WASHINGTON--White House hopeful Sen. Barack Obama (D-Ill.) wants to create a new health federal-backed health insurance program--and to expand Medicaid, the state-federal program providing health coverage for the medically needy.
Obama also wants to provide alternatives to the current system, where most individuals can obtain health insurance only through their employers. If an employer does not offer insurance, the company (except for some small business) must help pay for the purchase of private insurance. All these are elements towards Obama's goals of providing health coverage to all the uninsured in the U.S. One Obama proposal calls for insurance companies to let parents carry their children on their plans longer--up to the age of 25.
Obama unveils his long-awaited health plan Tuesday morning in at the University of Iowa in Iowa City. Democrats don't differ much in calling for covering the estimated 45 million uninsured in the U.S. It's how to get there--to universal coverage--that will be part of the presidential debate.
Last week, chief rival Sen. Hillary Rodham Clinton (D-N.Y.) in Washington offered the first elements of her proposal, dealing with containing and lowering costs. Both candidates called for investing more in electronic medical records systems, lowering drug costs by allowing imports from some--not all--approved countries and by investing more in preventive medicine.
In 1993 and 1994 Clinton was scorched when, as First Lady, she failed to sell Congress on a comprehensive overhaul of the health insurance system. Since then, the climate has changed, as corporations are looking for ways to reduce costs.
"We now face an opportunity--and an obligation--to turn the page on the failed politics of yesterday's health care debates," Obama said in speech excerpts released by his campaign after an embargo was broken.
click below for Obama's "fact sheet" on his health plan and other material and the text of Clinton's May 24 speech at George Washington University on lowering health care costs.
This from the Obama campaign....
Paid for by Obam a for America
BARACK OBAMA’S PLAN FOR A HEALTHY AMERICA:
Lowering health care costs and ensuring affordable, high-quality health care for all
The U.S. spends $2 trillion on health care every year, and offers the best medical technology and
scientific research in the world. Yet, the benefits of the American health care system come at a
price that an increasing number of individuals and families, employers and employees, and
public and private providers cannot afford.
Millions of Americans are uninsured or underinsured because of rising medical costs.
Nearly 45 million Americans—including 9 million children—lack health insurance with no signs
of this trend slowing down. Eight percent of them are from working families
Health care costs are skyrocketing. Health insurance premiums have risen 4 times faster than
wages over the past 6 years. Lack of affordable health care is compounded by serious flaws in
our health care delivery system. About 100,000 Americans die from medical errors in hospitals
Too little is spent on prevention and public health. The nation faces epidemics of obesity and
chronic diseases as well as new threats of pandemic flu and bioterrorism. Yet despite all of this
less than 4 cents of every health care dollar is spent on prevention and public health.
Barack Obama believes we live in the greatest country in the world and that when it comes to
health care America can and must do better. Obama has a three part plan to build upon the
strengths of the U.S. health care system, including innovative state efforts, and address its glaring
weaknesses, such as affordability. The Obama plan will save a typical American family up to
$2,500 every year on medical expenditures by:
(1) Providing affordable, comprehensive and portable health coverage for every
(2) Modernizing the U.S. health care system to contain spiraling health care costs and
improve the quality of patient care; and
(3) Promoting prevention and strengthening public health to prevent disease and
protect against natural and man-made disasters.
Under the Obama plan, the typical family will save up to $2,500 every year through:
Health IT investment, which will reduce unnecessary and wasteful spending in the health
care system that results from preventable medical errors and inefficient paper billing
Improving prevention and management of chronic conditions;
Increasing insurance industry competition and reducing underwriting costs and profits,
which will reduce insurance overhead;
Providing reinsurance for catastrophic coverage that will reduce insurance premiums; and
Making health insurance universal, which will reduce spending on uncompensated care.
Paid for by Obam a for America
The Obama plan both builds upon and improves our current insurance system, upon which most
Americans continue to rely, and leaves Medicare intact for older and disabled Americans. The
Obama plan also addresses the large gaps in coverage that leave 45 million Americans
uninsured. Specifically, the Obama plan will: (1) establish a new public insurance program
available to Americans who neither qualify for Medicaid or SCHIP nor have access to insurance
through their employers, as well as to small businesses that want to offer insurance to their
employees; (2) make available the National Health Insurance Exchange to help Americans and
businesses that want to purchase private health insurance directly; (3) require all employers to
contribute towards health coverage for their employees; (4) mandate all children have health care
coverage; (5) expand Medicaid and SCHIP to cover more of the least well-off among us; and (6)
allow state flexibility for state health reform plans.
(1) OBAMA’S PLAN TO COVER UNINSURED. Obama will make available a new national health
plan that will allow individuals without access to affordable insurance coverage, including the
self-employed and small businesses, to buy affordable health coverage that is similar to the plan
available to members of Congress.
The Obama plan will have the following features:
Guaranteed eligibility. No American will be turned away because of illness or preexisting
Comprehensive benefits. The benefit package will be similar to that offered through
Federal Employees Health Benefits Program (FEHBP). The plan will cover all essential
medical services, including preventive, maternity and mental health care.
Affordable premiums, co-pays and deductibles.
