Category Archives: Low Quality in Health Care The Necessity for Reform Sen

Senator Baucus’ Opening Statement (Full-text) from Tuesday’s Hearing on Health Care Reform

June 3, 2008

Rising Costs, Low Quality in Health Care
Opening Statement of Senator Max Baucus (D-Mont.)

People generally — but perhaps mistakenly — attribute to Mark Twain the saying:

Everybody talks about the weather, but nobody does anything about it.”

Health care reform is like that, too. People talk about it often in Washington, D.C., and across the country. But for some time now, nobody has accomplished anything about it.

I hope and intend that the Finance Committee will prove the old saying wrong — at least when it comes to health care. I hope and intend that we can seize the opportunity to achieve what previous Congresses and Presidents were unable to do. We must find a way for all Americans to have access to affordable, high-quality health care.

Today’s hearing will take stock of the current health system. We will look at the current system so that we can craft the right reforms and make the right changes. We thereby hope to yield the desired result — affordable, high-quality health care for all Americans.

Today, we will hear about some of the major problems in the current system. We will hear about the difficulties that employers face providing health coverage to their employees and retirees. We will hear about hardships that employees have paying for their insurance and for health care that is not covered. And we will hear how the current system impedes American business in competing in the global market.

We will also look at the value of the health care that Americans buy. American health care is technologically advanced and sophisticated. But it is costly. And it lacks focus on prevention, wellness, disease-management, and other basic efforts to increase efficiency. We will hear how we could stretch our health care dollars further.

America spends more than $2 trillion a year on health care. But 47 million Americans are uninsured. That means that one out of every six Americans does not have access to health care, except in overcrowded emergency rooms. So one out of very six Americans has to worry about every sniffle and every cough turning into something serious.

In some parts of the country, the share without insurance is even greater. In my home state of Montana, one in five people lack health insurance. And in Texas, one in four is uninsured. This is unacceptable.

And the trends are heading in the wrong direction. The number of uninsured Americans increases every year. The cost of insurance continues to increase faster than the economy and faster than wages. Fewer employers offer coverage to their employees. And fewer employees are able to afford it.

Benefits have been scaled back. Co-pays have been expanded. People are paying more and getting less. And the quality of care being provided is not as high as it should be.

We can do better. We can increase the number of Americans who have health coverage. We can lower the cost of insurance to help both employers and employees. And we can improve the quality of care to help everyone lead longer, happier, and more productive lives.

We can make American businesses of all sizes more competitive by helping them to provide health coverage to their employees. By providing all Americans with affordable, high-quality health care, America can remain an attractive option for new job growth. We should not just talk about jobs leaving our shores because other destinations have health coverage that is less expensive. We need to do something about it.

Our efforts at reform need to include ways to control costs. America simply cannot sustain its current rate of growth in health care spending over the long run. We must find ways to bend the cost curve. Otherwise, health spending will consume our entire economy.

Our efforts at reform must also include ways to improve the quality of care. America trains the world’s best doctors, operates some of the best hospitals, and develops the most advanced medical technology. But our health outcomes lag behind those of other industrialized countries.

We must demand better health outcomes from our health system. And our efforts at reform must include a new focus on prevention, wellness, and chronic disease.

Health care should be about fostering good health, not just treating illness. We are gaining knowledge about how to prevent and manage diseases. If we expand and apply that knowledge, we can improve health outcomes and decrease the cost of health care.

Our current system leaves too many people without coverage. It hinders employers. It leaves employees exposed. Our current system is in need of reform. But we must do it right. In order to do it right, we need to ask experts for help.

Today we have a panel of such experts to help us. This is the second in the series of hearings on health care reform that the Finance Committee will hold this year.

These four witnesses can help us to understand the major issues in our current system and why we need reform. Their diverse perspectives will help us to focus reform so that we reach our goal of having affordable, high-quality health care for all Americans.

So today let us talk again about health care reform. Let us hear from the experts about how to do it right. And let us plan, next year, to actually doing something about it.

Max Baucus (D, MT),
United States Senator,
and Chairman, Senate
Committee on Finance

[Emphasis supplied]

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Senator Baucus’ Opening Statement (Full-text) from Tuesday’s Hearing on Health Care Reform

June 3, 2008

Rising Costs, Low Quality in Health Care
Opening Statement of Senator Max Baucus (D-Mont.)

People generally — but perhaps mistakenly — attribute to Mark Twain the saying:

Everybody talks about the weather, but nobody does anything about it.”

Health care reform is like that, too. People talk about it often in Washington, D.C., and across the country. But for some time now, nobody has accomplished anything about it.

I hope and intend that the Finance Committee will prove the old saying wrong — at least when it comes to health care. I hope and intend that we can seize the opportunity to achieve what previous Congresses and Presidents were unable to do. We must find a way for all Americans to have access to affordable, high-quality health care.

Today’s hearing will take stock of the current health system. We will look at the current system so that we can craft the right reforms and make the right changes. We thereby hope to yield the desired result — affordable, high-quality health care for all Americans.

