Health Care
Floor Speech
HEALTH CARE -- (Senate - July 07, 2009)
Mr. WHITEHOUSE. Madam President, I have spoken many times on the floor of the Senate about the desperate need for reform of our broken health care system. Today the Congress stands at a moment of historic opportunity. The attention, hopes, and anxieties of the American people are focused on us like never before.
We have seen over the course of the last 60 years constant lament over the system's flaws and failure--failure when true opportunities for reform arise.
President Obama has now challenged this Congress to reform our Nation's health care system, to expand access to insurance, to improve below-average results, and to bring down its costs. It is about this last challenge--the challenge of our unimaginable and grotesque health care costs--that I speak today.
In his recent speech to the AMA, the President called escalating health care costs ``a threat to our economy ..... an escalating burden on our families and businesses ..... a ticking time-bomb for the federal budget, and ..... unsustainable for the United States of America.''
I hope all of us share his sense of urgency. Our country's economic future may well depend on it.
Over the past few weeks, I have been privileged to work with my HELP Committee colleagues to make long-awaited reforms and investments to control costs and wring savings from the system. In that process, much attention has been paid to the Congressional Budget Office's cost and savings estimates--estimates that, in many cases, have significant limitations.
CBO, as we know, plays a vital role in our legislative branch by ensuring that we have objective, nonpartisan estimates of the likely costs and savings to the Federal budget of legislation. These estimates can help us make responsible and efficient use of the taxpayers' money, but we must recognize that in the particular context of health care reform, they are fundamentally limited by CBO's professional restrictions.
CBO can only estimate health care costs and savings that have historic precedent. For example, since we have the experience of Medicaid and the Children's Health Insurance Program, CBO can estimate how much expanding coverage to all needy families will cost. These subsidies account for the vast majority of CBO's $600 billion estimate of the 10-year cost of the HELP Committee bill.
On the cost savings side, however, CBO's capability is limited. We know our health care system is on an unsustainable course, and there is broad agreement on which of the broken pieces need fixing, but it is impossible to estimate cost savings with the degree of certainty CBO requires to provide what we call a score.
CBO's Director has been refreshingly candid about this. In a recent letter to our budget chairman, Senator Conrad, he writes the following:
Changes in government policy have the potential to yield large reductions in both national health expenditures and Federal health care spending without harming health.
He continues:
Moreover, many experts agree on some general directions in which the government's health policies should move, typically involving changes in the information and incentives that doctors and patients have when making decisions about health care. Yet many of the specific changes that might ultimately prove most important cannot be foreseen today and could be developed only over time through experimentation and learning.
CBO's professional discipline requires it to score legislation through a rearview mirror, looking back, and basing its calculations on what it can chronicle has happened in the past. But when we propose to take the country in a new direction, when there is a turn in the road, when we seek to fulfill President Obama's promise of true change in America, the rearview mirror doesn't help much. We have not been where we need to go.
In addition, getting there will require leadership, creativity, and perseverance. It will require executive administration with constant adjustments and improvements as we work toward our goal. Those factors are beyond the capability of CBO to predict.
I speak not to criticize the hard-working public servants of the Congressional Budget Office. They do an exemplary job with the tools at their disposal. Americans owe them a particular debt of gratitude now for how incredibly hard they have worked over these past weeks, but their tools come with their own limitations. The point of this reform is to turn around a system that is spiraling out of control. We spent 18 percent of our gross domestic product on health care, the next highest spending Nation in the world--the next worst is Switzerland, at 11 percent. Even if our success in this reform is limited to shaving a few percentage points off our national expenditure on health care, that change will be worth hundreds of billions of dollars a year. Yes, there will need to be an initial investment in health care reform, but the potential savings are multiples larger. CBO's inability to score those savings does not mean that those savings are not both real and substantial.
One measure of the potential savings is the recent report of the President's Council of Economic Advisers, June 2009. I ask unanimous consent that the executive summary of this document be printed in the Record.
There being no objection, the material was ordered to be printed in the RECORD, as follows:
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Mr. WHITEHOUSE. This report compares the share of America's gross domestic product spent on health care to the share spent by our international industrialized competitors. It also looks to the wide variation in health care expense and quality, region to region, within the United States of America. From each of these measures, the report comes to the same conclusion: They estimate excess health care expenditures of about 5 percent of GDP, which translates to $700 billion per year. Former Treasury Secretary O'Neill has written recently that the target is $1 trillion per year. Whether $700 billion or $1 trillion, that is a savings target that is worth an enormous expenditure of executive and legislative effort to achieve, particularly when all the evidence suggests that achieving it will actually improve health care outcomes for the American people.
Perfect examples of the savings that await us are in quality of care. I have spoken before about the Keystone Project up in Michigan which reformed care in a significant number of Michigan's intensive care units. It reduced infections, respiratory complications, and other medical errors. Between March 2004 and June 2005, just a little over a year, the project is documented to have saved 1,578 lives, 81,020 days patients otherwise would have spent in the hospital, and over 165 million health care dollars--just in a little over a year, just in intensive care units, just in one State, and not even all of the intensive care units in that State.
