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National Health Care Reform: Opportunity or Crisis?, Remarks

Tuesday, November 13, 2007 - 7:00pm

Address by Thomas J. Donohue
President and CEO, U.S. Chamber of Commerce

Peoria, Illinois
November 14, 2007

Introduction-Health Care and Competitiveness

Thank you very much, Gerry, and good afternoon everyone.

President Glasser, Dean Lorenz, honored guests, ladies and gentlemen, thank you for having me today.

Let me begin by congratulating the Community Health Award winners. We need people of their vision, passion, and energy to tackle the health care challenges before us.

I can't think of a better place to discuss those challenges than here in Central Illinois.

The Peoria area is home to some of the most advanced medical facilities in the country.

The University of Illinois and Bradley University—under the new leadership of Joanne Glasser—are making important contributions to medical research and innovation every day.

Peoria is also headquarters to one of our nation's greatest companies, Caterpillar. Its support for Peoria Promise helps send qualifying high school graduates to Illinois Central College.

Caterpillar is also an industry leader in health care, thanks to the commitment of executives like Gerry Shaheen.

The company has reduced health care costs and improved quality by encouraging employee responsibility and focusing on wellness and prevention.

Other companies—indeed, our entire country—should follow its example.

When it comes to forging bipartisan solutions to health care, I'd also like to applaud the work of Bradley's Institute for Principled Leadership in Public Service.

Under Brad McMillan's direction, it is building support across party lines for commonsense reforms.

That's no small task. Can anyone here think of an issue that is more complex and more emotional than health care?

Over the past few months, I've been making a series of speeches around the country on the fundamental competitive challenges facing the American economy in an interdependent global environment challenges like energy, infrastructure, legal reform, education, and immigration.

Health care is a competitive challenge unlike any other.

In many respects, we're already beating the global competition hands down. We are home to the finest medical facilities, technologies, innovations, treatments, and human talent.

Many of the world's best medical practitioners have moved here—or want to. Patients of means who face major health challenges beat a path to our doors for treatment.

Tens of billions of dollars in capital for medical and pharmaceutical R&D flows here. With this capital, our doctors, scientists, chemists, and engineers are essentially underwriting medical and pharmaceutical innovation for the entire world.

Health care is also generating more new job opportunities than any other sector of our economy. This is good news for Americans from every skill level and background.

All told, the U.S. health care sector accounts for 16% of our entire economy. Now, if we were talking about any other industry, this would be something to brag about, even to celebrate.

But like I said, health care is different. There is a negative side to the competitive equation we must talk about too.

The statistics can be debated. But there's little question, that as a nation, we pay more for health care than any other modern society.

Yet on a national basis, we fall short on some key indices such as infant mortality and life expectancy.

Some 47 million people are without health insurance coverage at least part of the year.

Lawsuit abuse affects many industries, but it hits health care particularly hard—not only by driving up costs but also by driving medical services away from many communities.

And because we use an employer-based system, skyrocketing costs have become a burden for our companies as they compete with foreign counterparts whose health care systems operate under different models.

Then there is what I call the "good news problem" with American health care.

The good news problem is this: The more success we have in achieving breakthroughs, saving lives, and keeping people around longer, the more costs we are creating for our society and the bigger drag we are putting on our competitiveness.

And, yet, who among us would say they wished these advances had never happened? Not me! People are living longer, healthier lives.

Now we have 77 million baby boomers approaching retirement. They are entering the period of life in which the overwhelming majority of health care costs are incurred. We cannot ignore or escape the profound impact this could have on our economy, on government budgets, and on the tax burden facing younger generations—especially if we make the wrong policy choices.

So in the remainder of my remarks today, I'd like to explore further the challenges facing American health care and some of the responses that have been proposed.

I'll then conclude by outlining five core ideas that the Chamber believes should guide any serious reform effort—ideas that can address our problems without sacrificing the many things that American health care does very, very well.

