[Congressional Record Volume 159, Number 11 (Monday, January 28, 2013)]
[Senate]
[Pages S304-S307]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
HEALTH CARE COSTS
Mr. WHITEHOUSE. Mr. President, we are now entering a postfiscal cliff
phase of budget negotiations, and a troubling but familiar refrain is
already beginning to echo through this Chamber which goes something
like this: In order to fix our deficit, we must cut Medicare and
Medicaid benefits. This is wrong. This is flatout wrong and it is
factually wrong.
A recent Providence Journal editorial touched on the dangers of that
misguided approach. The editorial read: We need a better run Medicare
and Medicaid, not one that covers fewer people. Quality can be improved
and costs contained without throwing people off the rolls and into the
streets and back into the free care of emergency rooms mandated for the
uninsured and into expensive private insurance. In the end, we all pay
in some way, in quality of life and in money, for the gaps we tolerate
in our health care system.
Attacking Medicare and Medicaid is consistent with a particular
political ideology--it has been part of that political ideology for
decades now--but it is not consistent with the facts. It ignores the
fact that our health care spending problem is systemwide, not just in
Federal programs. It ignores the fact that we operate in this country a
wildly inefficient health care system. It is not just Medicare.
For example, Secretary of Defense Robert Gates said, in reference to
the defense budgets: We are being eaten alive by health care.
New data from the Centers for Medicare and Medicaid Services shows
our national health care spending increased to $2.7 trillion in 2011,
which is about 18 percent of America's gross domestic product. This is
more than three times what it was in 1992, and it is about 100 times
what it was back in 1960. The Presiding Officer, the new Senator from
Virginia, and I were probably around in 1960. So in our lifetime it has
gone up 100 times.
At this rate, by 2020, $1 out of every $5 in this country will go
toward health care. This is a rocketing pace of increase.
In 1979, the year after I graduated from college, $221 billion; 1987,
$519 billion; 1992, $857 billion; and now $2.7 trillion. Anybody
looking at that graph of our exploding national health care costs who
can think that Medicare is the problem simply does not have a grasp of
the facts.
Let's compare U.S. spending to other developed countries. This is us,
``pre'' the last report when we were still at 17.6 percent of GDP. The
next least efficient developed country is the Netherlands at 12 percent
of GDP in 2010. Germany and France were at 11.6 percent of GDP.
This margin right here is the margin by which we are more inefficient
than the least efficient of our industrialized competitors--$800
billion a year. We could save $800 billion a year on our national
health care system just by becoming as efficient as the least efficient
of our national competitors.
For all of this extra spending, the extra $800 billion a year, one
might expect that we would have paid for and earned longer and
healthier lives, but that is not the case. Our National Institute of
Medicine recently compared the United States to 17 peer countries. We
were worst for prevalence of diabetes among adults among those 17
countries, worst for obesity across all age groups of those 17
countries, and had the worst infant mortality of all 17 countries. We
suffer higher death rates and worse outcomes for conditions such as
heart disease and chronic lung disease.
This chart from that National Institute of Medicine report shows all
these dots of the other countries grouped around cost--expenditure per
capita--and life expectancy. That is the United States of America, the
dot with the red circle around it. We are an outlier, below virtually
all of these countries
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except Poland and Turkey and Hungary, below them all on life
expectancy. They are all above 78 and we are just below it, and we are
wildly out of the grouping on cost. We are at way higher cost than the
grouping of all of our industrialized competitors. We are wild outliers
in a very bad direction of high cost and poor outcomes. This is a stark
and unsettling disparity of us from virtually all the other nations. It
is not to our benefit.
The real issue is the fact that we have to deal with the cost and the
performance of our health care system. Another fact that I know the
Presiding Officer is well aware of is how hard this is on American
families. From 2000 to 2009 the average family premium for health
insurance more than doubled from around $6,500 to more than $13,000. I
can assure you the average family income did not double during that
same period, unless maybe you were an average family on Wall Street.
Health care costs are a leading cause of family bankruptcy in this
country. Thankfully, the Affordable Care Act will help millions of
uninsured Americans purchase health coverage. But we should add, in
addition to the kneejerk reaction to target Medicare and Medicaid being
out of step with these facts, it will also hurt these families more
without grappling with the real health care system cost problem.
Again, going after Medicare is wrong. It is a misdiagnosis of the
problem, and, of course, when you miss the diagnosis you prescribe the
wrong cure.