Today, we will hear about some of the major problems in the current system. We will hear about the difficulties that employers face providing health coverage to their employees and retirees. We will hear about hardships that employees have paying for their insurance and for health care that is not covered. And we will hear how the current system impedes American business in competing in the global market.

We will also look at the value of the health care that Americans buy. American health care is technologically advanced and sophisticated. But it is costly. And it lacks focus on prevention, wellness, disease-management, and other basic efforts to increase efficiency. We will hear how we could stretch our health care dollars further.

America spends more than $2 trillion a year on health care. But 47 million Americans are uninsured. That means that one out of every six Americans does not have access to health care, except in overcrowded emergency rooms. So one out of very six Americans has to worry about every sniffle and every cough turning into something serious.

In some parts of the country, the share without insurance is even greater. In my home state of Montana, one in five people lack health insurance. And in Texas, one in four is uninsured. This is unacceptable.

And the trends are heading in the wrong direction. The number of uninsured Americans increases every year. The cost of insurance continues to increase faster than the economy and faster than wages. Fewer employers offer coverage to their employees. And fewer employees are able to afford it.

Benefits have been scaled back. Co-pays have been expanded. People are paying more and getting less. And the quality of care being provided is not as high as it should be.

We can do better. We can increase the number of Americans who have health coverage. We can lower the cost of insurance to help both employers and employees. And we can improve the quality of care to help everyone lead longer, happier, and more productive lives.

We can make American businesses of all sizes more competitive by helping them to provide health coverage to their employees. By providing all Americans with affordable, high-quality health care, America can remain an attractive option for new job growth. We should not just talk about jobs leaving our shores because other destinations have health coverage that is less expensive. We need to do something about it.

Our efforts at reform need to include ways to control costs. America simply cannot sustain its current rate of growth in health care spending over the long run. We must find ways to bend the cost curve. Otherwise, health spending will consume our entire economy.

Our efforts at reform must also include ways to improve the quality of care. America trains the world’s best doctors, operates some of the best hospitals, and develops the most advanced medical technology. But our health outcomes lag behind those of other industrialized countries.

We must demand better health outcomes from our health system. And our efforts at reform must include a new focus on prevention, wellness, and chronic disease.

Health care should be about fostering good health, not just treating illness. We are gaining knowledge about how to prevent and manage diseases. If we expand and apply that knowledge, we can improve health outcomes and decrease the cost of health care.

Our current system leaves too many people without coverage. It hinders employers. It leaves employees exposed. Our current system is in need of reform. But we must do it right. In order to do it right, we need to ask experts for help.

Today we have a panel of such experts to help us. This is the second in the series of hearings on health care reform that the Finance Committee will hold this year.

These four witnesses can help us to understand the major issues in our current system and why we need reform. Their diverse perspectives will help us to focus reform so that we reach our goal of having affordable, high-quality health care for all Americans.

So today let us talk again about health care reform. Let us hear from the experts about how to do it right. And let us plan, next year, to actually doing something about it.

Max Baucus (D, MT),
United States Senator,
and Chairman, Senate
Committee on Finance

[Emphasis supplied]

Senator Baucus’ Opening Statement (Full-text) from Tuesday’s Hearing on Health Care Reform

June 3, 2008

Rising Costs, Low Quality in Health Care
Opening Statement of Senator Max Baucus (D-Mont.)

People generally — but perhaps mistakenly — attribute to Mark Twain the saying:

Everybody talks about the weather, but nobody does anything about it.”

Health care reform is like that, too. People talk about it often in Washington, D.C., and across the country. But for some time now, nobody has accomplished anything about it.

I hope and intend that the Finance Committee will prove the old saying wrong — at least when it comes to health care. I hope and intend that we can seize the opportunity to achieve what previous Congresses and Presidents were unable to do. We must find a way for all Americans to have access to affordable, high-quality health care.

Today’s hearing will take stock of the current health system. We will look at the current system so that we can craft the right reforms and make the right changes. We thereby hope to yield the desired result — affordable, high-quality health care for all Americans.

Today, we will hear about some of the major problems in the current system. We will hear about the difficulties that employers face providing health coverage to their employees and retirees. We will hear about hardships that employees have paying for their insurance and for health care that is not covered. And we will hear how the current system impedes American business in competing in the global market.

We will also look at the value of the health care that Americans buy. American health care is technologically advanced and sophisticated. But it is costly. And it lacks focus on prevention, wellness, disease-management, and other basic efforts to increase efficiency. We will hear how we could stretch our health care dollars further.

America spends more than $2 trillion a year on health care. But 47 million Americans are uninsured. That means that one out of every six Americans does not have access to health care, except in overcrowded emergency rooms. So one out of very six Americans has to worry about every sniffle and every cough turning into something serious.

In some parts of the country, the share without insurance is even greater. In my home state of Montana, one in five people lack health insurance. And in Texas, one in four is uninsured. This is unacceptable.

And the trends are heading in the wrong direction. The number of uninsured Americans increases every year. The cost of insurance continues to increase faster than the economy and faster than wages. Fewer employers offer coverage to their employees. And fewer employees are able to afford it.

Benefits have been scaled back. Co-pays have been expanded. People are paying more and getting less. And the quality of care being provided is not as high as it should be.

