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Public Statements

Health Care and Education Reconciliation Act of 2010

Floor Speech

By:
Date:
Location: Washington, DC

BREAK IN TRANSCRIPT

Mr. WHITEHOUSE. Mr. President, on this historic day, I rise to speak, as I have many times before, about our historic opportunity to turn away from the path of fiscal crisis and toward the difficult and vital work of bringing down the costs of health care.

After the wild and unsustainable borrowing of the Bush era, we now face an era of limited resources, in which every last dollar is needed to spur economic recovery, create jobs, and restore economic security for all. Economists agree with virtual unanimity that the needless and excessive cost of health care is the heaviest weight dragging down America's economic growth.

In 1955, the year I was born, the Nation spent $12 billion annually on health care. Last year, we spent $2.5 trillion--$134 billion more than the previous year, the largest year-to-year increase in history, and 200 times what we spent the year I was born. That spending constitutes a stunning 17.3 percent of our Nation's entire gross domestic product--also the highest level in our history.

The cost of our Republican colleagues' desire to do nothing would have been impossibly high. In my home State of Rhode Island, a family of four would have faced more than $26,000 in premiums for family health insurance in 2016. Last year, premiums for Medicare Advantage nationally jumped an average of 14.2 percent--just in 1 year. Indeed, this escalation is unsustainable, but it is not inevitable.

A great deal of health care cost is nothing more than waste--waste resulting from a status quo that is irrational, disorganized, and often downright greedy and mean. The only good news about all this waste and excess cost is that we know where to look for savings. In the reform bill signed by President Obama today, we deploy every tool at our disposal to reap those savings.

This health care debate has been enveloped in--indeed, sometimes blinded by--a blizzard of numbers: CBO reports, actuarial analyses, projections upon estimates upon projections. Too often, my colleagues on the other side pluck out only those figures that serve their purpose--their purpose to delay and ultimately defeat this bill for their insurance company friends.

However, I believe that a fair view of the evidence demonstrates that this reform bill will do more to lower health care costs, reduce the deficit, and free up precious resources in the private sector than any reform has ever done before.

Let me start with the budget deficit. In its most recent report, CBO projects that the bill, combined with the package of improvements that is now before the Senate, will reduce the deficit by $138 billion over the next decade. Economists in the Commonwealth Fund have estimated that the bill will reduce the deficit even more dramatically by $409 billion over the next 10 years. In the second decade, CBO projects that the combined bills will reduce the deficit by a broad range around one-half percent of GDP. One-half percent of GDP is $1.3 trillion over 10 years, a significant achievement in deficit reduction.

Let's look at another number the critics too frequently ignore: savings in Medicare and Medicaid spending from innovative reforms in the delivery of health services, particularly increased efficiencies, improved quality, and the elimination of wasteful spending. Both CBO and the CMS Actuary estimate those savings at roughly $490 billion, nearly $ 1/2 trillion over the next 10 years. The economists at the Commonwealth Fund peg that number over half a trillion dollars, at $576 billion. Examples of this are found in CBO's forecast that an independent, nonpartisan commission of experts with authority to determine payment rates under Medicare will save the Treasury $13.3 billion over a 10-year period. CBO also credits Medicare payment reforms that seek to limit hospital readmissions and hospital-acquired infections with $7.1 billion in savings, and incentives that encourage physicians to group together in cost-saving organizations with $4.9 billion in savings. We know these things work because places such as the Mayo Clinic in Minnesota are out there doing that right now.

Not only does this bill protect the Medicare trust fund and preserve Medicare benefits, it also reduces spending growth in the outyears. The savings I have been talking about are not just a one-off proposition and then back on the spending growth ratchet; this bill reshapes the delivery system so that Federal health care costs should never grow at this outrageous rate again. CBO and Commonwealth Fund economists find that the bill reduces the Medicare rate of growth by 2 percent. President Obama's Council of Economic Advisers estimates that the bill will:

Reduce the annual growth rate of Federal spending by a percentage point in the upcoming decade and by an even greater amount in the subsequent decade--which would increase national savings and improve the long-run performance of the U.S. economy, in their words.