Health Care Challenges

I'm sure you've noticed that much of the current health care debate is focused on the uninsured.

This is, without question, an important challenge—but it is not the only challenge.

Issues of cost, quality, competitiveness, liability, technology, and personal responsibility are just as important.

Since World War II, and then with the advent of Medicare and Medicaid, the U.S. health care system has evolved into a blend of privately financed care—with employers playing a leading role-along with government support for the elderly and the poor.

Under this mostly voluntary approach, we have managed to insure roughly 85% of our people, with emergency care legally required for everyone else.

It may surprise you to hear that all told, the number of people with either private or government health insurance went up in 2006—to 249.8 million.

More than 201 million are covered by private insurance, the vast majority of those—177 million—with employment-based coverage under a voluntary system with no employer mandates.

Many of the insured, including all the elderly, enjoy comprehensive coverage. Medicare has recently added a prescription drug benefit that most seniors are very happy with.

In addition, as I have said, this system has played a major role in the development of almost every important medical innovation in the last 30 years.

All these advances, along with the widespread availability of a vast range of medical services, have played a major role in enabling us to live longer and better lives. In 1900, life expectancy in the United States was about 48 years. By the end of the century, it had reached 78 years and is climbing. Now that's a remarkable achievement!

At the same time, we must clearly recognize the problems.

Escalating Costs

Costs are escalating with no end in sight—for businesses, families, and the government.

Unless solutions are found—and soon—these spiraling costs will bankrupt 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.

In 2005, Americans spent $2 trillion on health care, representing 16% of our GDP—or $6,700 per person.

If we do nothing, our total costs as a percentage of GDP will balloon to 20% by 2016.

The health-care costs of Fortune 500 companies will exceed their total profits by next year.

In the struggling American auto industry, health care adds $1,600 to the cost of every GM car, more than the cost of steel. Chrysler's health costs have more than doubled since 2000.

As you know, these costs have led to some major changes. U.S. automakers are now shifting billions of dollars in retiree health-care obligations from their books to union-run trust funds, fueled by company contributions. Stay tuned …

Small businesses—the backbone of our economy—have seen health insurance premiums outpace inflation year after year, often at a double-digit clip.

For employees, insurance premiums, co-pays, and deductibles are on the rise as well.

As for Medicare and Medicaid, these entitlement programs are on a rendezvous with disaster. If cost increases for Medicare and Medicaid continue on their present course, they alone will represent 20% of GDP by 2050, or roughly today's entire federal budget.

Medical Mistakes

In addition to exploding costs, American health care faces other serious challenges. And until we fix them, we won't be able to achieve very much on the cost side.

Medical accidents are unacceptably 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.

Medical Liability

Legal redress should be available for the victims of these mistakes, 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.

Medical malpractice tort costs are the fastest-growing segment of total tort costs.

A study by the Harvard School of Public Health found that as many as 40% of the medical malpractice cases they reviewed were groundless.

Many doctors, particularly those performing high-risk procedures such as obstetrics and neurology, have been forced to quit or limit their practices.

Additional and unnecessary procedures performed for the explicit purpose of avoiding a potential lawsuit—so—called "defensive medicine"—are estimated to cost anywhere from $70 billion to $126 billion per year.

Health Care IT

Another problem is that our 21st century health care system employs 20th century technology. Most providers lack the IT systems necessary to coordinate a patient's care with other providers, share needed information, and monitor compliance with prevention and disease-management programs.

This makes it impossible for doctors to provide the highest level of care. It drives up costs by contributing to errors and redundant tests.

Consumer Responsibility

Then there's a subject that some people like to avoid. We need a far greater level of personal responsibility on the part of our citizens.

Two things need to change: First, consumers need to understand the impact of their health care decisions and the cost of their treatments.

Out-of-pocket payments have plummeted from 33% of all personal health care expenditures in 1975 to just 15% in 2005.

When someone else is picking up most of the bill, people are naturally less cost conscious.

