"Building a Health Care System That Works for Everyone" - Remarks by Thomas J. Donohue
Address by Thomas J. Donohue, President and CEO, U.S. Chamber of Commerce
EDPMA Solutions Summit XI: Strategies to Manage Health Care Change
Las Vegas, Nevada
May 14, 2008
As Prepared for Delivery
Introduction
Thank you very much, Ricardo [Martinez], and good afternoon everyone.
When Ricardo invited me to speak here today, I happily rearranged my schedule to come. He's not only a good friend, but one of the most respected voices on health care in the country.
I took one look at the title of your meeting—"Strategies to Manage Health Care Change"—and I thought that's ambitious managing change in something as complex and multifaceted as our health care system, a sector that accounts for 16% of our $13 trillion economy.
I knew there'd be a lot of smart people engaging in the debate, and I wanted to be a part of it.
But let me offer something even more ambitious than what your title suggests We shouldn't seek to just manage health care change, we should lead it. You as practitioners and providers working hand in hand with those of us in the business and employer community who, in a broad sense, are your largest customers and the premium payers.
And I can't think of a more important group to help lead positive change in health care than emergency room physicians and all those who support them. Your role in health care is not appreciated enough—until someone really needs it!
You are on the front lines. You get right down to the essence of what health care is ultimately all about—saving lives. You have seen and helped drive extraordinary advances—through technology, communications, logistics—and woven them together into a seamless system. As a result, lives are being saved 24/7 that would have been lost just a few years ago.
You see American health care and values—the idea that every life is worthy of an extraordinary effort to save it—at their best. You also see firsthand the problems and the challenges, and there are many.
Today I'd like to address those challenges, with the understanding—which I know you share—that for all its faults, American health care does many things right
and does some things better than anyone else.
Health Care Challenges
So what are those challenges? Let me touch on seven of the most significant.
First, our system costs too much. Costs are escalating with no end in sight—for businesses, families, and the government. Unless solutions are found—and soon—these spiraling costs will harm companies and force businesses and individuals to drop coverage. Government will be forced to enact crippling tax increases, cut promised benefits, or drain other vital programs just to pay the health care bill.
And just wait until the nation's 77 million baby boomers retire! The Medicare trustees recently issued their annual report, and the news is bleak. To make good on the health care benefits promised to Americans, future generations face a tax bill of $85 trillion as measured in today's dollars.
The picture is even more troubling when you add in Medicaid. And we haven't even begun to factor in Social Security. A growing economy can help cushion some of the blow, but not numbers of this magnitude.
The bottom line: Americans spend more on health care than any other modern society—$2 trillion, or $6,700 per person—yet we don't always get the best results.
It's time to ask why and hold people accountable. I can assure you that the business community, which pays a major portion of health care bills, wants to know why!
Second, our system fails to cover significant portions of our population. Some 47 million people are alleged to be without health insurance coverage at least part of the year. Many of them end up in emergency rooms with non-emergency medical needs, and most can't pay for services. But we must look closely behind those numbers before we start proposing policy solutions.
More than 9 million of the uninsured earn more than $75,000 a year, and almost 17 million make more than $50,000. Why are they choosing to opt out and risk not having some level of coverage?
Another 10 million are not citizens and would not even qualify for a federal program under current law. Yet emergency rooms are required to treat them. How many could, in fact, afford to pay at least part of the cost, but do not?
About 6 million are eligible for health care through their employer or a family member's employer, but do not enroll. Another 9.7 million are eligible for Medicaid and government health insurance, but don't take advantage of it.
The uninsured do represent a significant problem, but the number of truly uninsured who need assistance is not nearly as large as is often claimed. Finding solutions for 10 million to 15 million—the real number—are much different than 47 million.
Third, our system is grossly inefficient. A new analysis from PriceWaterhouseCoopers finds that there is about $1.2 trillion in wasteful or unnecessary health care spending, or about half of all spending. I think that number is too high. It's a stretch to think we could actually identify and then remove waste and inefficiency at such high levels.
I should emphasize that throughout this speech I will be citing statistics like this principally for illustrative purposes. I may not necessarily agree with the exact numbers, but they all underscore essential points and provide us with important benchmarks.
There's no question there is a lot of inefficiency. What are the causes? Underutilized information technology, duplicative testing, inefficient administrative costs, and defensive medicine, among others.
When it comes to health IT, we see that data cannot be shared, and much of the important information needed for patient care remains locked away in paper folders in filing cabinets. The result? Care can be uncoordinated, inefficient, and on too many occasions, inadequate.
Overhead and administrative costs are another problem. They account for 20% to 25% of health care spending. Much of it is demanded by the government. Those of you who work in this end of the business could probably come up with many good ideas to make the system work better for everyone.
There is also far too much defensive medicine. The Department of Health and Human Services estimates that as much as 30% of health care costs are due to tests and procedures that are performed for no other reason than to avoid a costly lawsuit. Whether it's 10%, 20%, or 30%, that money could be put to far better use improving patient care.