Subsidies. Individuals and families who do not qualify for Medicaid or SCHIP but still
need assistance will receive an income-related federal subsidy to buy into the new public
plan or purchase a private health care plan.
Simplifying paperwork and reining in health costs.
Easy enrollment. The new public plan will be simple to enroll in and provide ready
access to coverage.
Portability and choice. Participating hospitals and providers in the new public plan will
be able to move from job to job without changing or jeopardizing their health care
Quality and efficiency. Participating insurance companies in the new public program
will be required to collect and report data to ensure that standards for health care quality,
health information technology and administration are being met.
QUALITY, AFFORDABLE & PORTABLE HEALTH
COVERAGE FOR ALL
Paid for by Obam a for America
(2) NATIONAL HEALTH INSURANCE EXCHANGE. The Obama plan will create a National Health
Insurance Exchange to help individuals who wish to purchase a private insurance plan. The
Exchange will act as a watchdog group and help reform the private insurance market by creating
rules and standards for participating insurance plans to ensure fairness and to make individual
coverage more affordable and accessible. Through the Exchange, any American will be able to
enroll in the new public plan or purchase an approved private plan, and income-based subsidies
will be provided for people and families who need it. Insurers would have to issue every
applicant a policy, and charge fair and stable premiums that will not depend upon health status.
The Exchange will require that all the plans offered are at least as generous as the new public
plan and the same standards for quality and efficiency. Insurers would be required to justify an
above-average premium increase to the Exchange. The Exchange would evaluate plans and
make the differences among the plans, including cost of services, transparent.
(3) EMPLOYER CONTRIBUTION. Employers that do not offer or make a meaningful contribution
to the cost of quality health coverage for their employees will be required to contribute a
percentage of payroll toward the costs of the national plan. Small employers that meet certain
revenue thresholds will be exempt.
(4) MANDATORY COVERAGE OF CHILDREN. Obama will require that all children have health
care coverage. Obama will expand the number of options for young adults to get coverage,
including by allowing young people up to age 25 to continue coverage through their parents’
(5) EXPANSION OF MEDICAID AND SCHIP. Obama will expand eligibility for the Medicaid and
SCHIP programs and ensure that these programs continue to serve their critical safety net
(6) FLEXIBILITY FOR STATE PLANS. Due to federal inaction, some states have taken the lead in
health care reform. The Obama plan builds on these efforts and does not replace what states are
doing. States can continue to experiment, provided they meet the minimum standards of the
The Obama plan will lower costs and improve efficiency in the health care system by: (1)
offering federal reinsurance to employers to help ensure that unexpected or catastrophic illnesses
do not make health insurance unaffordable or out of reach for businesses and their employees;
(2) ensuring that patients receive and providers deliver the best possible care; (3) adopting stateof-
the-art health information technology systems; (4) reforming our market structure to ensure
fairness and increase competition.
(1) REDUCING COSTS OF CATASTROPHIC ILLNESSES FOR EMPLOYERS AND THEIR
EMPLOYEES. Catastrophic health expenditures account for a high percentage of medical
expenses for private insurers. The Obama plan would reimburse employer health plans for a
MODERNIZING THE U.S. HEALTH CARE SYSTEM TO LOWER COSTS
& IMPROVE QUALITY
Paid for by Obam a for America
portion of the catastrophic costs they incur above a threshold if they guarantee such savings are
used to reduce the cost of workers' premiums.
(2) LOWERING COSTS BY ENSURING PATIENTS RECEIVE AND PROVIDERS DELIVER QUALITY
Support disease management programs. Seventy five percent of total health care
dollars are spent on patients with one or more chronic conditions, such as diabetes, heart
disease, and high blood pressure. Obama will require that providers that participate in the
new public plan, Medicare or the Federal Employee Health Benefits Program (FEHBP)
utilize proven disease management programs. This will improve quality of care, give
doctors better information and lower costs.
Coordinate and integrate care. Over 133 million Americans have at least one chronic
disease and these chronic conditions cost a staggering $1.7 trillion yearly. More than half
of Americans with serious chronic conditions have 3 or more different physicians,
leading to duplicate testing, conflicting treatment advice and prescription drugs that may
be contraindicated. Obama will support implementation of programs and encourage team
care that will improve coordination and integration of care of those with chronic
Require full transparency about quality and costs. Obama will require hospitals and
providers to collect and publicly report measures of health care costs and quality,
including data on preventable medical errors, nurse staffing ratios, hospital-acquired
infections, and disparities in care. Health plans will also be required to disclose the
percentage of premiums that goes to patient care as opposed to administrative costs.
ENSURING PROVIDERS DELIVER QUALITY CARE
Promoting patient safety. Obama will require providers to report preventable medical
errors, and support hospital and physician practice improvement to prevent future
Aligning incentives for excellence. Both public and private insurers tend to pay
providers based on the volume of services provided, rather than the quality or
effectiveness of care. Providers who see patients enrolled in the new public plan, the
National Health Insurance Exchange, Medicare and FEHBP will be rewarded for
achieving performance thresholds on outcome measures.
