[Congressional Record (Bound Edition), Volume 159 (2013), Part 1]
[Senate]
[Pages 684-687]
[From the U.S. 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 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.

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  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 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

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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.
  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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