Fourth, quality of care is unsatisfactory, sometimes appallingly and tragically so, considering what we're paying. Medical accidents are high. An estimated 98,000 Americans die annually from preventable medical mistakes. According to the Institute of Medicine, medication errors harm at least 1.5 million people each year. In addition to the pain and heartbreak, these errors add incalculable costs to our health care system.
Fifth, the system does not adequately address wellness and prevention or encourage personal responsibility. You've heard the saying an ounce of prevention is worth a pound of cure, but much of our current health system doesn't pay for prevention. It pays for treatment.
Americans are co-conspirators in this failure. We have developed a real sense of entitlement we can absolve ourselves of personal health responsibility because someone else will pay.
If Americans are unhappy with escalating costs, then they should do something about it—stop eating too much, drinking too much, and smoking too much even when they visit Las Vegas!
You've also heard of the 80-20 problem that is, 80% of the health care bills go to 20% of the population, most with chronic conditions, many of which are preventable. This is a huge factor in escalating costs, and it will only get worse if we don't take steps to get chronic conditions and obesity under control.
Sixth, when Americans do get sick, they are confronted by a system that lacks transparency. They lack information on the quality of doctors and hospitals and appropriate treatments. We need to find ways to provide them with this information—it can help reduce costs and lead to better health care outcomes.
Last, we don't talk about this challenge often enough—where are we going to get the good workers we need to fill health care positions at all levels, from the nursing home attendant to the general practitioner to the surgeon?
A new report from the Institute of Medicine warned that health care institutions must rapidly increase training in geriatric care to prevent an "impending crisis" as baby boomers head toward old age. It called the current workforce "too small and woefully unprepared."
We won't need just health care workers, but IT professionals as well. By some estimates, we'll require at least 40,000 additional health IT professionals to move toward a paperless system.
The Right Conversation
In the face of these challenges, we are having the wrong conversation about health care in this country. Or, at best, an incomplete conversation. And we are setting the wrong expectations for the American people.
Nowhere is this more evident than on the campaign trail.
The wrong conversation focuses inordinately on the uninsured, while offering only lip service to spiraling costs, medical accidents, frivolous lawsuits, and the need to focus on wellness and prevention.
The wrong conversation promises Cadillac benefits and services with the promise that "someone else" will pay for it. It demands little responsibility from each of us as patients—keeping ourselves healthy—or as consumers—getting informed and making sound decisions in the marketplace.
The wrong conversation finds us grasping for the silver bullet solution—such as universal coverage, a single payer system, or an employer mandate—as if these tactics would magically resolve our health care challenges.
But, in fact, we need broader, bottom-up reforms across the board to deal with the magnitude of the challenges we face.
When a patient is wheeled into the emergency room with a broken arm, a broken leg, and internal injuries, you don't just treat the broken arm and expect him to be healthy—you treat the totality of his injuries.
In the same way, our health care solutions must address all these challenges holistically, or reform will ultimately be ineffective.
We can do better. We can build and maintain the best health care system in the world—improving access and quality and affordability for all.
What would that system look like? It would have a strong employer-provided system and a robust individual market with affordable premiums and portable policies
It would be a system connected by state-of-the-art interoperable IT with electronic medical records and other information that could be shared quickly throughout the health care supply chain
It would empower consumers with easily accessible information on providers and procedures so they can make better informed decisions and reduce overall costs
It would put the focus on wellness and prevention, promote personal responsibility, and break that 80-20 cycle
And it would offer a higher quality of care with fewer medical errors, less defensive medicine, and care that is delivered more efficiently by outstanding medical personnel.
Now, the hard part-how do we get there? And how do we get there without sacrificing the many things that American health care does very, very well?
A Better Health Care System
Let's start with the single biggest barrier that puts coverage out of reach for many families and employers and threatens to drag down our economy—costs.
We can dramatically reduce costs by implementing health IT, focusing on wellness and prevention, reducing medical errors, and ending frivolous medical malpractice suits.
When it comes to health IT, we need to build a networked health care system that unites providers, facilities, and patients—and makes information available to support efficient, collaborative care. Health IT is also key to breaking the 80-20 problem. The only proven way to manage chronic diseases is through health IT that links the general practitioners, endocrinologists, and cardiovascular specialists in real time with all patient information.
And we know it works. A comprehensive study by Florida State University found that patients are more likely to have better health outcomes if they are treated at hospitals using health IT systems. Let's not forget that every other sector of the economy that's employed information technology has experienced significant productivity gains and reductions in costs. It can be the same for health care.
Health IT is also essential to improving quality of care by reducing litigation and costly medical errors. E-prescribing, for example, could benefit the 1.5 million Americans who are sickened, injured, or killed each year by errors in prescribing, dispensing, and taking medications.
