Trade Act of 2015

Floor Speech

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Mr. WHITEHOUSE. Mr. President, we are embarked on a significant budget agreement that has as one of its components adjustments to America's health care costs. In the case of this particular agreement, I support the adjustments that have been proposed--things such as preventing drug manufacturers from raising their costs higher than the rate of inflation. We have seen people come in and buy companies and jack up the costs 10 times because they can. They haven't added any value to the products; they have just raised the costs. I support that. Paying hospitals the rate for physician practices that the physician practices were paid before the hospital bought them--nothing changed in the physician practices; just ownership changed, and that shouldn't allow a windfall to the buyer. I think we have done well with what we have done to reduce health care spending in this particular bill, but I recall that in the sequester we did an across-the-board haircut right across Medicare. Whatever you were being paid before, you got paid 98 percent of that afterward if you were a Medicare provider.

I want to come today to offer a thought that I hope can percolate a bit, and if we go back and look at those costs again I would like to get this thought into the conversation. The backdrop of this is the extraordinary increase of health care costs that we have seen more or less in my lifetime.

This chart shows 1960, and it is a $27 billion American expenditure on total health care. Here it is in 2013, with $2.9 trillion, an increase of more than 100 times over those years in what we spend on health care. And as we have done that, what we have done is we have become the most expensive per-capita health care country in the world--and not by a little but by a ton. Over at the far side of the chart is the United Kingdom, then Germany, Japan, Switzerland, France, the Netherlands, and here is the United States. Again, this is 2013 data. We are way above the most expensive competitors that we have. So there is something that can be done here with this excess cost, because people aren't getting bad health care in Germany. They are not getting terrible health care in the United Kingdom. They are not suffering in Japan or Switzerland or France or the Netherlands. These are competitive systems with ours, but ours costs half again as much. There is a big target in savings here.

Here is another way of describing it. If you look at the cost and you compare it to a quality measure, here the quality measure is life expectancy in years, how long people can expect to live in these different countries, and this is the same per-capita cost information I showed in the last bar chart. What you see is that most of the countries that we compete with are grouped right up in here, as shown on this chart--Greece, Great Britain, Japan. Most of the EU is right in here. As you run up the cost curve you get to Switzerland and the Netherlands. They are the two most expensive countries in the world in per-capita health care, not counting us. Look where we are. We are out here. Our costs are about half again as much as the least efficient health care providers in the industrialized world. We are more inefficient by nearly a factor of a third than the least efficient health care providers in the industrialized world. That is not a prize we want to own. We want to be able to move this back.

If you look at this gradient of life expectancy, we compare with Chile and the Czech Republic. Where we want to be is up here. Where we are is here. So once again, it proves there is enormous room for improvement in our health care system and we know that because other countries are doing it. They can do it. Darn it, we ought to be able to do it too.

Now we change the scope of this a little bit. This chart shows the American health care system State by State. Each State is marked as one of the dots on this graph. This graph has the same thing across the bottom--Medicare spending per beneficiary. The last one was national spending, and this is Medicare spending per beneficiary. Here are the quality rankings of the States. There are a variety of quality rankings, and this assembles them into a consolidated quality rating.

What you see is that within the United States of America you have the States. This goes back a bit. This is an old ranking that the Journal of the American Medical Association produced. It shows that there are some States that were just under $5,000 per capita. They were doing something right. There are other States here, including an outlier, all the way over to $8,000 per capita. But there is a bulk of States here that run about $7,000 per capita. That is a $2,000-per-Medicare-recipient difference between this group of States and that group of States. That is interesting. Why is it that there is this big difference?

Here is another interesting factor. Look who is doing better on quality--the States that spend less. The lesson from this is if you are delivering high quality health care, you can deliver it less expensively than if you are delivering low quality health care. At a $2,000-per-beneficiary increase in costs, these States are way at the bottom on quality compared to the others. The relationship between quality of the care people receive and the cost it takes to deliver it to them is reversed. This isn't like Lexus and Mercedes, where you pay more and you get a better car. This is the opposite. You have a really crummy car and it costs more to run it, it doesn't work, and it is expensive because it is not working well. It is backward. It is interesting that way.

If you bring that forward, this shows a recent graph from the Commonwealth Fund that shows the same thing, overall quality score relative to the U.S. median and costs in total Medicare spending. Here is the average right here for cost and the average for quality, and here you have these States down here in the bad box. They are way out here in costs. They are very expensive States. They are all above average. Some of them here are way above average--25 percent above average, 15 percent above average, 20 percent above average. Look what their quality measure is. They stink. They deliver terrible quality health care. Over here you have a bunch of other States that are way above the quality median and at the same time they are way below the cost average. So the principle from that first graph back in 2000 still holds true, according to the Commonwealth Fund.

With that background, here is another way to describe it. These are the 10 worst States in terms of highest cost per capita, and these are the best 10 States. I know we have a country with 50 States. This is only 20. We leave out the middle 30. These are the worst 10 in terms of cost, and these are the 10 best in terms of cost.

Here is the idea. Why should we be reimbursing above average the States that have a per-capita cost above average, instead of the way we did it on the sequester, by taking a 2-percent cut on everybody across the board that nobody can do anything about--just a cold, wet blanket of funds denial? Why not look and say this is the most that a State would get paid--whatever the cost would be--if it were at the average. The rest, you just take it back per capita across the entire reimbursement for that State.

This is what would happen with these high cost States. The very next meeting of the State medical society, the very next time the State met with the Governor, the very next time the Medicaid program got together, they would be hollering, saying: What on Earth? I do a good job. I am going to get my reimbursement cut because of that?

No, we have to fix this. It would give them a massive incentive to stop behaving like this and start behaving like this. If we built in some lead time so they had the chance to actually get there, they might actually never have to cut. They might not ever have to face that cut because what they would have done in the time leading up to when the cut was scheduled to be imposed is begin to behave like the States that have lower costs than average.

We know this could be done because so many States are already doing it. Why would we ever again look at an across-the-board Medicare-provider cut when we have an enormous discrepancy between these high-cost, low-quality States and these low-cost, high-quality States--like this one all the way over here? Oh, my gosh, it is a bargain there; it is top quality care.

That is my point for the day. I hope that anybody listening who is looking at the proposed cuts in the budget and who is looking at the need to manage this exploding health care cost curve that America has had for the last 50 years--steepening health care cost curve--starts to think about ways to do not just dumb and bloody cuts, but smart cuts--smart cuts that give the States that are costing us much more money than their peers the inventive to actually start behaving like their peers and bring down the cost for everyone. That is what I would consider to be a serious win-win.

I look forward to continuing this discussion. We have a couple of years before we are going to face this again with any luck, but I think this is an idea that is worth considering.

Once again, if you give the States enough warning within the 10-year budget period so we can score it but with enough warning that they have got the chance to react--I encourage anybody to read Atul Gawande's last article about Texas. He wrote an article about the terrible cost differential between--I think it was El Paso and a town called McAllen, TX--huge. Then they brought in the ObamaCare affordable care organizations--accountable care organization models and down came the price in McAllen.

So it can be done. We have seen it being done.

With that, I yield the floor.

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