We can do better. We can increase the number of Americans who have health coverage. We can lower the cost of insurance to help both employers and employees. And we can improve the quality of care to help everyone lead longer, happier, and more productive lives.

We can make American businesses of all sizes more competitive by helping them to provide health coverage to their employees. By providing all Americans with affordable, high-quality health care, America can remain an attractive option for new job growth. We should not just talk about jobs leaving our shores because other destinations have health coverage that is less expensive. We need to do something about it.

Our efforts at reform need to include ways to control costs. America simply cannot sustain its current rate of growth in health care spending over the long run. We must find ways to bend the cost curve. Otherwise, health spending will consume our entire economy.

Our efforts at reform must also include ways to improve the quality of care. America trains the world’s best doctors, operates some of the best hospitals, and develops the most advanced medical technology. But our health outcomes lag behind those of other industrialized countries.

We must demand better health outcomes from our health system. And our efforts at reform must include a new focus on prevention, wellness, and chronic disease.

Health care should be about fostering good health, not just treating illness. We are gaining knowledge about how to prevent and manage diseases. If we expand and apply that knowledge, we can improve health outcomes and decrease the cost of health care.

Our current system leaves too many people without coverage. It hinders employers. It leaves employees exposed. Our current system is in need of reform. But we must do it right. In order to do it right, we need to ask experts for help.

Today we have a panel of such experts to help us. This is the second in the series of hearings on health care reform that the Finance Committee will hold this year.

These four witnesses can help us to understand the major issues in our current system and why we need reform. Their diverse perspectives will help us to focus reform so that we reach our goal of having affordable, high-quality health care for all Americans.

So today let us talk again about health care reform. Let us hear from the experts about how to do it right. And let us plan, next year, to actually doing something about it.

Max Baucus (D, MT),
United States Senator,
and Chairman, Senate
Committee on Finance

[Emphasis supplied]

Senator Baucus’ Opening Statement (Full-text) from Tuesday’s Hearing on Health Care Reform

June 3, 2008

Rising Costs, Low Quality in Health Care
Opening Statement of Senator Max Baucus (D-Mont.)

People generally — but perhaps mistakenly — attribute to Mark Twain the saying:

Everybody talks about the weather, but nobody does anything about it.”

Health care reform is like that, too. People talk about it often in Washington, D.C., and across the country. But for some time now, nobody has accomplished anything about it.

I hope and intend that the Finance Committee will prove the old saying wrong — at least when it comes to health care. I hope and intend that we can seize the opportunity to achieve what previous Congresses and Presidents were unable to do. We must find a way for all Americans to have access to affordable, high-quality health care.

Today’s hearing will take stock of the current health system. We will look at the current system so that we can craft the right reforms and make the right changes. We thereby hope to yield the desired result — affordable, high-quality health care for all Americans.

Today, we will hear about some of the major problems in the current system. We will hear about the difficulties that employers face providing health coverage to their employees and retirees. We will hear about hardships that employees have paying for their insurance and for health care that is not covered. And we will hear how the current system impedes American business in competing in the global market.

We will also look at the value of the health care that Americans buy. American health care is technologically advanced and sophisticated. But it is costly. And it lacks focus on prevention, wellness, disease-management, and other basic efforts to increase efficiency. We will hear how we could stretch our health care dollars further.

America spends more than $2 trillion a year on health care. But 47 million Americans are uninsured. That means that one out of every six Americans does not have access to health care, except in overcrowded emergency rooms. So one out of very six Americans has to worry about every sniffle and every cough turning into something serious.

In some parts of the country, the share without insurance is even greater. In my home state of Montana, one in five people lack health insurance. And in Texas, one in four is uninsured. This is unacceptable.

And the trends are heading in the wrong direction. The number of uninsured Americans increases every year. The cost of insurance continues to increase faster than the economy and faster than wages. Fewer employers offer coverage to their employees. And fewer employees are able to afford it.

Benefits have been scaled back. Co-pays have been expanded. People are paying more and getting less. And the quality of care being provided is not as high as it should be.

We can do better. We can increase the number of Americans who have health coverage. We can lower the cost of insurance to help both employers and employees. And we can improve the quality of care to help everyone lead longer, happier, and more productive lives.

We can make American businesses of all sizes more competitive by helping them to provide health coverage to their employees. By providing all Americans with affordable, high-quality health care, America can remain an attractive option for new job growth. We should not just talk about jobs leaving our shores because other destinations have health coverage that is less expensive. We need to do something about it.

Our efforts at reform need to include ways to control costs. America simply cannot sustain its current rate of growth in health care spending over the long run. We must find ways to bend the cost curve. Otherwise, health spending will consume our entire economy.

Our efforts at reform must also include ways to improve the quality of care. America trains the world’s best doctors, operates some of the best hospitals, and develops the most advanced medical technology. But our health outcomes lag behind those of other industrialized countries.

We must demand better health outcomes from our health system. And our efforts at reform must include a new focus on prevention, wellness, and chronic disease.

Health care should be about fostering good health, not just treating illness. We are gaining knowledge about how to prevent and manage diseases. If we expand and apply that knowledge, we can improve health outcomes and decrease the cost of health care.