Both the government and businesses are beginning to draw the line on preventable medical mistakes. The Centers for Medicare and Medicaid Services and health insurers Cigna and Aetna, for instance, will soon stop reimbursing hospitals for major medical errors. Even state governments have set up no-pay policies through their Medicaid programs.
Anyone who suffers a medical injury due to a preventable error deserves legal redress. But that's no excuse for all the frivolous liability claims that are driving up prices and driving health care providers out of the profession. There's a difference between malpractice and not being perfect.
One major study found that as many as 40% of the medical malpractice cases reviewed were groundless. Liability is a big reason that an estimated 93% of doctors are engaging in $210 billion worth of defensive medicine per year.
We can tackle this challenge by creating specialized Health Liability Courts, which would remove medical malpractice claims from the tort system. Such courts are already operating successfully in areas such as bankruptcy.
But the best way to reduce costs is to prevent the need for services in the first place, and you can only do that through wellness and prevention.
The Chamber supports tax incentives for prevention and wellness programs as a step in transforming the system away from treatment to preventing sickness. Many employers have stepped up to the plate by starting walking groups, opening gyms, offering smoking-cessation plans, and switching to healthier foods in cafeterias and vending machines.
The Milken Institute estimates that a reorientation to preventive medicine could save about $1.1 trillion. While that number sounds impossibly high, there's no doubt that a greater focus on wellness and prevention could save us real money.
Costs are a tremendous concern, but there are other important challenges that must be addressed. We need a much more consumer-driven health care system, with better transparency and a healthy individual market.
Congress can help greatly by leveling the tax playing field—granting comparable tax treatment whether premiums are paid through an employer or by individuals in the private marketplace. Lawmakers should also improve health savings accounts by increasing the annual contribution limit and allowing funds to be used for purchasing health insurance. HSAs have been a success story. Today, an estimated 6 million people are covered by them.
We must also be open to new models of health care and new ways to access health care. It's been fascinating to watch the boom in health care clinics located inside pharmacies, supermarkets, and big-box retailers.
In a more consumer-driven system, individuals would be able to make smarter decisions if we had more transparency in the quality of providers and treatments. We applauded an executive order signed by President Bush in 2006 directing federal agencies to increase pricing and quality transparency. Thirty states have passed or proposed legislation requiring steps toward transparency.
We could take a giant step forward by releasing Medicare claims data, with all appropriate protections of confidential information. The availability of the Medicare database could help establish credible performance metrics and mark the beginning of an important movement in medicine that contributes to higher quality care and lower costs.
Such metrics could also help cement a principle the Chamber strongly supports—pay for performance. We need to move away from a system that pays regardless of outcome.
Finally, let's not forget the employer-sponsored system is the foundation of health care for more than 177 million Americans. It must remain strong and healthy. Most employers don't want to get out of it—they want to continue to offer health care benefits as a means to attract the best and brightest employees. To keep the system viable, we must protect the ERISA preemption—the one part of our health care system that is really working.
Furthermore, millions of uninsured Americans work for smaller businesses that can't afford health benefits. Congress should pass small group market reforms so that these companies can pool risk and purchase coverage at an affordable price.
Conclusion
Now, in the context of today's limited and incomplete health care debate, some will react to the areas of change and reform I have suggested by saying that this is all small stuff That what we really need is a sweeping, top-down upheaval in American health care that can only happen through a federal solution.
They want that one big stroke that would provide an instant panacea. And I understand that, even from some of my own members who are drowning under a tidal wave of health costs.
But guess what? A single solution doesn't exist. And a top-down government solution engineered by politicians in Washington won't work! We need a multifaceted program of wellness and prevention, transparency, technology, and consumer responsibility to cover more people and provide better care at lower cost.
Will it work overnight? No. Could it actually cost more at the outset to emphasize IT, better training, and prevention? Yes.
In fact, this nation must take a serious look at how we are going to attract, train, and fairly compensate the doctors, providers, and health care workers of the future.
If we get that equation wrong, if we continue to force would-be doctors to take on a lifetime of debt in order to work in a profession that squeezes their incomes and bombards them with lawsuits and paperwork, guess what? We aren't going to have the doctors we need for an aging population.
And if we continue to act in a boneheaded way in terms of our immigration policy, we aren't going to have the health care workers that we desperately need at all skill levels to care for the sick and elderly.
Ultimately, as a nation, we must decide whether we want a Band-Aid solution or a real solution.
Your voice is critical in this debate. You need to lead change, not manage it. You are the innovators and improvisers, the ones first ready to try new approaches and new techniques. You know that in your business, when that life-threatened patient is rushed into the ER, there's no one-size-fits-all.
So as you advance policies needed to keep your sector alive and well, also help us at the Chamber look at the big picture: Quality care, not just universal care
Affordable care, not the false promise of "free" care
Good health, because that's the real goal, not just good health care
And American health care seen once again as an opportunity-not as a problem.
Thank you very much.