As Prepared for Delivery
National Health Care Reform: Opportunity or
Crisis?
Health Care for All Americans-Building a Bipartisan
Coalition for Real Change
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 true 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.