Health Care Reform

Floor Speech

HEALTH CARE REFORM -- (Senate - October 19, 2009)

Mr. WHITEHOUSE. Madam President, I have spoken many times on this floor about the urgency of the need to reform our broken health care system, to expand access to insurance, to improve below average results, and to bring down costs. In a speech to the joint session of Congress, the President eloquently described the challenge of this moment:

I am not the first President to take up this cause, but I am determined to be the last. It has now been nearly a century since Theodore Roosevelt first called for health care reform. And ever since, nearly every President and Congress, whether Democrat or Republican, has attempted to meet this challenge--in some way. ..... Our collective failure to meet this challenge--year after year, decade after decade--has led us to the breaking point.

We are at the breaking point for Nancy from Barrington, RI, a single mother and accomplished music teacher who lost her full-time job and currently teaches part time at a local university. Nancy has paid the full cost of health insurance out of pocket so her two children would not go without coverage. But now they have graduated from college, they are no longer eligible to be on her insurance policy, and they work at jobs that don't provide health care benefits. So Nancy is now thinking about selling her home, their childhood home, to prevent her family from going without health insurance. Nancy writes:

Between the three of us, we are desperate for a workable solution to our health insurance needs. For the first time in my life I feel utterly disenfranchised by my own society.

We are at the breaking point, not just for Nancy but for so many Rhode Islanders who have shared with me their stories--stories of loss, stories of sorrow, stories of frustration, stories of personal and family disasters,

in a treacherous health care system that offers all the care you need until you need it.

We are also at the breaking point nationally. Our country's economic future may well depend on the reforms and investments we now craft to control costs and wring savings from the system.

One measure of the potential savings is the recent report of President Obama's Council on Economic Advisers, comparing the share of America's gross domestic product spent on health care to the share spent by our industrialized international competitors, and evaluating the wide variation in health care expenses region to region within the United States.

The report estimates annual excess health care expenditures of about 5 percent of GDP. That translates to over $700 billion a year in excess cost. They are not alone. The New England Health Care Institute reports that as much as $850 billion in excess costs every year ``can be eliminated without reducing the quality of care.'' That is $850 billion.

Former Treasury Secretary O'Neill, the Treasury Secretary in the Bush administration, has written recently that the excess cost in our health care system is $1 trillion a year. The Lewin Group, a consulting firm that is well regarded on health care issues, has estimated that excess cost exceeds $1 trillion per year. So is it $700 billion a year? Is it $850 billion a year? Is it $1 trillion a year? Whatever it is, it is a savings target worth an enormous executive and legislative effort, particularly when the evidence is that achieving these savings will actually improve health care for the American people.

Where will these savings come from? Well, the savings await us in quality of care. For instance, the Keystone Project in Michigan reduced infections, respiratory complications, and other medical errors in some of Michigan's intensive care units between March 2004 and June 2005, a little over a year. The project saved 1,578 lives, 8,120 days that patients otherwise would have spent in the hospital but did not have to because they did not get the infections or the complications and, as a result, over 165 million health care dollars, just in Michigan, just in intensive care units, just in 1 year, and not all of the intensive care units.

In my home State, the Rhode Island Quality Institute has taken this model statewide with every hospital participating. We are already seeing hospital-acquired infections and costs declining. There is a similar opportunity in disease prevention. The Trust for America's Health found that investing $10 per person per year in programs that increase physical activity, improve nutrition, and prevent tobacco use could save the country more than $16 billion annually within 5 years.

Out of that $16 billion in savings, Medicare would save more than $5 billion, Medicaid would save more than $1.9 billion, and private payers would save more than $9 billion. So that is quality of care and prevention.

A third area for significant efficiencies and savings is the insurance industry's contentious, inefficient billing and approval process. The battle over approvals for treatment and claims for payment creates a colossal burden on our health care system, causing perhaps 10 to 15 percent of the insurance industry's expenditures because the hospitals and the doctors and the providers have to fight back. That 10 to 15 percent of the insurance companies' expenditures casts a cost shadow over the provider community which is probably bigger than the insurance industry spends, because they are less efficient at fighting back than the insurance company is at tormenting them.

It all adds no health care value. None. It is pure administrative costs and cost shifting. Rhode Island providers have told me over and over that half of their personnel are absorbed in this battle and not providing health care. They are at the doctor's office, they work there, but they are not providing health care. They are busy fighting with the insurance company.

Even the insurance industry estimates that $30 billion per year could be saved through simplifications of the process. That relates to a fourth area, the overall inefficiency and waste that plagues the private insurance market.

While administrative costs for Medicare run about 3 to 5 percent, overhead for private insurers is an astounding 20 to 27 percent. A Commonwealth Fund report indicates that private insurer administrative costs have more than doubled in the past 6 years. From 2000 to 2006, they increased 109 percent.

The McKinsey Global Institute estimates that Americans spend roughly
$128 billion annually--$128 billion annually--on excess administrative overhead in the private health insurance market.

A fifth savings area is investments in our infrastructure of health information technology; secure electronic health records, for instance, electronic coordination between your doctor and your specialist and your pharmacy and your hospital and your laboratory. These investments promise big savings as well, $162 billion per year, according to one RAND study, and possibly twice that.

Finally, reform of how we pay for health care will yield enormous dividends. At the moment we mostly pay on a piecework basis. The more you do, the more you are paid. No surprise that we do a lot and pay a lot. Since the best care, the best quality care is so often less intrusive but better designed and better coordinated, this payment reform presents another win-win opportunity: better health care and lower cost, hand in hand.