Comparative effectiveness research. The U.S. provides some of the best health care
and most sophisticated medical technologies in the world, but at a cost that is making the
effort to expand access to care ever more difficult. Obama will establish an independent
institute to guide reviews and research on comparative effectiveness, so that Americans
and their doctors will have the accurate and objective information they need to make the
best decisions for their health and well-being.
Tackling disparities in health care. Obama will tackle the root causes of health
disparities by addressing differences in access to health coverage and promoting
Paid for by Obam a for America
prevention and public health, both of which play a major role in addressing disparities.
He will also challenge the medical system to eliminate inequities in health care through
quality measurement and reporting, implementation of effective interventions such as
patient navigation programs, and diversification of the health workforce.
Reforming medical malpractice. Obama will strengthen antitrust laws to prevent
insurers from overcharging physicians for their malpractice insurance, and will promote
new models for addressing physician errors that improve patient safety, strengthen the
doctor-patient relationship, and reduce the need for malpractice suits.
(3) LOWERING COSTS THROUGH INVESTMENT IN ELECTRONIC HEALTH INFORMATION
TECHNOLOGY SYSTEMS. Most medical records are still stored on paper, which makes it hard to
coordinate care, measure quality, or reduce medical errors and which costs twice as much as
electronic claims. Obama will invest $10 billion over the next five years to move the U.S. health
care system to broad adoption of standards-based electronic health information systems,
including electronic health records and will phase in requirements for full implementation of
health IT. Obama will ensure that patients’ privacy is protected.
(4) LOWERING COSTS BY INCREASING COMPETITION IN THE INSURANCE AND DRUG MARKETS.
Increasing competition. The insurance business today is dominated by a small group of
large companies that has been gobbling up their rivals. There have been over 400 health
care mergers in the last 10 years, and just two companies dominate a full third of the
national market. These changes were supposed to make the industry more efficient, but
instead premiums have skyrocketed, increasing over 87 percent.
Barack Obama will prevent companies from abusing their monopoly power through
unjustified price increases. His plan will force insurers to pay out a reasonable share of
their premiums for patient care instead of keeping exorbitant amounts for profits and
administration. His new National Health Exchange will help increase competition by
Lowering prescription drug costs. The second-fastest growing type of health expenses
is prescription drugs. Pharmaceutical companies are selling the exact same drugs in
Europe and Canada but charging Americans more than double the price. Obama will
allow Americans to buy their medicines from other developed countries if the drugs are
safe and prices are lower outside the U.S. Obama will also repeal the ban that prevents
the government from negotiating with drug companies, which could result in savings as
high as $30 billion. Finally, Obama will work to increase the use of generic drugs in
Medicare, Medicaid, FEHBP and prohibit big name drug companies from keeping
generics out of markets.
Barack Obama believes that protecting and promoting health and wellness in this nation is a
shared responsibility among individuals and families, school systems, employers, the medical
and public health workforce, and federal and state and local governments. Each must do their
PROMOTING PREVENTION & STRENGTHENING
Paid for by Obam a for America
part, as well as collaborate with one another, to create the conditions and opportunities that will
allow and encourage Americans to adopt healthy lifestyles.
(1) EMPLOYERS. An increasing number of employers are offering worksite health promotion
programs and many employers choose insurance plans that cover preventive services for their
employees. Obama believes that worksite interventions hold tremendous potential to influence
health and will expand and reward these efforts.
(2) SCHOOL SYSTEMS. Obama will work with schools to create more healthful environments for
children. He will work to get junk food out of vending machines in schools and improve
nutritional content of lunches through financial incentives, increase grant support for physical
education, expand federal reimbursement for school-based health services, and provide grants for
health educational programs for students.
(3) WORKFORCE. Obama will expand funding – including loan repayment, adequate
reimbursement, grants for training curricula, and infrastructure support to improve working
conditions – to ensure a strong workforce that will champion prevention and public health
(4) INDIVIDUALS AND FAMILIES. The way Americans live, eat, work and play have real
implications for their health and wellness. The Obama health plan will require coverage of
essential clinical preventive services such as cancer screenings and smoking cessation programs
in all federally supported health plans, including Medicare, Medicaid, SCHIP and the new public
plan. In addition, Obama will increase funding to expand community based preventive
interventions to help Americans make better choices that can help ward off chronic and
preventable diseases and improve their health.
(5) FEDERAL, STATE, AND LOCAL GOVERNMENTS. The federal government and state and local
governments play critical roles in disease prevention and health promotion activities. First,
working together, governments at all levels should develop a national and regional strategy for
public health that includes funding mechanisms for implementation. Second, the field of public
health would benefit from greater research to optimize organization of the 3,000 health
departments in this nation, collaborative arrangements between levels of government and its
private partners, performance and accountability indicators, integrated and interoperable
communication networks, and disaster preparedness and response. Third, the government must
invest in workforce recruitment as well as modernizing our physical structures. And finally, the
government must examine its own policies, including agricultural, educational, environmental
and health policies, to assess and improve their effect on public health in this nation. As
President, Barack Obama will prioritize all of these activities to strengthen prevention and public
This from the Clinton campaign...