Medicare is actually one of the most efficient parts of our
inefficient health care system. From 2007 to 2011, for the same set of
health benefits, the annual growth rate in health spending per Medicare
enrollee was 2.8 percent; for private plans, 5.6 percent, twice as
much, a 100-percent higher cost than for Medicare.
The Congressional Budget Office has found that for every dollar we
spend on Medicare, 98 cents of it goes through to people in the form of
health care, actual health care. Spend $1, get 98 cents' worth of
health care. For Medicare Advantage that the private insurance sector
runs that operates under similar rules and treats the same population
as Medicare, every $1 delivers only 89 cents in health care, with the
rest spent on administrative cost and CEO salaries and marketing. So
not only is Medicare not the problem, it is actually one of the best
ways we have for delivering health care through this wildly inefficient
outlier of a health care system.
I am not alone in saying that a correct diagnosis of the problem will
lead us to health care system reform, not Medicare benefit cuts. Gail
Wilensky, the former CMS Administrator under President George H.W.
Bush, said in 2011:
If we don't redesign what we are doing, we can't just cut
unit reimbursement and think we are somehow getting a better
system.
A lot of my colleagues give great credence to the private sector. In
the private sector, one of the leaders in health care is George
Halvorson, who recently stepped down as chairman and CEO of Kaiser
Permanente, one of the biggest and best health care companies in the
country. Here is what he said:
There are people right now who want to cut benefits and
ration care and have that be the avenue to cost reduction in
this country and that's wrong. It's so wrong, it's almost
criminal. It's an inept way of thinking about health care.
So from Republican administrators to private sector leaders, the
message is the same: We have to solve this as a system problem.
Let me give a couple of examples of how we might want to go about
doing this. As one example of the significant savings to be found in
our health care system, a Washington Post columnist recently wrote:
Few people realize that Medicare spends wildly different
amounts per senior depending on where the senior happens to
live. . . . Medicare spends 2.5 times more per senior in
Miami than in Minneapolis.
I repeat, 2\1/2\ times more per senior in Miami than in Minneapolis--
Yet there is no difference in quality or health outcomes
associated with this extra spending. In other words, Medicare
redistributes billions from regions where doctors practice
cost effectively to regions where the local Medical
Industrial Complex pads its income with excess services and
procedures.
Our colleague, Senator Franken, often says: If we could just deliver
health care the way we do in Minnesota, we could solve our problem. And
this column and this information bears it out. If they are not getting
better health care in Miami, then why do we tolerate letting Miami
absorb 2.5 times the cost per senior than they are able to provide it
for in Minneapolis? We should be driving Miami toward Minneapolis,
where we know they can do it in Minneapolis. Make that the model and
force the change.
This graph uses data from the Dartmouth Atlas Project to illustrate
this point. Not only is there significant variation in health care cost
and quality--each of these dots is a State, and they are rated on
overall quality and spending per beneficiary. As we can see, they
spread out from very high cost and very poor quality States, such as
Louisiana, to very low cost and very high quality States, such as New
Hampshire. But if we draw a statistical line through this array of
dots, here is the line we get. It shows the reverse correlation: The
more you spend the worse your care.
A second example, and it is consistent with this, is how poorly our
health care system performs on basic measures of quality and safety and
prevention. For example, according to the news magazine ``The Week,''
avoidable infections passed on due to poor hospital hygiene kill as
many people in the United States--about 103,000 people killed every
year--as are killed by AIDS, breast cancer, and auto accidents
combined. We are killing more people in this country through hospital-
acquired infection than through AIDS, breast cancer, and auto accidents
combined. These deaths are tragic to those families, but they are
tragic in another sense because they are preventable.
As we have shown, in Rhode Island, when hospital staff follow a
checklist of basic instructions--washing hands with soap, cleaning the
patient's skin with antiseptic, placing sterile drapes widely over the
patient--rates of infection plummet and the costs of treating those
infections disappear. The costs of treating the 100,000 Americans who
die every year from those hospital-acquired infections are huge, and
they would disappear if we do not have the infections in the first
place and the cost of treating the hundreds of thousands who get those
infections and do not die, who are not among the 103,000 who die but
nevertheless have to be treated, those costs also disappear. It is a
pretty big number. We don't know exactly what it is, but the Center for
Disease Prevention reported that from 2001 to 2009, there were State
and Federal efforts to improve these efforts to prevent hospital-
acquired infections, and that contributed to a 58-percent decrease in
the number of central line bloodstream infections among intensive care
unit patients. That, in turn, represents up to 27,000 saved and
approximately $1.8 billion in cost savings to our health care system.