Second, we need to take better care of ourselves. We eat too much, still smoke too much, and don't exercise enough.

Obesity is at epidemic levels, leading to more cases of diabetes, heart disease, and high blood pressure. These conditions are expensive to treat and often preventable with proper diet and exercise.

Despite massive public awareness campaigns and social rejection, roughly 20% of adults still smoke.

And it's not just about dollars and cents—it's about enjoying a better quality of life and being a more productive contributor to society.

The Uninsured

And then there's the matter of the 47 million uninsured, which has triggered the sharpest indictment of our current system and spawned a variety of proposals for an expanded government role in health care.

Let's examine the uninsured more closely.

Of those 47 million, about 10 million are non-citizens and about 9 million make more than $75,000 a year and could conceivably afford at least some measure of catastrophic coverage.

Many people are only uninsured for short periods of time. In fact, nearly half of the 47 million uninsured remain so on average for just four months.

Not everyone who is eligible for government-provided care takes advantage of their benefits.

In fact, the number of long-term uninsured Americans is probably in the range of 10 to 15 million.

This suggests a very different policy response than a program to cover 47 million people.

The Government Role in Health Care

And that brings me to the "solution du jour" we are hearing so much about today—getting the U.S. government even more deeply and systematically involved in our health care system.

The proposals come in a variety of forms and with different labels attached—universal coverage … a single-payer system … national health insurance … individual mandates … employer mandates … shared responsibility. You've heard all the buzz words.

All of them are advanced principally for the purpose of insuring the uninsured. But one way or another, intentionally or not, they would actually drive more people out of private insurance and into government insurance.

When government controls and pays for the insurance, it controls what's covered. And when government controls what's covered, it controls the care.

None of the sweeping national plans I've looked at would make a serious effort in controlling costs. Sooner or later, that would mean health care rationing. Either intentional, overt rationing—or rationing that comes in the form of long lines and waiting lists for treatments.

We don't have to imagine these outcomes. Just look at what's happening in countries that have national plans.

Waiting times to see the dentist in England are so long that there are reports of Brits pulling their own teeth.

The bureaucratic requirements imposed by the UK's National Health Service are so stifling that nurses have little time to see patients because they are overwhelmed with paperwork.

It's no wonder that more than 70,000 British patients will travel out of the country this year to seek medical treatment. By the end of the decade, that number will skyrocket to 200,000.

North of the border, not even a quarter of Canadians recently surveyed said they could get a same-day appointment when they're sick.

Almost 15% of Canadians had to wait for six months or more to receive nonemergency surgery.

While there may be a modicum of security in knowing that everyone has coverage, putting government in the driver's seat—rather than doctors and patients—carries a steep price.

Covering the uninsured is important, but if we want to do something about skyrocketing costs … if we think it's imperative to maintain and improve quality … if we want America to keep its leadership edge in medical breakthroughs … then we must chart a different course toward reform.

Where Do We Go From Here?

What is that course? Let me conclude by suggesting five core ideas that can guide our nation to more affordable and accessible quality health care.

1. First, policymakers must adhere faithfully to the Hippocratic Oath—and that is, first do no harm!

The Chamber has an experienced team of health care experts and lobbyists, and they spend a lot of time simply trying to keep government from taking our health care problems from bad to worse.

Politicians say they are concerned about coverage, cost, and quality. Yet they are constantly proposing new laws and mandates that would make health care more expensive and cause more businesses to curtail or drop coverage.

As we are seeing in the unwise effort to expand the S-CHIP program beyond its original purpose, some politicians seem intent on incrementally and systematically moving Americans out of private health care and into government programs.

Does this make any sense? Only if you believe that government has suddenly changed its ways and has learned how to provide better services more efficiently than the private sector. When has that ever happened?

2. Second, we should work to restore the viability of employer-sponsored health insurance.

Should America have gone down the road half a century ago to an employer-based system? That's an interesting question to discuss, but the discussion won't get us very far today.

The employer-sponsored system is the foundation of health care for more than 177 million Americans.