Senator Hillary Rodham Clinton
Remarks on Health Care Costs
May 24, 2007
Well, thank you very, very,
much. I am delighted to be back at GW and I want to thank President
Trachtenberg for his kind introduction, but he and his wife Francine
have been leading advocates on behalf of higher education and so many
other issues for as long as I’ve known them, and that goes back many
years. And as Joel said, we shared the experience of our children in
high school, and that was indeed an experience we both survived, so
we’re grateful to tell the tale.
I want to thank Dr.
Williams, and, of course, Dr. Becker. I want also to recognize Russ
Ramsey, the chair of the board, Dr. Scott, Dean of the Medical School
and the CEO of the medical faculty, Evan Badger. It is an honor to be
back at GW in order to talk about one of the most important issues
facing the health care community, and of course, our country.
As I travel around America,
I have talked with people from all walks of life about the challenges
that our country is facing: from ending the war in Iraq to ending our
dependence on foreign oil – from improving our education system to
reducing our deficit. And no matter where I go or with whom I talk –
whether it’s small business owners or CEOs, doctors or nurses or
patients – I hear growing concern about the crisis in our health care
system: exploding costs, declining coverage and shortcoming in care and
Now, I’ve tangled with this
issue before – and I’ve got the scars to show for it. But I learned
some valuable lessons from that experience. One is that we can’t
achieve reform without the participation and commitment of health care
providers, employers, employees and other citizens who pay for, depend
upon, and actually deliver health care services. I think we finally
have a recognition that everyone sees there is an economic imperative
to rein in costs. There is a moral imperative to extend coverage to all
Americans. And, there is a practical necessity to promote wellness and
prevent illness wherever possible. I plan to put those lessons to work
to ensure every single American has quality, affordable health
There are three parts to my
approach. First, lowering costs for everyone. Second, improving
quality for everyone. Third, insuring everyone.
Today, I will focus on the
challenge of lowering costs.
Health care costs are spiraling out of
control. Premiums have almost doubled since 2000 – increasing four
times faster than average wages.
Every day, parents choose
between paying the premium for themselves or their children. Small
businesses wonder how they will stay afloat when their health care
costs eat up their profits year after year. CEOs of major American
companies worry about how they will succeed in the global economy when
they’re competing with foreign companies that spend significantly less
on health care.
We spend 16 percent of our
gross domestic product - $2 trillion – on health care. And by 2016,
health costs are scheduled to exceed $4 trillion, or almost 20% of
GDP. That means that within less than 10 years, 20 cents out of every
dollar produced in America will be spent on health care. No other
country spends more than 12%, a difference of more than $500 billion.
All other wealthy countries spend even less. We spend $5,711 per
patient. The next highest spending country, Switzerland, spends $3,847
on patients. Yet, they cover every single one of their citizens and
have an average life expectancy that is three years longer than ours.
Now, how have our costs
spiraled out of control like this? Well, about 30% of the rise in
health care spending is linked to the doubling of obesity among adults
over the past 20 years. In other words, if our obesity levels had
remained at 1990 levels, we would be spending 10% less on health care
today -- a savings of $220 billion. About two-thirds of the rise in
health care spending is associated with a rise in the prevalence of
treatable disease - like diabetes, asthma and heart disease. 75% of
all health care spending – roughly $1.5 trillion -- is associated with
the 4 to 5 percent of patients who have multiple chronic illnesses and
require ongoing medical management over a period of years, or even
decades. And 10-12% of the total health care budget is spent on end of
Our administrative costs
are by far the highest in the world. Today more than one in four
health care dollars goes to administration. 64% of private insurance
plans’ administrative costs are dedicated to underwriting health risks,
sales, and marketing. Every man, woman and child in America spends $412
on health care administration, nearly six times as much as other
countries. According to a recent report by McKinsey, the United States
spends 98 billion more than other countries on excessive administrative
costs that have nothing to do with delivering good health care.
Too much of the money we
spend is wasted on care that doesn't improve health. A study in Santa
Barbara, California found that one out of every five lab tests and
X-rays were conducted solely because previous test results were
unavailable. A recent study reported in the Atlantic Monthly found that
for two-thirds of the patients who received a $15,000 surgery to
prevent strokes, there was no compelling evidence that the surgery
At the same time, in
situations where the benefits of intervention are clear, many patients
still don’t receive the care they need. A recent study in The New
England Journal of Medicine found that, overall, Americans get needed
care only 55 percent of the time.
If we spend so much, why
does the World Health Organization rank the United States 31st in life
expectancy and 40th in child mortality – worse than Cuba and Croatia?
Our health care system is
plagued with under-use, overuse and misuse. It is, simply put,
broken. As President, I will make it my mission to fix it, starting by
helping the 250 million people with public or private insurance who
face skyrocketing costs, inadequate care, and bureaucratic obstacles to
Today, I’m announcing a
seven point plan to lower health care costs for all American and again
to make our health care system, without doubt from any corner, the best
in the world.
Building a national
consensus around these cost savings is the first crucial step to cover
all Americans with quality, affordable health care.
First, we’re going to focus
on prevention – on wellness, not just sickness. Under my reforms, all
Americans will have access to comprehensive preventive care, which will
save money in the long run.