In my home State, the Rhode Island Quality Institute has taken this model statewide with every hospital participating, and we are already seeing hospital-acquired infections and costs declining.
Why aren't these quality reforms happening spontaneously all over the country? Because government and private insurers haven't set up the right rules for the game. When we began our intensive care unit reform in Rhode Island, the Hospital Association of Rhode Island estimated a $400,000 cost for a potential $8 million savings from the ICU reform program. That is a 20-to-1 return on investment. Super deal, right? Who wouldn't take that? Well, the hospitals pointed out that all the savings--the $8 million--went to the payers--to Medicare, to the insurance companies--and all the costs and all the trouble and all the risk came out of their own pockets. The savings actually cut hospital revenues. So with a lot of business experience around this Chamber, do we know a lot of businesses that would spend $400,000 in cash in order to lose $8 million in revenues? That is not a good economic proposition. We have made the rules such that it is not a good economic proposition for hospitals to invest that way.
That is why the HELP Committee bill changes payment incentives and invests in grant programs so it begins to make economic sense for doctors and hospitals to invest in lifesaving and cost-saving quality improvements. If we can make it an economic win for providers to improve quality this way, think of the torrent of American ingenuity that will unleash. Now we are stuck. We are stuck in a bog of market failure, with the connection between risk and reward--the fundamental connection between risk and reward that is the basic engine of American capitalism--interrupted and disabled. But CBO can't score that innovation because we haven't been down this road before. There is nothing in the rearview mirror for CBO professionals to work with to determine what those savings will be.
There is a similar problem in disease prevention. A study by the Trust for America's Health found that investing $10 per person per year in proven community-based programs to increase physical activity, improve nutrition, and prevent tobacco use could save the country more than $16 billion annually within 5 years. Out of the $16 billion in savings, Medicare could save more than $5 billion, Medicaid could save more than $1.9 billion, and private payers could save more than $9 billion, but those program providers don't get funded. That is why the HELP Committee bill establishes a prevention and public health investment fund to provide expanded and sustained nationwide investment in preventing illness. Well run, the savings could be enormous. But CBO can't score it because we haven't been down this road before, and there is nothing in the rearview mirror for CBO professionals to work with.
A third area for significant efficiencies and savings is the contentious, inefficient billing and approval process. Right now, doctors and insurance companies are locked in an arms race. Private insurers delay claims and deny claims for reimbursement and throw up barriers to payment, and the providers, in turn, staff up and hire consultants and add people to fight back. This battle creates a colossal burden on the system, consuming perhaps 10 to 15 percent of all private insurance expenditure and then creating a reciprocal and probably actually greater cost shadow out in the provider community from having to fight back against that 10- to 15-percent expenditure. It all adds no overall health care value--none. It is pure administrative cost shifting. Even the insurance industry estimates that $30 billion per year could be saved through simplification of that process. That is why the HELP Committee bill has strong administrative simplification requirements. But again, CBO can't score it because this is another new road.
Again, there is nothing in the rearview mirror for CBO to work with.
Finally, multiple studies show that the private insurance market is plagued by inefficiency and waste. While administrative costs for Medicare run about 3 to 5 percent, overhead for private insurers is an astounding 20 to 27 percent--charges that consumers pay for higher premiums. A Commonwealth Fund report indicates that private insurer administrative costs increased 109 percent--they more than doubled--private insurer administrative costs more than doubled from 2000 to 2006, just in 6 years. The McKinsey Global Institute and a leading health economist indicate that Americans spend roughly $128 billion annually on ``excess administrative overhead''--that is, $128 billion on excess administrative overhead--in the private health insurance market.
That is why the HELP Committee bill establishes a strong nonprofit public health insurance option that would compete on even terms with private insurance companies, bringing down premiums, negotiating more efficient provider payments, and increasing consumer access--all through the power of free market competition. All this is done through the power of free market competition. But, again, CBO cannot score it because we have not been down that road before. There is, again, nothing in the rearview mirror for CBO professionals to work with.
In the 1930s, Franklin Delano Roosevelt's proposal for an innovative program called the Tennessee Valley Authority faced this dour prediction from a Member of the House of Representatives:
Mr. Speaker, I think I can accurately predict no one in this generation will see materialize the industrial empire dream of the Tennessee Valley.
Another Member remarked:
The development of power in that particular locality of the Nation ..... can be of no general good.''
Had FDR been cowed and discouraged by such pessimism, by the difficulty and uncertainty and novelty of his task, the TVA would never have brought electricity, jobs, and prosperity to millions of Americans.
Likewise, today, it is precisely because our reforms are innovative and because they will take energy, commitment, and leadership to achieve that they are unscorable. That should be an inspiration to us, not a discouragement. Through this reform bill, we must challenge ourselves and the Obama administration to do that which economists and commentators cannot specifically score and analyze. With strong leadership and dedication, we can not only bend the cost curve, we can break it.
Let's set a hard target, say, $500 billion in annual savings, and see how fast we can get there. Let's make this the Apollo project of our generation. The stakes are high enough to justify that effort.
I thank the Chair and yield the floor.
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