Let's do more of that before we go after Medicare benefits.
A third example is managing and preventing chronic disease. Compare
the United States to France on the treatment of lung disease and you
will find that although France has more smokers and therefore higher
rates of lung disease than the United States, levels of severity and
fatality are three times lower in France. France spends eight times
less on treatment per person than we do.
Compare the United States to Britain on diabetes. You will find that
Britain spent only half of what we spend per person on diabetes, but it
is five times more productive in managing diabetes than we are.
Dr. Daniel Vasella, who is the chairman of Novartis, explains that
``in America, no one has incentives to make quality and cost-effective
outcomes the goal.''
France and Britain give their health care providers incentives to
focus on early detection and cost-effective treatment that make
wellness the goal, not treatment. To paraphrase George Washington
University Professor Thomas J. Schoenbaum: ``Make virtue profitable and
everyone's a saint.''
Saving money by reforming how we deliver health care is not just
possible, it is happening. A 2008 report from the Dartmough Atlas
Project predicted that ``using the Mayo Clinic as a benchmark, the
nation could reduce health care spending by as much as 30 percent for
acute and chronic illnesses.'' A benchmark based on Intermountain
Healthcare, which is a great
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provider based in Utah, predicts a reduction of more than 40 percent.
So we are doing it; it is happening. We just need to spread it more
widely. During a 2011 Senate HELP hearing that I chaired, Greg Poulsen
of Intermountain Healthcare said:
Intermountain and other organizations have shown that
improving quality is compatible with lowering costs and,
indeed, high-quality care is generally less expensive than
substandard care.
Take a look at what various experts estimate as the potential annual
savings that could be found in our health care system. The President's
Council of Economic Advisers says that we could annually save $700
billion a year. The National Institute of Medicine recently reported
that we could save $750 billion a year. The New England Healthcare
Institute has estimated that a savings of $850 billion a year is
possible, and the Lewin Group--a private group that focuses extensively
on health care and does research and analysis--together with George
Bush's Treasury Secretary Paul O'Neill, have come up with an estimate
of $1 trillion a year. We don't know what the exact number is. These
are estimates, but for sure there is a huge potential for savings in
our health care system.
These savings flow through to our Federal budget. The Federal
Government does 40 percent of America's health care spending. If the
estimate by the Council of Economic Advisers is correct, the national
health care expenditure is $2.7 trillion, Federal health care spending
is $1.1 trillion. After we do the math, it is 40 percent.
Of the four estimates, let's take the most conservative one. Let's
take the Council of Economic Advisers' estimate of $700 billion--the
lowest of the four--and multiply it by 40 percent. The Federal share
would be $280 billion per year for the Federal Government. It would be
$280 billion per year just by getting those kinds of savings.
Let's say we cannot get the $700 billion, that it is too hard to
lift; we tried and cannot get there. Let's say we can only get half of
those estimated savings. That is $350 billion times 40 percent. We
could set a target of $140 billion of savings in the Federal budget in
health care having assumed a 50-percent failure rate in getting there
from the lowest of the four major estimates. That is pretty
conservative to start from the lowest of the four major estimates,
assume a 50-percent failure rate, and there we are, we still get $140
billion a year we could target as savings coming back into the Federal
budget and the Federal health care system.
Let's say we set the target at $350 billion, the halfway target, and
we failed at meeting even that target. Let's say we failed again by
half, which is not close. That is a huge miss. Let's say the best we
could do is to get $175 billion of the $700 billion in savings, which
was the most conservative of those four estimates. If we multiply that
by 40 percent, guess what. That is $70 billion a year.
What do we do when we get into budget discussions? We multiply by 10
because it is a 10-year budget estimate. If we are going to take that
$70 billion and move into a budget discussion, it becomes $700 billion.
So this is real money.
Let me add that most recently the Commonwealth Fund released a report
that outlines a set of distinct policies that would accelerate health
care delivery system reform and slow health spending by $2 trillion
over 10 years. So that is not just $700 billion but $2 trillion over 10
years, from 2014 to 2023.
How do we get there? Well, many of the tools necessary to drive down
costs and improve the quality of patient care are already in the law.