Today, we pay doctors and
hospitals to treat diseases and injuries, but not to help prevent them
from occurring in the first place. Only 38 percent of adults receive
recommended colorectal screening, and roughly 20 percent of children do
not receive recommended immunizations. In fact, our country spends
only an estimated 1 to 3 percent of national health expenditures on
preventive health care services and health promotion per year. That is
about the same percentage we spent in the 1920’s.
For example we have many
more adults and young people being diagnosed with type 2 diabetes.
While, the costs of caring for them are increasing exponentially, many
insurance companies won’t pay for someone who's pre-diabetic or who’s
been diagnosed with diabetes to go to a nutritionist to learn how to
eat properly, to get preventive medicine or to go to a podiatrist to
have their feet checked. But the companies will pay if you have to
have your foot amputated. The insurance companies will actually tell
you they don't want to pay for preventive health care because the
patient might change insurance companies, and the original company
won’t get the benefits of the money they invested. But if a patient’s
doctor tells them that a foot needs to be amputated, well the company
is kind of stuck with that. Talk about a system that is upside down
We clearly need a new
approach. We know we can save money if we give insurance companies
incentives to cover preventive care and wellness services – and my plan
will do exactly that. Keeping people healthy today will not only keep
our costs down in the future, but improve quality of life as well.
We know that preventive care
works. I could cite thousands of examples, but just consider the
following: The incidence of diabetes was 58 percent lower among adults
with elevated blood sugar were enrolled in a lifestyle intervention
program than the control group that was only given drugs. Among those
aged 60 and older the reduction was 71 percent. And some of the
research that was done leading to these outcomes was right here at GW.
Or look at what the private
sector has tried to do. Safeway has made a conscious decision to focus
on prevention. It pays 100% of all appropriate preventive care
services, and it offers a 24-hour hotline staffed by registered nurses,
and provides services to help people manage chronic conditions and
incentives designed to promote healthier lifestyles.
Again, the results speak
for themselves. While average costs went up 7.7% across the country.
Safeway its health care costs will be flat. And they aren’t the
exception: Motorola’s wellness initiative showed savings of almost $4
per every dollar invested.
Under my plan, all insurers
who are already participating in a federal health program like Medicare
or Medicaid or the federal employee’s health benefit plan will have to
cover prevention as a condition of doing business with the Federal
government. Insurers would encourage both individuals and providers to
use prevention services by paying for benefits like cancer screenings
My plan also pools and
coordinates federal spending on prevention to help redeploy
high-priority preventive services. Working in collaboration with the
private sector, this initiative would pay for preventive care
initiatives in schools, workplaces, supermarkets, churches,
communities. It would fund and train new health prevention outreach
workers, who understood the language, understood the culture of various
constituencies around our country. Now, we still have so many people,
and I’m sure you see it in the hospital, who come in unable to speak
English, often times bringing a child to interpret. And we’re just not
doing a good enough job in getting information broadly available to
people who need it.
Now, of course, you can
have the best insurance plan in the world, but if you don’t take the
medicine your doctor prescribes, or follow lifestyle advice your doctor
recommends, you aren’t going to improve your health. If we’re going to
reduce costs through prevention, all of us all must take responsibility
for taking better care of ourselves and I will have more to say about
The second way to bring
costs under control is to bring our health care system’s record keeping
into the 21st century, finally leaving behind paper records and
outdated, obsolete, 20th century information technology. Right now, if
you’re rushed to a hospital with a medical emergency, they may not be
able to access your medical history or to find out what medications
you’re taking, what surgeries you’ve had – or even what your blood type
is. Electronic medical records would change that.
This is also important in
the event of catastrophes. After Katrina, medical records were under
water, never to be recovered. A lot of people who were taking
prescription drugs who fled their homes or were rescued didn’t even
know the names of the drugs they were taking. Only, those who had been
buying drugs from drug stores that had electronic medical records could
immediately access to find out what the drug was and what the
prescription should be.
Modernizing our system will
improve quality of care and reduce costs. Today, processing paper
claims costs an average of $1.60 to $2.20 per claim. It costs 85 cents
for an electronic claim. A RAND study found that, as a nation, we
could save more than $77 billion annually through the widespread use of
electronic medical records, and these savings could double with the
addition of prevention and chronic disease management. If the use of
information technology impacts our health care system as much as it has
impacted other sectors of the economy, like for example, the wholesale
and retail industry, we could see savings as high as $346 billion
annually or over 15% of health care spending.
There is no reason why
people’s health files – their test results, lab records, X-rays --
can’t be stored securely and confidentially on a computer file
accessible from a doctor's office or hospital. In fact, if all
hospitals used a computerized physician order entry system, an
estimated 200,000 fewer adverse drug events would occur, saving roughly
$1 billion per year.
We can also use information
technology to disseminate research. A government study recently showed
it takes 17 years from the time of a new medical discovery to the time
clinicians actually incorporate that discovery into their practice at
the bedside. Why not 17 seconds, the moment we know the discovery
The Veterans medical system
provides a perfect example of a fully automated health information
system that supports the needs of patients, clinicians, and
administrators. Its computerized patient record system (CPRS),
contains every detail of a patient’s health record, including
laboratory test results, medical images, bar code medication
administration, progress notes, and appointments, all accessible from
anywhere within the VA system.
