Whitehouse Statement: How Health Care Reform Can Lower Costs

Press Release

Whitehouse Statement: How Health Care Reform Can Lower Costs

I want first to thank Chairman Conrad for holding this hearing, and for his longstanding interest in the ways in which health care reform can significantly improve America's fiscal outlook for decades to come.

Our health care system is broken: it yields unsatisfactory results at vast expense. The annual cost of the system exceeds $2 trillion and is expected soon to double. We spend more of our GDP on health care than any other industrialized country. Health care is one of the largest expenses for many of our companies: Starbucks spends more on health care than it does on coffee beans and Ford spends more on it than it does on steel.

Yet the number of uninsured Americans is climbing and will soon break 50 million. As many as 100,000 Americans are killed every year by unnecessary and avoidable medical errors. Life expectancy, obesity rates, and infant mortality rates are much worse than they should be, by most international measures. The system itself doesn't work - hospitals are broke, doctors are furious, and paperwork chokes the system. More American families are bankrupted by health care costs than any other cause.

I have heard from countless Rhode Islanders who have struggled to pay for their health care, and who live in fear of losing the coverage on which they and their families depend. It does not have to be this way.

What we are dealing with, in a nutshell, is market failure: the American health care system does not optimize quality or invest in prevention, particularly where improved care would lower cost; the system does not have the information technology infrastructure to support the improvements we need; and the way we pay for health care sends adverse price signals that steer away from the public interest.

Specifically in the area of health information technology, some pretty respectable organizations have looked to see what we would save in health care costs if our health IT infrastructure were adequate. Here's what they report for anticipated savings:

§ RAND, $81 billion, conservatively;
§ David Brailer, former National Coordinator for Health Information Technology, $100 billion; and
§ The Center for Information Technology Leadership, $77 billion.
The average of the three estimates: $86 billion per year.

That is a lot of savings to leave sitting out there - savings desperately needed by American businesses and American families.

But rather than a focused national effort to capture the savings from health care reform, the system leaves it up to individual doctors and health care providers to choose and implement health IT infrastructure office by office. If you were in business school and you submitted that structure as a business plan for health care reform, you'd not only get an F, you might be asked to reconsider your career path.

We have work to do in three areas: improving health care quality and prevention in ways that lower costs; fixing our information technology to increase efficiency and generate savings; and repairing the reimbursement system so it does not discourage those reforms, but rather encourages and rewards them.

A few weeks ago, I introduced three bills to address these problems. The Quality Reform Expansion and Savings Act of 2007 (S. 1451) would provide grants to local quality reform organizations that are engaged in the real "R&D" work on improving care and lowering cost in health care.

The National Health Information Technology and Privacy Advancement Act of 2007 (S. 1455) would create a national, private, non-profit corporation to plan, initiate, develop, finance, and manage our national IT infrastructure. I want to note especially that the funding mechanism for this bill allows the corporation to capitalize on the billions of dollars in projected savings for health information technology, raising revenue through user fees, bonds, and other appropriate tools without increasing the deficit.

Finally, the Improved Medical Decision Incentive Act of 2007 (S. 1471) would allow doctors and medical specialty groups to apply to their state departments of health with best practices, and to reward them for compliance with such protocols through increased public insurance payments and speedier private payments.

The system that underlies all our health care financing, coverage, and access problems in this country is itself broken. It is administrative and bureaucratic machinery, and, like other machinery, when it is broken, it needs to be fixed.

Fixing the administration of our health care system will reduce costs, improve care, and make a badly-operating system run better. That can move us a critical step forward towards making sure every American family has access to health care they can afford.

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