Our current system leaves too many people without coverage. It hinders employers. It leaves employees exposed. Our current system is in need of reform. But we must do it right. In order to do it right, we need to ask experts for help.

Today we have a panel of such experts to help us. This is the second in the series of hearings on health care reform that the Finance Committee will hold this year.

These four witnesses can help us to understand the major issues in our current system and why we need reform. Their diverse perspectives will help us to focus reform so that we reach our goal of having affordable, high-quality health care for all Americans.

So today let us talk again about health care reform. Let us hear from the experts about how to do it right. And let us plan, next year, to actually doing something about it.

Max Baucus (D, MT),
United States Senator,
and Chairman, Senate
Committee on Finance

[Emphasis supplied]

Senator Chuck Grassley’s Opening Statement (and all Witnesses’ Statements) from the "Health Care Reform Hearing" Held this Morning — June 3, 2008

Were I a betting man, I’d predict that the Junior Senator from Illinois will be sitting at 1600 Pennsylvania Avenue, on the morning of January 21, 2009 — and, were I a betting man, I’d be betting that his Democratic majority will be “reform-minded” on a wide range of topics — from the cost of oil, to this seemingly-endless war, to NSLs, to FISA-abuses, to. . . . well, yes, even to US Health Care System-wide reform. [Note we are hearing from a Republican, immediately below. That alone speaks volumes, here.]

So, I think it would be rather wise to watch these headlights, now approaching — for a bit, here, from the other end-of-the-tunnel — and, were I the CEO of a Big Pharma company. . . . I’d. get. off. of. the. tracks.

But that’s just me. [My live-blogging transcript — of this Hearing may be accessed here.]

June 3, 2008

Rising Costs, Low Quality in Health Care
Opening Statement of Sen. Chuck Grassley

Thank you, Chairman Baucus, for holding this hearing. These next two hearings are very helpful for setting the tone for the Health Care Reform Summit we are hosting in less than two weeks.

Today’s hearing focuses on the relationship between cost and quality in health care. Simply put, are we getting what we’re paying for? In America, we pay a lot for health care. According to the Kaiser Family Foundation, the United States spends more on health care as both a percent of GDP and on a per capita basis than any other OECD country in the world.

Well, if we are going to be spending that much money on health care, we should have the best health care in the world, right? While health care spending continues to rise, the U.S. lags considerably behind other OECD countries on indicators of health care quality. Obviously, that’s unacceptable.

We need to do more to improve the quality of care Americans receive. And we have certainly made some forward progress on the Medicare front. Transforming the way in which Medicare pays for health care has been a bipartisan priority Senator Baucus and I have worked on for some time now.

Last Congress, we introduced the Medicare Value Purchasing Act or MVP Act. This bill would start all Medicare providers on the path to being based more on the quality of care instead than volume of services.

We have accomplished much since the introduction of the MVP Act. Currently, a number of Medicare providers, including hospitals, ambulatory surgical centers, home health agencies and physicians, report quality measures in return for a full annual payment update or bonus. The reporting of quality measures is an important first step toward transforming the Medicare program from a passive payer for health care to a value purchaser. Hospitals by far are the furthest along in reaching this goal. A Medicare demonstration project on value based purchasing for hospital services showed promising results. Last year, the Secretary of Health and Human Services released a value based purchasing implementation plan for Medicare hospital services. It’s obvious that a lot of thought was put into coming up with this plan. I look forward to working with Senator Baucus and other members of the Committee to implement value-based purchasing for Medicare hospital services.

When the federal government can play a role in improving quality, we should. We should also ensure that nothing we do interferes with private sector efforts to improve quality today. I am looking forward to the testimony of our witnesses today so we might learn more on what we should be doing to make certain Americans receive, not just the best care, but the right care.



United States Senator
Ranking Member,
Committee on Finance

[Emphasis supplied.]

UPDATED — Click on Witness Names to read Witness Statements (in PDF Format):

Paul B.Ginsburg, Ph.D, President, Center for Studying Health System Change, Washington, DC

Elizabeth McGlynn, Ph.D, Associate Director, RAND Health, Distinguished Chair in Health Quality, Santa Monica, CA

Arlene Holt Baker, Executive Vice President, AFL-CIO, Washington, DC

Felicia Fields, Group Vice President, Human Resources and Corporate Services, Ford Motor Company, Dearborn, MI

Okay — this just became a [much] longer post — I simply must highlight some of Dr. Ginsburg’s wise remarks, in full-text, as well, here:

. . . .Rising health care costs and stagnant incomes also are increasing the financial burden of health care for American families. More than one in six Americans in 2004 — or 17.7 percent of the nonelderly population—lived in families spending more than 10percent of after-tax income on health care, including health insurance premium payments and direct spending on services, up from 15.9 percent in 2001. Despite the overall increase in financial burden, the share of total health spending paid for out of pocket actually decreased slightly from 34.8 percent in 2001 to 33.6 percent in 2004, meaning that much of the increased burden was a result of health spending growing more rapidly than income.