The VA started modernizing
its programs in 1993, using health IT as well as other care management
techniques. And it delivers some of the best quality health care in
the United States with amazing efficiency. Between 1999 and 2003, the
number of patients enrolled in the VA system increased by 70 percent,
yet funding (not adjusted for inflation) increased by only 41 percent.
So the VA has not only has become one of the health care industry's
best quality performers, it has done so while spending less and less on
each patient. Health care spending per capita averages, as I said, over
$6,300 in the U.S.; at the VA, however, the per-patient cost is $5,000,
and 20% lower than the national average, even though the average age of
a VA patient is 60.
Last year I was at the
hospital here at GW announcing legislation that has since passed the
Senate that promotes the use of information technology so we can end
the paper chase, limit medical errors and reduce the number of
malpractice suits. It would allow us to use IT to develop a nationwide,
interoperable system, to streamline our health care costs, and, I
believe, reduce errors as well. Now, I’m proud of my legislation, we
didn’t get it passed in the House last year, we’re going to try again
this year. But if we don’t get it passed, I will have it as one of my
highest priorities as President. I’m going to build on that
legislation by requiring health providers that participate in federal
programs, which is nearly all of them, to adopt private, secure, and
interoperable technology. And to help hospitals and doctors modernize
their systems and promote the widespread adoption of health IT, I would
invest $3 billion a year in grants to help ramp up the system. No more
yellowing paper records – no more trying to decipher messy
Third, we’re finally going to
coordinate and streamline the care our chronically ill patients
receive. Americans with chronic disease such as heart disease and
diabetes account for an astonishing percentage. When I first saw this,
I couldn’t believe it----that it was 75 percent of our national health
care expenditures. And improving the quality of their care will help
limit costs, and improve health.
To that end, I propose establishing
medical “homes” similar to those operating right now in Oregon. Dr.
David Dorra, a primary care physician, spoke at the Senate Aging
Committee, on which I serve, two weeks ago about the success of these
medical homes. He told the story of a patient, Ms. Viera, a 75
year-old woman in Oregon who suffered from five chronic illnesses,
including diabetes, high blood pressure, and mild congestive heart
failure. She also had difficulties remembering what bills to pay and
what pills to take.
Now, in most clinics across this
country, Ms. Viera would receive care from qualified, capable doctors
and nurses. But her care would likely not be coordinated – her
providers wouldn’t be talking to each other, making sure that the
treatments they were prescribing were working together. This ends up
raising costs and increasing the chances that she will suffer
complications or end up back in the hospital. Anyone who has ever
tried to coordinate their own care, or the care of a loved one, knows
that this is all too common situation.
Fortunately, her care was addressed
comprehensively through Care Management Plus in Oregon, an IT system
with trained care managers in primary care clinics to treat older
adults with complicated conditions. She’s is in good hands. Her care
managers and her primary care physician addressed her symptoms early,
preventing problems rather than treating them after they occurred. And
she is helped to navigate the system.
Under this program, seniors with
complex diabetes have had a 20 percent reduction in mortality, a 24
percent reduction in expensive hospitalization, and up to 42 percent
improvement in control of their disease.
Every patient should have access to a
system with outcomes like that. That’s why my proposal would require
that Americans with costly, hard to manage illnesses have access to
state-of-the-art chronic care coordination models under
federally-funded plans, like Medicare and the Federal Employees Health
Benefits (FEHBP) plan. This proposal would permit multi-specialty
clinics (GW, Mayo Clinic, Johns Hopkins, Partners HealthCare),
provider-sponsored organizations and private plans to bid on and
provide services such as care coordination amongst and between
providers, drug management, diet and exercise control and the promotion
of individual patient responsibility.
We k now that this
coordinated care model would result in significant cost savings. A
recent RAND study concluded that chronic disease management, preceded
by prevention and backed by information technology, could save $147
billion annually. Another study found this model could reduce the cost
of diabetes care alone by 3 percent, saving us $4 billion dollars.
Fourth, my plan will offer will offer
individuals and small businesses market access to larger insurance
pools that will lower costs and end insurance company discrimination
against people with pre-existing conditions. As part of a plan for
universal coverage, which I will discuss in detail in the coming
months, we would create large insurance pools that lower administrative
costs for small businesses and individuals by spreading the risk. In a
system of universal coverage insurance companies cannot as easily shift
costs through cherry picking and other means.
In fact, according to a recent McKinsey
report, insurance companies in America spend tens of billions a year
figuring out how not to cover people – doing complicated calculations
to figure out how to cherry pick the healthiest persons, and leave
everyone else out in the cold. That is how they profit: by avoiding
insuring patients who will be “expensive” -- and then trying to avoid
paying up once the insured patient actually needs treatment.
I see this all the time. My office
spends countless hours arguing with insurance companies to get my
constituents the health care they have paid for. For example, a father
called me from northern New York – his son had a rare illness. Now he
and his son were well insured. He’d worked for many years for the same
employer who provided a good policy. But when his son needed a special
operation – that could only be performed at one place in the country --
the insurance company said, sorry, that's out of network, we're not
going to send you to have that done.
So my office intervened. And in the
end they got permission for the operation. But I don't think people
should have to go to their United States Senator to get their insurance
company to give them what they’ve paid for.