Widening the focus from public programs to the economy as a whole, the challenge posed by wasteful health care costs expands. The President's Council of Economic Advisers recently released an updated report in which they concluded that: Annual waste and inefficiency in the health care status quo approaches 5 percent of GDP, $700 billion--billion with a ``b''--$700 billion every year in waste and inefficiency. Set aside for a moment duplicative tests, lost medical records, unnecessary treatments, and uncoordinated care for chronic patients and look just at the administrative overhead of the private insurance market. As we know, the administrative costs for Medicare run about 3 percent to 5 percent. Overhead for private insurers is an astounding 20 percent to 27 percent. A Commonwealth Fund report indicates that private insurer administrative costs increased 109 percent from 2000 to 2006, more than double in 6 years, and my colleagues can just imagine the mischievous purposes to which all that bureaucracy is being put.

The McKinsey Global Institute estimates that Americans spend roughly $128 billion annually on excess administrative overhead of private insurance companies--$128 billion every year. Then, of course, there are those duplicative tests: lost medical records, unnecessary treatments, and uncoordinated care for patients. Because of all of this waste in the system, the Council of Economic Advisers concludes that: [i]t should be possible to cut total health expenditures about 30 percent without worsening outcomes ..... which would again suggest that savings on the order of 5 percent of GDP could be feasible.

Remember, again, that 5 percent of our Nation's gross domestic product is $700 billion a year.

They are not alone. Other experts agree. The New England Health Care Institute reports that as much as $850 billion in annual excess costs: ``can be eliminated without reducing the quality of care.'' Former Treasury Secretary O'Neill has written recently that the excess cost is $1 trillion a year. And the Lewin Group, which is often cited by my colleagues on the other side of the aisle here, finds that we burn up over $1 trillion a year through excess cost and waste in our broken health care delivery system.

Whether it is $700 billion a year or $1 trillion a year, it is a big savings target--bigger than anything discussed by CBO--and the tools to achieve these potential savings are in this bill. Analysts of all stripes agree that this bill does more than any previous measure to relieve the economy of this dead weight of waste and excess health care costs.

The Commonwealth Fund has projected that our bill will reduce the annual growth of national health expenditures--that is the amount that the private and public sector spend on health care every year--by 0.6 percentage points annually--$683 billion over the next 10 years. The Council of Economic Advisers writes that ``total slowing of private sector cost growth'' will be approximately 1 percentage point per year.

Why does this happen? This happens because the bill begins to restructure, streamline, and modernize our disorganized and illogical medical delivery system. It changes outmoded payment systems that you will pay for good health care outcomes, not just more procedures. It funds comparative effectiveness research so you will know whether something works before you pay for it. It creates financial incentives for low-quality but high-cost providers to improve their performance, and for transparency so you will know who they are and you can avoid them. It makes investments in wellness and prevention to reduce costs by keeping you healthy in the first place. It improves the coordination of care for chronic care and multiple diagnosis patients. Anyone with a family member in that situation knows how difficult trying to organize their care is. It starts demonstration and pilot projects in Medicare to create quality-based efficiencies in health care delivery that will spread out to the private sector.

Such investments in quality of care pay proven dividends. For example, I often talk about the Keystone Project in Michigan which reduced infections, respiratory complications, and other medical errors in Michigan's intensive care units. It didn't even go to all of the intensive care units. Just in the participating ones, it saved more than 1,800 lives, over 140,000 days that patients would have spent in the hospital--140,000 saved patient days--and, of course, over 271 million health care dollars, saving lives and saving dollars.

In my home State, the Rhode Island Quality Institute has taken this model statewide with every one of our hospitals participating, and we are already seeing hospital-acquired infections and costs declining: a 16.5 percent decrease in mortality and a statewide mortality rate almost 21 percent lower than the national average, saving the State's health care system $6 million overall so far.

Analysts agree that there is a big savings opportunity, and many agree that we are taking the right approach to tackling it. But they also agree that the amount of savings we can achieve is uncertain. Why? Why is it uncertain if the tools are in the bill to achieve the savings? It is uncertain because administering and applying these tools effectively will be essential. Remember: We have never before taken aim at this target. We have never launched such a battery of innovative reforms, even though experts have been advocating them in some cases for decades. Success will depend on the quality of executive management, how dynamic we are in bringing these innovative tools to bear on a problem. The quality of executive management with innovative tools is simply not something that CBO knows how to score. It is not something they can do.

CBO Director Doug Elmendorf has conceded in a letter to Budget Committee Chairman Kent Conrad:

Changes in government policy have the potential to yield large reductions in both national health care expenditures and Federal health care spending without harming health.

Many experts agree on some general directions in which the government's health care policy should move. 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.

That is Doug Elmendorf: experimentation and learning.