Finally, rising health care costs also pose a problem for the federal and state governments, which finance 40 percent of national health expenditures, mostly through Medicare and Medicaid. With public revenues staying at a relatively constant percentage of national income, growth in outlays for these programs in excess of growth in income that is taxed poses particular strains on public budgets. As the economy slows, states are facing these strains now in an acute manner, as Medicaid outlay growth exceeds the trend in state revenues by a large margin. The strain will become acute for the federal government as concerns about rising deficits increase and when the baby boom generation begins to become eligible for Medicare.

While I have touched on a number of the drivers of rapidly rising costs, I want to emphasize one core factor that is behind much of the cost problem. In the United States, our culture emphasizes that insured people should get all the medical care they want, regardless of cost.

This works against attempts to discourage the development of treatments in which the benefits are uncertain or known to be small. Until the public becomes more aware of what is involved in truly containing costs, rising health care costs will continue to strain the resources of government purchasers, employers and consumers. . . .

The Need for Leadership

The next few years are likely to be a period of particularly intense concern about costs. . . .

One way to view many of the options [to address spiraling costs] is to classify them into demand-side and supply-side approaches. A key demand-side approach, which has been pursued broadly by the private sector—but not the public sector—is increased patient cost sharing at the point of service.

Although consumer-directed health plans and their large deductibles and savings accounts have received the most attention, most people with employer-sponsored coverage are enrolled in preferred provider organizations (PPOs) (57%) and HMOs (21%). So the changing benefit structures of PPOs and HMOs toward higher patient cost sharing is a more significant development. Although these steps clearly lead to reduced spending, the question is how much of a reduction can be achieved without major sacrifices in other societal goals, such as access to care and protection from financial hardship.

Should policymakers want to push the demand-side approach further, the most powerful tool would be changes in the tax treatment of health insurance. . . . Government can also contribute to this approach by continuing to expand provider quality reporting to Medicare and making data and information from Medicare claims files available to the public.

Supply-side approaches include reforming provider-payment mechanisms and administrative controls on service use. Because private insurers and Medicaid programs now follow Medicare provider payment mechanisms extensively, this presents an opportunity for federal policymakers to influence the entire delivery system. There is ample evidence that Medicare payment structures for physicians do not reflect relative costs and are providing inadvertent incentives to specialize in more profitable services, such as imaging and minor procedures. Revising Medicare payment structures to better reflect relative costs could make an important contribution to controlling costs.

Building on revised Medicare payment structures, payment mechanisms that depart from fee for service have the potential to increase provider efficiency. This includes paying for major procedures on a per-episode basis that includes all providers involved in the episode of care and paying for the management of chronic disease, including care coordination, on a capitated basis.

High-performance networks and newer forms of pay for performance are examples of initial steps in this direction. But with the fragmented payment system limiting the effectiveness of these approaches, Medicare leadership can potentially have a large impact.

Research on spending trends has highlighted the opportunity to contain costs — for at least the intermediate term — if wellness can be successfully promoted. Both employers and the public sector can support efforts of individuals to reduce high-risk behavior. But these wellness and prevention initiatives are at an early stage, without particular approaches demonstrating effectiveness. Many are intrigued with the notion of promoting wellness, but we are not yet at the point of having tools with proven effectiveness.

Reflecting on the U.S. experience with health care cost containment, what is striking is the consistency with which leaders in both the public and private sectors have avoided the idea that real cost containment involves real sacrifice — patients going without services that may provide some benefit, or physicians, hospitals and insurers settling for smaller incomes or profits. After all, all medical care spending is somebody’s income. Often what we hear from leaders is more wishes about directions that the health care system should take than concrete policy options to lead it to happen. More effective ways to cope with limited resources will depend on political, professional, corporate, labor and opinion leaders articulating the need to confront trade-offs among clinical effectiveness, costs and equity. . . .

Well-put, Dr. Ginsburg. [As ever, emphasis supplied. I’ve also placed these — all the links to the witnesses’ statements — in the live-blog Hearing archive, immediately below.]

Senator Chuck Grassley’s Opening Statement (and all Witnesses’ Statements) from the "Health Care Reform Hearing" Held this Morning — June 3, 2008

Were I a betting man, I’d predict that the Junior Senator from Illinois will be sitting at 1600 Pennsylvania Avenue, on the morning of January 21, 2009 — and, were I a betting man, I’d be betting that his Democratic majority will be “reform-minded” on a wide range of topics — from the cost of oil, to this seemingly-endless war, to NSLs, to FISA-abuses, to. . . . well, yes, even to US Health Care System-wide reform. [Note we are hearing from a Republican, immediately below. That alone speaks volumes, here.]

So, I think it would be rather wise to watch these headlights, now approaching — for a bit, here, from the other end-of-the-tunnel — and, were I the CEO of a Big Pharma company. . . . I’d. get. off. of. the. tracks.

But that’s just me. [My live-blogging transcript — of this Hearing may be accessed here.]

June 3, 2008

Rising Costs, Low Quality in Health Care
Opening Statement of Sen. Chuck Grassley

Thank you, Chairman Baucus, for holding this hearing. These next two hearings are very helpful for setting the tone for the Health Care Reform Summit we are hosting in less than two weeks.