As President, I will end the practice
of insurance company cherry-picking once and for all by allowing anyone
who wants to join a plan to do so and prohibiting insurance companies
from carving out benefits or charging higher rates to people with
health problems. I also will call for rating reforms to ensure that
older and other vulnerable populations are not discriminated against.
The whole point of insurance, lest we forget, is to spread risk across
a group of enrollees. It’s one of the reasons that the administrative
costs of Medicare are so much lower; because they are actually insuring
everyone. Everyone is in the pool, and we have to figure out how to
better control the costs within Medicare but they start with an
advantage because they have such a considerably lower administrative
Finally, insurers would be required to
prove they were spending much less on marketing and schemes to avoid
providing insurance to high-risk Americans, and more on direct
care-giving. Now most businesses and some states have become tough
purchasers of health insurance, insisting on fair marketing and
cracking down on high overhead. We should follow their lead. One of
the things I’ve advocated now for 14 years is a common vocabulary and a
common form that every insurance company must use. This sounds like a
pretty common-sense idea---so you can actually compare and contrast
what you’re paying for---but when I proposed in back in ‘93 and ‘94 it
was, shall we say, vigorously objected to. Because we need more
transparency and we need that common vocabulary in order to get costs
down, and that’s opposite of what the insurers want to happen. By
insuring all Americans through accountable public and private plans, we
can get rid of administrative costs that do nothing but add to
insurance companies’ bottom line. In such a reformed system, risk would
be widely spread and we could reduce administrative costs by as much as
$20 to 30 billion a year.
Fifth, I will work to improve the
quality of care which will also help us drive down costs. I’ll start
by establishing an independent public-private Best Practices
Institute. This Institute would be a partnership among the public and
the private sector, to finance comparative effectiveness research, so
that doctors, nurses and other health professionals – as well as
consumers and businesses -- would know what drugs, devices, surgeries
and treatments work best. This would reduce the use of inefficient and
ineffective treatments, and I believe that it would have tremendous
benefits because we could get evidence-based medicine into the
bloodstream of the country much more effectively. I spearheaded a
similar proposal to authorize the Agency for Healthcare Research and
Quality to start doing research on comparative effectiveness at the
Department of Health and Human Services. Eight reports have been
released and dozens more are underway.
One of the things they’re finding is a
lot of these so-called “blockbuster drugs” are no more effective, and
sometimes less effective, in treating conditions than old standbys that
have been around for a long time, and don’t have all the advertising
of, you know, people running through fields of wildflowers that
convince patients that they need the new drug, as opposed to the one
that has worked well.
Too often, doctors and patients don’t
know which medical interventions are most effective -- and which have
little benefit. A recent study by Dartmouth researchers shows that
close to one third of the $2 trillion we spend goes to care that is
duplicative and fails to improve patient health – in fact, the
researchers posited that it may even make health worse. More care is
not necessarily better care, and inefficient care may do more harm than
My plan will provide incentives to
encourage doctors to keep up with the research and prescribe the most
effective treatments. The University of Michigan and Pitney Bowes are
doing just that – linking out of pocket drug costs to clinical benefit
for patients. The more effective the medication, the less that patient
has to pay for the drug. As of 2005, Pitney Bowes had saved more than
$3.5 million dollars using this method.
Another innovative idea is the
Geisinger Health System’s suggestion of a medical warranty: it charges
a flat fee for surgery that includes 90 days of follow-up treatment.
Currently, there is little incentive to seek out the most effective
treatments, because if a treatment regimen or surgery doesn’t work, the
patient simply returns for more costly treatments. The warranty is an
incentive to do it right the first time, because there is no extra
billing if more care is needed. Geisinger doctors have identified 40
essential steps to bypass surgery, and they’ve established procedures
to ensure they’re always followed.
The Best Practices Institute will
empower with information and evidence those who have to make the
decisions. It will not only be beneficial with respect to
pharmaceuticals but also medical devices and even practice protocols
and I think that it will give a lot of doctor’s ammunition against
insurance companies, drug companies and even sometimes patients about
what works better than other options. The Oregon drug effectiveness
review founded by Governor John Kitzhaber in 1999, is a collaborative
partnership between states and non-profits that conducts reviews of
widely used drugs to promote the most effective ones. North Carolina
has used such reviews to educate providers, saving the state an
estimated $80 million in 2003 alone. Now I can’t extrapolate how much
we would save as a nation, but I believe it would obviously be in the
Sixth, if we want to get health care
costs under control, we need to get prescription drug costs under
control. We know that Americans pay the highest prices in the world
for prescription drugs that we have already in most instances funded
the research on funded the clinical trials on, done the FDA evaluation
of, then we put it into the market place and we end up still paying the
highest prices . Studies have shown that brand drug prices are 35 to
55 percent higher in the U.S., and top-selling medications a full 2.3
times more expensive compared to other industrialized countries. Over
the past decade, prescription drugs accounted for 15 percent of the
total increase in health spending, even though they account for only
about 10 percent of what other countries spend.
