHIP), the health
insurance coalition. Most of them said, ``We could reduce our
premiums if you basically will do these three things that you
are talking about.'' If we could do this, they could reduce
premiums by as much as 35 percent. And, the great thing about
that is it is not just to save some money for people who are
getting health insurance within the exchanges. It is Uncle Sam.
In some ways, Uncle Sam is actually the biggest beneficiary of
all. Is that correct?
Ms. Corlette. That is right because as premiums go up in
the markets, the tax credit subsidy has to go up dollar for
dollar with it.
Senator Carper. Do you all agree with this? OK. Let the
record show heads nodding from Oxford, Ohio, and other places.
Chairman Johnson. Can I just interject?
Senator Carper. Please.
Chairman Johnson. That was the point I made in our pre-
meeting, that whether we fund the CSRs--if we do not fund the
CSRs, premiums will go up, and we will fund the premium tax
credit. So, either way, the American taxpayer is going to pay
for this. The problem with allowing premiums to increase, the
forgotten men and women who do not qualify for the subsidies,
whatever that level is, they are going to--insurance is going
to be even more unaffordable.
So, this is, from my standpoint, some very unhelpful
demagoguery on our side of the aisle, ``We are not going to
bail out the insurance companies.'' Well, the insurance
companies are going to get the money one way or the other. The
American taxpayers are going to pay for it, so let us be
honest. Again, let us take a look at the reality of the
situation, which is why I was supportive of funding the CSRs a
number of months ago to stabilize those markets before it is
too late.
But, anyway, sorry for interjecting.
Senator Carper. That is OK. If I could, one last question
on HSAs. I share the interest of some of our Republican
colleagues in looking for ways to improve and possibly expand
health savings accounts. At the same time, one of my
constituent's main complaint is about high deductibles and cost
sharing with their health plan.
Last year, Senator John Thune from South Dakota and I sent
a letter to the Treasury Department. We asked that high-
deductible plans with HSAs be permitted to cover health care
services to treat chronic conditions before the deductible.
And, I would just ask each of you just to briefly let us know
what do you think this time of would reform to improve the
value of high-deductible insurance plans make sense? And, what
other reforms to HSAs should we consider? Dr. Thomasson?
Ms. Thomasson. But, do not ask me to do CPR.
Senator Carper. OK.
Ms. Thomasson. Well, I think that----
Senator Carper. Looking for some consensus on HSAs to add
more value.
Ms. Thomasson. Yes. Well, I do think that research has
shown that just a simple high-deductible health plan with a
one-size-fits-all deductible is a blunt instrument. And so,
there is evidence that high-deductible health plans could be
structured in such a way to encourage, for example, adhering to
diabetic medication or hypertensive drugs, treating some of
these chronic conditions, while minimizing your use of low-
value services. So, I think there is certainly room for
improvement. But, I would actually say that Dr. Baicker has
actually done research on this.
Senator Carper. Dr. Baicker, is that true?
Ms. Baicker. I will not deny it. There is, I think, a huge
potential gain from more value-based insurance design, taking
the principle behind HSAs that patients ought to be more price-
sensitive and have an incentive to choose the care that is
right for them, not just more care. But, an HSA is fairly
blunt. And what you would really like to see is not just co-
payments that vary for different treatments, but co-payments
that vary for different patient circumstances. An example is a
statin to lower cholesterol. For a diabetic patient, a statin
is incredibly valuable. In fact, lots of providers, even though
I am not a real doctor either, recommend using statins for
diabetics even before their cholesterol is elevated because it
is such good prevention for adverse cardiovascular events. So,
maybe diabetics ought to have a negative $5 co-pay. Maybe we
ought to pay them $5 to take their statins. Whereas for
somebody with mildly elevated cholesterol and no other risk
factors, the statins may not be really doing much good, maybe
that person ought to have a $50 co-pay. And so, you could have
something that is actuarially equivalent that is actually
increasing or rationalizing patient cost sharing. Things that
are high value could have and has very low cost sharing, and I
might add cost sharing that varies based on income, because $5
means something different to lower-income people than to
higher-income people. With that kind of insurance you can push
people toward high-value care and not subsidizing low-value
care.