There is a problem, though. For many of these reforms, CBO cannot fully score the savings they would yield, and thus their importance has been minimized in our debate. CBO can only estimate health care costs and savings that have historic precedent. For example, on the cost side we have the experience of Medicaid, and the Children's Health Insurance Program. So CBO can estimate how much it will cost to expand the coverage to needy families, as we importantly do in this bill.

On the savings side, however, CBO's capability is limited because there is not a lot of information to forecast from. CBO's Director has been refreshingly candid about this. In a recent letter to Senator Conrad, he wrote the following:

..... changes in government policy have the potential to yield large reductions in both federal health expenditures and federal health care spending without harming health. 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.

So to summarize: Large reductions in costs are possible. The general direction in which to move to achieve them is agreed. But experimentation and learning are necessary to get there.

Even with those analytical limitations, CBO has recognized some cost savings created by several innovative reforms in the Finance Committee's bill. For example, CBO forecasts that an independent nonpartisan commission of experts with authority to determine provider payment rates under Medicare will save the Treasury $22 billion over a 10-year period.

It also credits Medicare payment reforms that seek to prevent hospital readmissions with $2.1 billion in savings; incentives that encourage physicians to group together in cost savings organizations with $4.9 billion in savings, and payment reforms aimed at preventing health care-acquired infections with $1.5 billion in savings.

But as you have seen, in comparison to the numbers I talked about earlier, those are trivial projections, chump change against the excess cost of our health care system. Americans owe the Congressional Budget Office a particular debt of gratitude for how incredibly hard they have worked these past weeks and months. CBO performs a valuable service.

But its professional discipline requires it to score legislation basing its calculations on what it can chronicle has happened in the past. And we have not yet been where we need to go in health care reform. Moreover, getting there will require leadership, creativity, and perseverance in executive administration, with constant adjustments and improvements along the way to achieve our goal.

Those factors of executive administration are beyond the capability of CBO to predict. The distinguished Presiding Officer was the Governor of the State of New Hampshire. She knows well, having served as Governor, what a difference executive administration can make in areas where there is intelligent and sustained focus. Well, CBO cannot predict whether intelligent and sustained focus will occur, so they cannot predict the answer to that question.

Let me mention one further reform now that we are on the subject of executive administration, a final reform that can bring leadership and creativity toward achieving all of these goals in quality, in prevention, in payment reform, and in information technology. That is the reform that can bring leadership and creativity to pulling all of those reforms together, a public health insurance option, a government-run publicly handled plan that can provide affordable coverage in a market where premiums have increased 128 percent in 8 years.

A public option can bring vigorous competition to a market so monopolistic it would make Andrew Carnegie blush, will force private plans to minimize bloated administrative costs which have increased, as I said, 109 percent over those 6 years. The public option can pass along savings to consumers in the form of reduced premiums, and can end the wasteful practice of fighting with doctors and patients over reimbursement.

The public option is our best chance for executive implementation of the delivery system innovations and reforms I have described. Skillful executive administration will be required just as for every other element of reform. But public plans across the country, driven not by private motives but by the public good, set new standards of quality and efficiency in a market that has lost its way.

The point of this reform must be to turn around a health care system that is now spiraling out of control. We spend 18 percent of our GDP on health care. The next highest spending nation in the world is Switzerland at 11 percent. Even if our success is limited to shaving a few percentage points off our national expenditure on health care, that success 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 these savings does not mean they aren't real and achievable. Given the looming threat to America's fiscal security that is now presented by our health care costs, these savings are not only real and achievable, they are essential. They are necessary. We are bound to achieving them, and we must not fail. For that reason, I call on the Obama administration to begin defining a health care savings target from delivery system reform--from health information infrastructure, from quality improvements, from illness prevention, from more transparency and less bureaucracy, from reform of what we pay for in health care and, ideally, all implemented rapidly and fairly by public plans around the country. They need to set a target.

If the administration does not set a savings target, there is no way the vast apparatus of the Federal Government will wheel adequately toward achieving this goal. If we fail to achieve those savings, all our dreams--our dreams of universal coverage, our dreams of affordability, our dreams of a public option--will crumble like castles built on sand.

Let's take the most conservative number from President Obama's own White House, $700 billion a year in annual excess cost. Let's assume the best we can do is to eliminate less than one-third of that excess cost--not all of it, not even half of it, less than one-third. Let's assume it takes a few years to meet that goal; let's say 4 years. That would still permit reform savings of $200 billion a year by 2014. By then, our annual health care expenditures will have climbed well over $3 trillion. So that $200 billion annual savings would be only one-fifteenth, about 7 percent, of the cost, then, of our bloated health care system, a system now costing twice as much as other developed nations' health care systems that cover everyone. That goal, 7 percent off a system that costs twice as much as in other nations, does not seem unreasonable.

I will ask the administration: What is your annual savings target out of that $700 billion to $1 trillion a year in excess cost? What is it, and when will you achieve it? Soon you will have a bill out of this Congress that gives you the tools to achieve these savings. When you have that bill, I will ask for a number and a date.

I will urge the administration: Be bold. President Kennedy did not know how to get to the Moon when he promised that we would, but he knew we had the talent and the technology to do it, if we had the President's commitment behind it. Sure enough, it happened.

I would also remind the administration of this: We have to achieve these savings anyway. This is not an extra political hurdle the administration would have to clear. This is the bar we must clear if our Nation is to return to fiscal health and if our dreams of universal coverage and affordability and good public health and a humane, efficient health care system are all to be realized. Again, if we don't clear that bar, all those dreams crumble in our hands like dust.

Let's step forward now and make a commitment to some hard, firm measure of savings out of our bloated and inefficient delivery system.

I thank the Chair.

I yield the floor and suggest the absence of a quorum.

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