Let’s start getting drug costs under
control by allowing Medicare to negotiate for lower drug prices and to
lower those costs for everyone. We also have to crack down on the
overpayments in Medicare to private plans. These Private plan payment
rates are around 12 percent higher than Medicare traditionally pays to
treat the same beneficiaries. Reducing these overpayments could save
Medicare $10 to $20 billion dollars a year. Seniors don’t want to lose
the benefits they have under these plans, but under my reforms they
We should also allow the importation of
drugs from certain countries to lower costs and let’s remove barriers
to generic competition. While 53 percent of all prescriptions are
generic medicines, they account for only 12 percent of total
pharmaceutical costs. A one percent increase in the use of generics
could yield $4 billion dollars in government savings.
We need to break the monopoly that
biotech pharmaceutical companies have over their products, which can
cost us so much money. Most Americans have no idea that right now,
under current law and FDA practice, generic biopharmaceuticals are
precluded from going to the market. And businesses and consumers are
paying for that. You know the cost differential between generic and
non-generic drugs is astounding: in 2003, the average cost for a
one-day supply of non-generic drugs was $45.00, but only $1.66 for
There is bipartisan support for
providing the long overdue authority for the FDA to approve generic
products that are the biologics. Already, an unprecedented coalition
of patients’ groups, labor, business, pharmacists, governors and a
number of forward looking biotech companies have united to support
legislation that I introduced with Senator Charles Schumer and
Congressman Henry Waxman. Providing such competition is projected to
save $5 to $7 billion dollars a year in savings to businesses and
The final point that I would make today
about lowering costs is to reduce costs through medical malpractice
reform. While some have overstated the role that malpractice insurance
plays in the health care crisis, I think we can all agree that we need
reform that works for doctors and patients alike.
I have offered one solution that has
been used successfully at the University of Michigan Hospital system.
It’s called the National Medical Error Disclosure and Compensation
(MEDiC) Act as I have borrowed it from the University of Michigan to
put it into law. It’s a novel approach to improving patient safety and
the quality of health care while protecting patients’ rights, reducing
medical errors and lowering malpractice costs. This Act would encourage
physicians, hospitals and health systems to provide liability
protections for physicians who disclose medical errors to patients and
offer to enter into negotiations for fair compensation. At the
University of Michigan, these policies have already resulted in greater
patient trust and satisfaction, more patients being compensated for
injuries, fewer malpractice suits, significantly reduced administrative
costs and between one and three million dollars in litigation cost
The rise in malpractice rates has
spurred states like Texas and Nevada to allow doctors to create their
own risk retention companies as an alternative to traditional liability
insurance. Because a large percentage of actual malpractice is
committed by a very small percentage of doctors who won’t be included
in insurance groups that other doctors control, thereby lowering
malpractice rates for all.
Now as I have made clear in these seven
points, we know that if we continue on our present path, health care
costs in the U.S. will double within a decade, we know that we will
spend increasing amounts and we aren’t sure, and I think it is fair to
say we know, that we won’t improve quality and outcome.
Now how will this actually work? Well
it has to be implemented over time according again to Rand who has been
studying health care costs intensely now for several years. We could
save $147 billion dollars from the information technology changes I
have recommended, $20 to $30 billion dollars in administrative savings
every year, $25 billion in savings from overpayments for
pharmaceuticals and health plans, and there are billions more in
countless other inefficiencies that could be rung out of our often
wasteful health care system. We also will have to move toward a system
where it is doctor-patient centered and consumer driven if we expect to
really get the results that we need. Now there is no question that at
least $120 billion dollars in projected savings that I have included in
my plan are not only reasonable, but extremely conservative.
Now I know that a lot of this is kind
of overly wonky, which is why I am glad there is an audience of people
here today who really understand a lot of these issues, but I imagine,
you know, many people wonder what all this adds up to. Well the
Business Roundtable has recently estimated that just with a system that
used information technology, the typical family would save $2,200
dollars, and I think that is a pretty impressive outcome for us doing
what we need to be doing anyway.
The money we save from the waste we
eliminate and the way we change how we care for people should be used
to help finance coverage for the 45 million Americans who have no
insurance. Also, when you insure everyone, it will maximize the impact
of the prevention programs I have recommended – with earlier care as
opposed to emergency care – as well as cutting administrative costs.
Our present system is outdated,
ineffective, and unsustainable. We know how to do this. Many of you
in this audience could give me ten more suggestions that we need to do
immediately. Well the key is to develop the political will to make it
happen through a coalition of those who are most directly affected.
The people who deliver care, our doctors, our nurses our pharmacists
and others, the people who pay for care, our business and our
government and the people who receive care which is all the rest of us,
because I know very well that every one of these recommendations will
run into considerable opposition from forces that do not want change in
So I believe that equally importantly
to having a plan, we have to have a political consensus and that is
what I am trying to develop as I talk about health care and engage in a
conversation with the American people because I think Americans are
ready for change. They are ready for a health care system that
produces better results at lower cost and ends the shame of us not
covering 45 million plus of our fellow Americans.
I look forward to your ideas about how
we can pursue these goals and I hope you will join with me in being
part of this broad based, national coalition that will not only talk
about and demand change, but work to make sure, starting in 2009, that
our political system actually delivers the changes we all know our
health care system desperately needs.
Thank you all very much.
Paid for by Hillary Clinton for
President Exploratory Committee