Many large employers have already made long-term, contractually binding commitments to current and retired employees.

And most employers are engaged in fierce competition for the best workers. They're going to attract those workers by providing a broad array of benefits, including health care.

To keep the system viable, we must protect the ERISA preemption—the one part of our health care system that is really working.

Without ERISA, employers would have to comply with a patchwork of state rules that would be so costly to administer that many would be forced to discontinue coverage.

Furthermore, millions of uninsured Americans work for smaller businesses that can't afford health benefits. Congress should pass Small Business Health Plans so that these companies can pool risk and purchase coverage at an affordable price.

3. The third idea is to revitalize the individual health care market.

Not an individual mandate, as some have proposed, but putting more health care products and services within the reach of everyday consumers.

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 the purchase of health insurance.

A vibrant health care marketplace with real competition and choice will, over time, relieve pressure on costs and put, at least, some coverage within reach of Americans who may be self-employed or temporarily unemployed. This could address some of the concerns Americans have about being caught without coverage.

4. Fourth, we must reform the systems that are adding expense and inefficiency without improving quality.

Health IT is not only essential for controlling costs and preventing mistakes, it can provide the information and transparency consumers need to make better health care decisions.

We must also end the randomness of jury awards and bring stability to the medical liability insurance system.

One way to do this is to remove medical malpractice claims from the tort system by creating special administrative health courts, similar to bankruptcy courts.

On the issue of quality, we can drive costs out of health care by delivering better care.

Providers must stay on the cutting edge of treatments and procedures. Studies have shown that care in America is often uneven.

For example, the use of lasers to remove fibroid tumors from the uterus is more cost-effective than a hysterectomy, but they are not always available or employed.

Use of new medications that effectively control insulin levels in diabetics can prevent blindness and amputations, but again, their use is not as prevalent as it could be.

A breakthrough medication to treat RSV, a common virus that affects newborns, reduces the need for more expensive use of older technology and the time babies spend in a neonatal intensive care units.

Simple, thorough sterilization procedures can reduce the incidence of hospital patients being infected with the superbug known as MRSA.

Reducing costs by improving the level of care is a far better approach than trying to squeeze provider reimbursements that may only temporarily patch up a budget.

The old adage "you get what you pay for" is as in health care as in any other endeavor. The government and the private sector must both reevaluate how they compensate providers, finding ways to pay market rates while rewarding quality and efficiency.

5. This brings me to our fifth idea—we need to launch a ground-up revolution in wellness and prevention across every segment of our society.

The Milken Institute estimates that a reorientation to preventive medicine could avert 40 million cases of 7 chronic diseases—cancer, diabetes, heart disease, hypertension, stroke, mental disorders, and pulmonary conditions-by the year 2023.

This would save about $1.1 trillion dollars. That's real money!

Employer-based programs—like the one sponsored by Caterpillar—can help employees make better health care decisions and lead healthier lives. We have a strong program at the Chamber as well and have seen excellent results.

Conclusion

These five ideas may not sound as dramatic or all-encompassing as the big government plans we are hearing about on the political campaign trail. But guess what—they can work. Not overnight, but over time. They can lead us to a health care system of high quality, lower costs, and greater access for all Americans.

These reforms will reduce the competitive drag on American companies, strengthen our economy, and thereby improve our ability to afford the social safety net of Medicaid and Medicare.

I recognize that these ideas won't excite the health care ideologues who are hell-bent on bringing the British, Canadian, or even the Cuban health care approaches to America no matter what the consequences.

We have been arguing over that kind of massive, systemic change in our health care system for decades. And we haven't gotten very far. The theme of this conference is forging bipartisan solutions for real change.

The ideas I have outlined can attract bipartisan support. By building on the strengths of a private system—instead of blowing that system up for the false promises of government care—we can make a real difference in people's lives starting today.

To me, that's the real change we are looking for. Change that works. Change that's right for America.

Thank you very much.