Today’s hearing focuses on the relationship between cost and quality in health care. Simply put, are we getting what we’re paying for? In America, we pay a lot for health care. According to the Kaiser Family Foundation, the United States spends more on health care as both a percent of GDP and on a per capita basis than any other OECD country in the world.

Well, if we are going to be spending that much money on health care, we should have the best health care in the world, right? While health care spending continues to rise, the U.S. lags considerably behind other OECD countries on indicators of health care quality. Obviously, that’s unacceptable.

We need to do more to improve the quality of care Americans receive. And we have certainly made some forward progress on the Medicare front. Transforming the way in which Medicare pays for health care has been a bipartisan priority Senator Baucus and I have worked on for some time now.

Last Congress, we introduced the Medicare Value Purchasing Act or MVP Act. This bill would start all Medicare providers on the path to being based more on the quality of care instead than volume of services.

We have accomplished much since the introduction of the MVP Act. Currently, a number of Medicare providers, including hospitals, ambulatory surgical centers, home health agencies and physicians, report quality measures in return for a full annual payment update or bonus. The reporting of quality measures is an important first step toward transforming the Medicare program from a passive payer for health care to a value purchaser. Hospitals by far are the furthest along in reaching this goal. A Medicare demonstration project on value based purchasing for hospital services showed promising results. Last year, the Secretary of Health and Human Services released a value based purchasing implementation plan for Medicare hospital services. It’s obvious that a lot of thought was put into coming up with this plan. I look forward to working with Senator Baucus and other members of the Committee to implement value-based purchasing for Medicare hospital services.

When the federal government can play a role in improving quality, we should. We should also ensure that nothing we do interferes with private sector efforts to improve quality today. I am looking forward to the testimony of our witnesses today so we might learn more on what we should be doing to make certain Americans receive, not just the best care, but the right care.



United States Senator
Ranking Member,
Committee on Finance

[Emphasis supplied.]

UPDATED — Click on Witness Names to read Witness Statements (in PDF Format):

Paul B.Ginsburg, Ph.D, President, Center for Studying Health System Change, Washington, DC

Elizabeth McGlynn, Ph.D, Associate Director, RAND Health, Distinguished Chair in Health Quality, Santa Monica, CA

Arlene Holt Baker, Executive Vice President, AFL-CIO, Washington, DC

Felicia Fields, Group Vice President, Human Resources and Corporate Services, Ford Motor Company, Dearborn, MI

Okay — this just became a [much] longer post — I simply must highlight some of Dr. Ginsburg’s wise remarks, in full-text, as well, here:

. . . .Rising health care costs and stagnant incomes also are increasing the financial burden of health care for American families. More than one in six Americans in 2004 — or 17.7 percent of the nonelderly population—lived in families spending more than 10percent of after-tax income on health care, including health insurance premium payments and direct spending on services, up from 15.9 percent in 2001. Despite the overall increase in financial burden, the share of total health spending paid for out of pocket actually decreased slightly from 34.8 percent in 2001 to 33.6 percent in 2004, meaning that much of the increased burden was a result of health spending growing more rapidly than income.

Finally, rising health care costs also pose a problem for the federal and state governments, which finance 40 percent of national health expenditures, mostly through Medicare and Medicaid. With public revenues staying at a relatively constant percentage of national income, growth in outlays for these programs in excess of growth in income that is taxed poses particular strains on public budgets. As the economy slows, states are facing these strains now in an acute manner, as Medicaid outlay growth exceeds the trend in state revenues by a large margin. The strain will become acute for the federal government as concerns about rising deficits increase and when the baby boom generation begins to become eligible for Medicare.

While I have touched on a number of the drivers of rapidly rising costs, I want to emphasize one core factor that is behind much of the cost problem. In the United States, our culture emphasizes that insured people should get all the medical care they want, regardless of cost.

This works against attempts to discourage the development of treatments in which the benefits are uncertain or known to be small. Until the public becomes more aware of what is involved in truly containing costs, rising health care costs will continue to strain the resources of government purchasers, employers and consumers. . . .

The Need for Leadership

The next few years are likely to be a period of particularly intense concern about costs. . . .

One way to view many of the options [to address spiraling costs] is to classify them into demand-side and supply-side approaches. A key demand-side approach, which has been pursued broadly by the private sector—but not the public sector—is increased patient cost sharing at the point of service.

Although consumer-directed health plans and their large deductibles and savings accounts have received the most attention, most people with employer-sponsored coverage are enrolled in preferred provider organizations (PPOs) (57%) and HMOs (21%). So the changing benefit structures of PPOs and HMOs toward higher patient cost sharing is a more significant development. Although these steps clearly lead to reduced spending, the question is how much of a reduction can be achieved without major sacrifices in other societal goals, such as access to care and protection from financial hardship.

Should policymakers want to push the demand-side approach further, the most powerful tool would be changes in the tax treatment of health insurance. . . . Government can also contribute to this approach by continuing to expand provider quality reporting to Medicare and making data and information from Medicare claims files available to the public.

