Hearing of the Senate Budget Committee - Containing Health Care Costs: Recent Progress and Remaining Challenges

Hearing

"This hearing will now come to order.

"I'd like to thank Ranking Member Sessions--and all my colleagues for joining me here today. As well as members of the public here or watching online.

"I would also like to thank our witnesses: Dr. Len Nichols, Director and Professor at the Center for Health Policy Research and Ethics and College of Health and Human Services at George Mason University; Dr. Kavita Patel, Fellow and Managing Director at the Engelberg Center for Health Care Reform at the Brookings Institution; And Dr. Joseph Antos, Wilson H. Taylor Scholar in Health Care and Retirement Policy at the American Enterprise Institute.

"Thank you for joining us today for this important conversation about health care costs in the United States, and the implications recent cost trends have on our federal budget decisions.

"Almost five years after the greatest economic crisis since the Great Depression, our economy is recovering, but far too slowly. Millions of workers are still looking for too few jobs. Millions of families are still worrying about staying in their homes, or putting food on the table. We have serious long-term deficit and debt challenges that we need to tackle, since we certainly don't want to leave our children and grandchildren with an unmanageable pile of our bills. And we have serious short, medium, and long-term economic challenges that we simply can't ignore.

"But there has been some good news recently. The Congressional Budget Office released its latest forecast which gave us an updated view on our debt and deficits. This latest outlook shows we've made substantial progress when it comes to our short and medium-term deficits. It made it clear that there is no short-term debt crisis, and that the deficit reduction we've done in the last few years, combined with the growing economy, is making a difference.

"Recent trends in the health care sector have played an important role in this improved fiscal outlook. Medicare and Medicaid are two of the three largest federal budget items -- so trends in health care costs have major implications for our nation's fiscal policy. Health care cost growth outpaces our economic growth--and it also grows at a faster rate than household incomes.

"The cost of health care affects every kitchen table and conference table conversation in the United States, as American households and American business face the question of how to pay for the healthcare coverage they want for their families and employees.

"It remains a huge challenge for our businesses to stay competitive in a global market where their competitors have lower health care costs and continues to limit economic growth by reducing the investments businesses and families can make, whether that is starting a new venture or buying a new car.

"But, there has been some positive news on this front lately. Over the last several years, health care costs have grown slower than at any time in history. CBO now projects that the federal government will spend well over $500 billion less on Medicare through 2020 than it had predicted just a few years ago. And the recently released Medicare Trustees report showed an improvement in the trust fund, extending its solvency by two years until 2026, due to lower projected spending.

"And, as the White House noted yesterday--consumer health care spending has increased this year at the lowest rate in 50 years.

"This is welcome news. And continuing these trends is going to be absolutely critical.

"There is an emerging consensus that the economic recession is not the only reason for the slowing of cost growth, which is also good news. There is evidence that structural changes in the way health care is delivered are underway and appear to be having an impact. And, while the slowdown started before the Affordable Care Act was enacted, the law has set clear expectations for how health care will be financed and delivered in the future.

"Importantly, health insurance coverage is increasing at the same time, and will continue to for the future. This is critical, not only for families and communities, but also for our economy.

"Lower health care costs mean that families and communities are getting care at a lower total cost to the system, and it means lower deficits and debt.

"By enacting comprehensive health care reform law, Congress took a critical step toward improving our health care system. And, as I mentioned earlier, recent trends in the slowing of health care cost growth suggest that we're moving in the right direction. But serious long-term challenges remain.

"Right now, Americans still spend far more per person on health care than any other nation. But spending more on care hasn't made us healthier.

"Our current system also focuses far too much on healing sick people instead of on prevention and wellness. This isn't just bad for patients,. it's also bad for our economy. So we need to make sure we are moving toward a system where we prioritize prevention and quality.

"Fortunately, there are a number of reform ideas, many of which were included in the Affordable Care Act, that can help us address these problems and put us on a track toward greater quality with lower costs. And the work that providers across the country, including in my home state of Washington, are doing is making a difference.

"Accountable Care Organizations, like the one run by Polyclinic and the one being launched by Providence Health, both in my home state of Washington, help to ensure better communication between providers.

"Patient-centered medical homes, like the one run by Group Health in Seattle, aim to combine the personalized approach of a family doctor with innovative technology. And by creating fixed payments for all the care a patient is expected to need during a period of time, bundled payments could help incentivize coordination and efficiency between providers.

"These reforms a will help us move toward a system where we are spending less on care, and are healthier as a country. Increasing quality and encouraging efficiency and transparency is going to take all of us--providers, policymakers, and patients--working together.

"But it is so important for the wellbeing of our families across the country, as well as for the long-term strength of our economy.

"Now, more than ever, we need to be thoughtful about the reforms we are enacting, and work together to ensure that we are laying down a foundation for future growth and prosperity, both when it comes to enacting key health reforms, and also when it comes to future budgetary policy.

"That is especially true when it comes to the complexities of health care and the consequences of decisions we make when it comes to the future of Medicaid and Medicare.

"We can't lower health care spending simply by shifting those costs from the federal government on to seniors, states, and the most vulnerable families. But unfortunately, that's exactly the approach that House Republicans take in their budget.

"If House Republicans had their way, seniors would immediately see an increase in what they pay for routine doctor's visits, the number of uninsured Americans would rise, and the most vulnerable families would be put at greater risk. This is not the right way to address our long-term challenges in health care spending.

"Republicans claim that Democrats don't want to tackle health care costs, that's simply not true. We agree that we need to address this significant part of our federal spending. But we believe that we need to do so by coming together around a solution for real, lasting reform--not just by shifting costs, and shifting risks.

"This is a complex issue, and we shouldn't have to wait until the last minute to sit down at a table, try to find common ground, and work something out.

"That is why now that the House has passed their budget, and the Senate has passed ours, I hope we can finally move forward with going to conference and working together to address these major issues facing our country.

"As everyone in this room knows, we have tried many times to go to conference--but each time we have been blocked.

"In fact, the latest threat, coming from my colleagues Senators Rubio and Lee, is that they want to actually defund health care reform or they'll shut down the government.

"So not only are Tea Party Republicans willing to push us towards a crisis, but they'll do that to: cut off health care coverage for 25 million people, end free preventive care for our seniors, and cause them to pay more for their prescriptions.

"These political games might play well with their Tea Party base. But the reality is that not only is the Affordable Care Act already helping millions of Americans stay healthy and financially secure, but it's also helping slow health care cost growth.

"Instead of fighting what is now the law, I would hope we could all be working together right now to make sure Obamacare is implemented in the best possible way for our families, businesses, and communities.

"Continuing to manufacture crisis after crisis will only make the situation worse for our economy. Whereas coming together to tackle tough issues will help create jobs and keep America on its path to economic recovery.

"So I am hopeful Republicans will join us at the table in a budget conference under regular order, and work with me and other Democrats to address our long-term debt and deficit challenges, as well as our long-term health care challenges

"We owe it to the American people to come together around fair solutions that help the economy grow, tackle our deficit and debt responsibly, and ensure we have a health care system that delivers high quality, affordable care.

"So I am glad that we are able to have this important discussion today, and I look forward to hearing from our witnesses on this critical issue.

"But first, I will now turn to Ranking Member Senator Sessions for his opening statement."

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