Senator Carper. Ms. Corlette, the last word.
Ms. Corlette. I would agree that we should creative
incentives to push toward value-based insurance design. It is a
terrific concept. I think the challenge becomes who decides
what is high value, who decides what is low value. And, while
there are services on both ends that I think there is broad
consensus around, there is a lot in the middle around which
there is no consensus, and it becomes very challenging very
quickly.
With respect to HSAs and high-deductible plans, I think it
is important to keep in mind that close to half of the American
public reports that they could not afford to pay $400 for an
unanticipated emergency medical expense. Four hundred dollars.
They could not afford it. So, we need to bear in mind----
Senator Carper. Say that again. How many? What percent?
Ms. Corlette. Almost half of Americans surveyed say they
could not afford even a $400 bill for an unexpected medical
expense. So, it is important to know that most people do not
have the kind of disposable income you would need to adequately
fund an HSA to pay for the kinds of deductibles that we see,
for example, in a bronze level plan.
Senator Carper. Colleagues, I think Dr. Baicker has done
some research on this in terms of affordability, and your
research has suggested some possible solutions to address what
Ms. Corlette has just talked about. Is that correct?
Ms. Baicker. Tangentially.
Senator Carper. OK.
Ms. Baicker. Less in my wheelhouse, but I would like to
follow up on something that Senator Johnson said about pre-
funding the HSAs. A limited view of cost sharing is it is just
a way of making patients pay more for a fixed bundle of care,
that it is shifting costs from insurers to patients. But,
really what cost sharing ought to be doing is incentivizing use
of high-value care and disincentivizing use of low-value care.
It should change the bundle of care that you consume, not just
change who pays for a given bundle. If you can actually save
money in the overall spend by shifting people away from low-
value care, that leftover money can be used, for example, to
fund HSAs I very much agree that especially low-income
Americans do not have enough money to cover the typical
deductible in a high-deductible plan, but it does not have to
be coming out of resources they already have. You can share
back the savings from reducing overall health spending with
them in a way that is incentive-compatible, and I think that
kind of change could be sustainable and affordable across the
income spectrum.
Senator Carper. Great. Thank you so much.
Thanks, Mr. Chairman.
Chairman Johnson. Just quickly chiming in here, that, by
the way, is kind of a depressing statistic right there, 50
percent cannot--I think part of that is attributed to the fact
that we have conditioned Americans to the point that they do
not have to pay
for their health care because of zero-deductible plans, because
of--again, so nobody plans on it. It is just that has become
the culture, that we really do not have to pay for our own
health care. We have to buy our own food. We have to pay for
our own shelter. We have to buy our own cars. But, health care?
Do not have to pay a buck for it, or a $10 deductible. So, it
is going to be a cultural shift that is going to be required
here.
Again, I just want to kind of end, I guess, on that
statement but to thank you for I think just really good
testimony. The fact that you had Senator Carper, who was
actually involved in the higher-profile health care here, the
fact that he got back here I am assuming means we had a pretty
good set of witnesses here. And, hopefully this hearing had
some real value. It had a great deal of value to me. I want to
thank my colleagues for attending.
I really do want to hold more of these. I want to work with
all of my colleagues to provide the information. We will beef
up this with your charts and graphs as well. Again, I do not
want this one-sided. I want this completely bipartisan. Again,
that problem-solving process, describe the reality, define the
problem, get the information, set achievable goals. Then we
will design the solutions hopefully in a bipartisan fashion to
address--again, we all share the same goal. We want our fellow
citizens to have access to high-quality health care at an
affordable cost. So, again, thank you very much.
With that, the hearing record will remain open for 15 days
until September 21st, at 5 p.m. for the submission of
statements and questions for the record. This hearing is
adjourned.
[Whereupon, at 12:01 p.m., the Committee was adjourned.]
A P P E N D I X
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