That sounds an awful lot like the example used by Dr. Atul Gawande, one of our most thoughtful commentators on this subject, who analogized health care to the agricultural sector. He wrote about the agricultural sector:

That [it] was strangling the country at the beginning of the 20th century ..... The government never took over agriculture, but the government didn't leave it alone either. It shaped a feedback loop of experiments and learning and encouragement for farmers across the country.

Experiments and learning. How did that work out? To continue with Dr. Gawande:

The results were beyond what anyone could have imagined. Productivity went way up. Prices fell by half. Today, food is produced on no more land than was devoted to it a century ago and with far greater variety and abundance than ever before in history.

The strategy works because United States agencies were allowed to proceed by trial and error, continually adjusting policies over time, in response not to ideology but to hard measurement of the results against social goals ..... Pick up the Senate health care bill--yes, all 2,074 pages--and leaf through it. Almost half of it is devoted to programs that would test various ways to curb costs and increase quality ..... The bill is a hodgepodge. And it should be.

Here is how he wraps things up. He says this:

We crave sweeping transformations. However, all the current bill offers is those pilot programs, a battery of small-scale experiments. The strategy seems hopelessly inadequate to solve a problem of this magnitude. And, yet--history suggests otherwise.

David Cutler is a widely respected Harvard health care economist. He wrote in the Wall Street Journal recently that:

[o]ver the past year of debate, 10 broad ideas have been offered for bending the health care cost curve. The Democrats' proposed legislation incorporates virtually every one of them.

Professor Cutler gives the bill ``full credit'' on six of the cost control ideas and ``partial credit'' on three, including ideas regularly championed by my colleagues on the other side, such as combating fraud and abuse in the Medicare system and reform in the medical malpractice liability system.

The only area in which Cutler gives the bill zero credit is in its failure to include a public option. It is hard for our colleagues on the other size to criticize us for that since it is the thing they fought the hardest against. As codrafter with the distinguished Presiding Officer, Senator Brown of Ohio, I deeply regret that provision was excluded. Perhaps on another occasion we will have the chance to revisit that issue. But 9 of the 10 cost control mechanisms are in this bill, and the 10th was a public option our colleagues opposed.

David Cutler concludes that ``[w]hat is on the table is the most significant action on medical spending ever proposed in the United States.'' In spite of the uncertainty described by CBO Director Elmendorf, Cutler estimates that the reforms will save ``nearly $600 billion over the next decade and even more in the subsequent one.''

Nobel laureate Paul Krugman agrees that ``there's good reason to believe that [CBO's] estimates are too pessimistic. There are many cost-saving efforts in the proposed reform, but nobody knows how well any one of these efforts will work. And as a result, official estimates don't give the plan much credit for any of them. ..... Realistically, health reform is likely to do much better at controlling costs than any of the official projections suggest.''

Recently, three more respected health economists--Len Nichols of George Mason, Ken Thorpe of Emory, and Alan Garber of Stanford--described the bill's cost controls as vital, a significant improvement on the status quo. As Professor Thorpe neatly described it:

Under the do-nothing scenario, everything gets worse.

And MIT professor Jonathan Gruber, one of our leading health economists, said this of the bill's cost control measures:

I can't think of a thing to try they didn't try.

I ask unanimous consent for an additional minute.

The PRESIDING OFFICER. Without objection, it is so ordered.

Mr. WHITEHOUSE. Professor Gruber said:

I can't think of a thing to try that they didn't try. They really make the best effort anyone has ever made. Everything is in here. ..... You couldn't have done better than they are doing.

When the do-nothing crowd on the other side argues that this bill is a cost disaster, that it has no master plan, I urge that American ingenuity, through experimentation and learning, can overcome the toughest challenges, not through command and control but through a flexible, dynamic, and persistent exercise--experimentation, learning, and encouragement.

I will close by urging President Obama to specify a savings target for his administration to achieve. I have before recommended setting the target at $200 billion in annual savings by 2014. That should be conservative and easy to achieve. But a clear and specific goal will wheel the vast apparatus of Federal bureaucracy more rapidly toward the comprehensive change we need.

When President Kennedy announced in September of 1962 that America would strive to put a man on the Moon, he set a specific target. He did not say he was going to bend the curve of space exploration; he said he would put a man on the Moon. What he said about that is this:

We choose to do such things not because they are easy, but because they are hard, because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one which we intend to Ðwin. .....

Health care cost is a challenge we are indeed willing to accept, it is one we cannot afford to postpone, and it is one which we can and must and will win.

I thank the Presiding Officer for his courtesy. I yield the floor.

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