Supply-side approaches include reforming provider-payment mechanisms and administrative controls on service use. Because private insurers and Medicaid programs now follow Medicare provider payment mechanisms extensively, this presents an opportunity for federal policymakers to influence the entire delivery system. There is ample evidence that Medicare payment structures for physicians do not reflect relative costs and are providing inadvertent incentives to specialize in more profitable services, such as imaging and minor procedures. Revising Medicare payment structures to better reflect relative costs could make an important contribution to controlling costs.

Building on revised Medicare payment structures, payment mechanisms that depart from fee for service have the potential to increase provider efficiency. This includes paying for major procedures on a per-episode basis that includes all providers involved in the episode of care and paying for the management of chronic disease, including care coordination, on a capitated basis.

High-performance networks and newer forms of pay for performance are examples of initial steps in this direction. But with the fragmented payment system limiting the effectiveness of these approaches, Medicare leadership can potentially have a large impact.

Research on spending trends has highlighted the opportunity to contain costs — for at least the intermediate term — if wellness can be successfully promoted. Both employers and the public sector can support efforts of individuals to reduce high-risk behavior. But these wellness and prevention initiatives are at an early stage, without particular approaches demonstrating effectiveness. Many are intrigued with the notion of promoting wellness, but we are not yet at the point of having tools with proven effectiveness.

Reflecting on the U.S. experience with health care cost containment, what is striking is the consistency with which leaders in both the public and private sectors have avoided the idea that real cost containment involves real sacrifice — patients going without services that may provide some benefit, or physicians, hospitals and insurers settling for smaller incomes or profits. After all, all medical care spending is somebody’s income. Often what we hear from leaders is more wishes about directions that the health care system should take than concrete policy options to lead it to happen. More effective ways to cope with limited resources will depend on political, professional, corporate, labor and opinion leaders articulating the need to confront trade-offs among clinical effectiveness, costs and equity. . . .

Well-put, Dr. Ginsburg. [As ever, emphasis supplied. I’ve also placed these — all the links to the witnesses’ statements — in the live-blog Hearing archive, immediately below.]

Senator Chuck Grassley’s Opening Statement (and all Witnesses’ Statements) from the "Health Care Reform Hearing" Held this Morning — June 3, 2008

Were I a betting man, I’d predict that the Junior Senator from Illinois will be sitting at 1600 Pennsylvania Avenue, on the morning of January 21, 2009 — and, were I a betting man, I’d be betting that his Democratic majority will be “reform-minded” on a wide range of topics — from the cost of oil, to this seemingly-endless war, to NSLs, to FISA-abuses, to. . . . well, yes, even to US Health Care System-wide reform. [Note we are hearing from a Republican, immediately below. That alone speaks volumes, here.]

So, I think it would be rather wise to watch these headlights, now approaching — for a bit, here, from the other end-of-the-tunnel — and, were I the CEO of a Big Pharma company. . . . I’d. get. off. of. the. tracks.

But that’s just me. [My live-blogging transcript — of this Hearing may be accessed here.]

June 3, 2008

Rising Costs, Low Quality in Health Care
Opening Statement of Sen. Chuck Grassley

Thank you, Chairman Baucus, for holding this hearing. These next two hearings are very helpful for setting the tone for the Health Care Reform Summit we are hosting in less than two weeks.

Today’s hearing focuses on the relationship between cost and quality in health care. Simply put, are we getting what we’re paying for? In America, we pay a lot for health care. According to the Kaiser Family Foundation, the United States spends more on health care as both a percent of GDP and on a per capita basis than any other OECD country in the world.

Well, if we are going to be spending that much money on health care, we should have the best health care in the world, right? While health care spending continues to rise, the U.S. lags considerably behind other OECD countries on indicators of health care quality. Obviously, that’s unacceptable.

We need to do more to improve the quality of care Americans receive. And we have certainly made some forward progress on the Medicare front. Transforming the way in which Medicare pays for health care has been a bipartisan priority Senator Baucus and I have worked on for some time now.

Last Congress, we introduced the Medicare Value Purchasing Act or MVP Act. This bill would start all Medicare providers on the path to being based more on the quality of care instead than volume of services.

We have accomplished much since the introduction of the MVP Act. Currently, a number of Medicare providers, including hospitals, ambulatory surgical centers, home health agencies and physicians, report quality measures in return for a full annual payment update or bonus. The reporting of quality measures is an important first step toward transforming the Medicare program from a passive payer for health care to a value purchaser. Hospitals by far are the furthest along in reaching this goal. A Medicare demonstration project on value based purchasing for hospital services showed promising results. Last year, the Secretary of Health and Human Services released a value based purchasing implementation plan for Medicare hospital services. It’s obvious that a lot of thought was put into coming up with this plan. I look forward to working with Senator Baucus and other members of the Committee to implement value-based purchasing for Medicare hospital services.

When the federal government can play a role in improving quality, we should. We should also ensure that nothing we do interferes with private sector efforts to improve quality today. I am looking forward to the testimony of our witnesses today so we might learn more on what we should be doing to make certain Americans receive, not just the best care, but the right care.



United States Senator
Ranking Member,
Committee on Finance

[Emphasis supplied.]