The Affordable Care Act, the famous ObamaCare, included 45 provisions
which have virtually never been discussed on this Senate floor--because
they were not controversial--that were dedicated to redesigning how
health care is delivered. These delivery system reforms cover five
priority areas: payment reform, making sure that people are paid to
keep us well and not wait until we get sick and have to treat us more;
primary and preventive care, making sure we are taking care of chronic
patients, less specialists, more care upfront; measuring and reporting
quality so we are not dealing with the hospital-acquired infections so
much; administrative simplification because for doctors it is a bear to
try to keep up with the insurance companies that try to continue to
deny them payment; and health information technology so we have an
electronic health record that loads with data and is sensible and state
of the art.
These Affordable Care Act delivery system reforms span our health
care system and engage all stakeholders in the effort--for example,
patients, physicians, hospitals, State governments, and the Federal
Government--which is good because working together is the right way to
achieve these reforms.
There is even evidence that the Affordable Care Act is already
working to slow the growth of health care spending. In a Washington
Post op-ed this summer, Secretary of Health and Human Services Kathleen
Sebelius wrote:
In the decade before the law passed, national health
expenditures increased about 7 percent a year. But in the
past two years, those increases have dropped to less than 4
percent per year.
At the top of this graph, it is actually starting to tip down a
little bit, thanks to that. Dropping it to less than 4 percent per year
has saved Americans more than $220 billion.
Peter Orszag, the former Director of the Office of Management and
Budget, said the same thing in a recent Providence Journal editorial.
He said----
The ACTING PRESIDENT pro tempore. The Senator needs to begin to wrap
up.
Mr. WHITEHOUSE. Mr. President, I ask unanimous consent for an
additional 2 minutes.
The ACTING PRESIDENT pro tempore. Without objection, it is so
ordered.
Mr. WHITEHOUSE. Mr. President, I know the distinguished Senator from
Alabama is waiting and I will wrap up.
Peter Orszag wrote in the Providence Journal:
In January 2009, [CMS] projected that expenditures would
reach 19.8 percent of gross domestic product in 2017. This
year, the projection for 2017 is down to 18.4 percent of GDP.
That difference amounts to a whopping $280 billion. In other
words, relative to the projections issued three years
earlier, today's forecasts suggest health savings of $3,500
per family of four by 2017.
I did this report for the Senate HELP Committee last year on the
Affordable Care Act delivery system reform provisions. Anybody who is
watching and wants a copy, contact my office; we will mail or e-mail it
to you.
In the report we found that the administration has made fairly
considerable progress on the 45 delivery system reform provisions in
the law, but much more can and must be done. Specifically, the report
calls upon the Obama administration to set a cost savings target for
health care delivery system reform. A cost savings target will focus
and guide and spur the administration's efforts in a manner that vague
intentions to bend the health care cost curve will not. It would also
provide a measurable goal by which we can evaluate the progress of the
Affordable Care Act.
In a report I mentioned earlier, the Commonwealth Fund has reported
that ``the establishment of targets . . . can serve both as a metric to
guide policy development and as an incentive for all involved parties
to act to make them effective.''
One of the best examples of a clear target was President Kennedy
declaring that within 10 years the U.S. Government would put a man
safely on the Moon and bring him home. That message and the mission
that was outlined were clear. The result was a mobilization of private
and public resources to achieve that purpose because the goal was clear
and specific.
This administration has a similar opportunity, particularly now at
the height of the implementation of the Affordable Care Act: Set a
serious cost savings target for our Nation's health care system--none
of this spongy bending the health care cost curve stuff--and put the
full force of American innovation and ingenuity into achieving that
target. That approach has a triple benefit: protecting Medicare and
Medicaid benefits that don't need to be cut if we are doing this right;
second, improving patient outcomes, making people healthier; and third,
dialing back health care spending by potentially hundreds and hundreds
of billions of dollars. The alternatives to that will harm seniors and
those least able to afford adequate health care.
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I conclude by urging the administration to set a real cost savings
target with a number and a date, and then let's get to work to give the
American families the health care system they deserve. Instead of waste
and inefficiency and being a disgraceful outlier from all the rest of
the world on quality and cost, let's make for America the health care
system that is the envy of the world. That should be our goal and that
could be our destiny.
I thank the Presiding Officer, and I yield the floor.
I express my appreciation to the distinguished Senator from Alabama
for his patience during my remarks.
The ACTING PRESIDENT pro tempore. The Senator from Alabama.
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