UPDATED — Click on Witness Names to read Witness Statements (in PDF Format):

Paul B.Ginsburg, Ph.D, President, Center for Studying Health System Change, Washington, DC

Elizabeth McGlynn, Ph.D, Associate Director, RAND Health, Distinguished Chair in Health Quality, Santa Monica, CA

Arlene Holt Baker, Executive Vice President, AFL-CIO, Washington, DC

Felicia Fields, Group Vice President, Human Resources and Corporate Services, Ford Motor Company, Dearborn, MI

Okay — this just became a [much] longer post — I simply must highlight some of Dr. Ginsburg’s wise remarks, in full-text, as well, here:

. . . .Rising health care costs and stagnant incomes also are increasing the financial burden of health care for American families. More than one in six Americans in 2004 — or 17.7 percent of the nonelderly population—lived in families spending more than 10percent of after-tax income on health care, including health insurance premium payments and direct spending on services, up from 15.9 percent in 2001. Despite the overall increase in financial burden, the share of total health spending paid for out of pocket actually decreased slightly from 34.8 percent in 2001 to 33.6 percent in 2004, meaning that much of the increased burden was a result of health spending growing more rapidly than income.

Finally, rising health care costs also pose a problem for the federal and state governments, which finance 40 percent of national health expenditures, mostly through Medicare and Medicaid. With public revenues staying at a relatively constant percentage of national income, growth in outlays for these programs in excess of growth in income that is taxed poses particular strains on public budgets. As the economy slows, states are facing these strains now in an acute manner, as Medicaid outlay growth exceeds the trend in state revenues by a large margin. The strain will become acute for the federal government as concerns about rising deficits increase and when the baby boom generation begins to become eligible for Medicare.

While I have touched on a number of the drivers of rapidly rising costs, I want to emphasize one core factor that is behind much of the cost problem. In the United States, our culture emphasizes that insured people should get all the medical care they want, regardless of cost.

This works against attempts to discourage the development of treatments in which the benefits are uncertain or known to be small. Until the public becomes more aware of what is involved in truly containing costs, rising health care costs will continue to strain the resources of government purchasers, employers and consumers. . . .

The Need for Leadership

The next few years are likely to be a period of particularly intense concern about costs. . . .

One way to view many of the options [to address spiraling costs] is to classify them into demand-side and supply-side approaches. A key demand-side approach, which has been pursued broadly by the private sector—but not the public sector—is increased patient cost sharing at the point of service.

Although consumer-directed health plans and their large deductibles and savings accounts have received the most attention, most people with employer-sponsored coverage are enrolled in preferred provider organizations (PPOs) (57%) and HMOs (21%). So the changing benefit structures of PPOs and HMOs toward higher patient cost sharing is a more significant development. Although these steps clearly lead to reduced spending, the question is how much of a reduction can be achieved without major sacrifices in other societal goals, such as access to care and protection from financial hardship.

Should policymakers want to push the demand-side approach further, the most powerful tool would be changes in the tax treatment of health insurance. . . . Government can also contribute to this approach by continuing to expand provider quality reporting to Medicare and making data and information from Medicare claims files available to the public.

Supply-side approaches include reforming provider-payment mechanisms and administrative controls on service use. Because private insurers and Medicaid programs now follow Medicare provider payment mechanisms extensively, this presents an opportunity for federal policymakers to influence the entire delivery system. There is ample evidence that Medicare payment structures for physicians do not reflect relative costs and are providing inadvertent incentives to specialize in more profitable services, such as imaging and minor procedures. Revising Medicare payment structures to better reflect relative costs could make an important contribution to controlling costs.

Building on revised Medicare payment structures, payment mechanisms that depart from fee for service have the potential to increase provider efficiency. This includes paying for major procedures on a per-episode basis that includes all providers involved in the episode of care and paying for the management of chronic disease, including care coordination, on a capitated basis.

High-performance networks and newer forms of pay for performance are examples of initial steps in this direction. But with the fragmented payment system limiting the effectiveness of these approaches, Medicare leadership can potentially have a large impact.

Research on spending trends has highlighted the opportunity to contain costs — for at least the intermediate term — if wellness can be successfully promoted. Both employers and the public sector can support efforts of individuals to reduce high-risk behavior. But these wellness and prevention initiatives are at an early stage, without particular approaches demonstrating effectiveness. Many are intrigued with the notion of promoting wellness, but we are not yet at the point of having tools with proven effectiveness.

Reflecting on the U.S. experience with health care cost containment, what is striking is the consistency with which leaders in both the public and private sectors have avoided the idea that real cost containment involves real sacrifice — patients going without services that may provide some benefit, or physicians, hospitals and insurers settling for smaller incomes or profits. After all, all medical care spending is somebody’s income. Often what we hear from leaders is more wishes about directions that the health care system should take than concrete policy options to lead it to happen. More effective ways to cope with limited resources will depend on political, professional, corporate, labor and opinion leaders articulating the need to confront trade-offs among clinical effectiveness, costs and equity. . . .

Well-put, Dr. Ginsburg. [As ever, emphasis supplied. I’ve also placed these — all the links to the witnesses’ statements — in the live-blog Hearing archive, immediately below.]