Thank you, Mr. Chairman, Ranking Member Gregg, and Members of the Committee for this invitation to testify on health care reform. The U.S. health care system performs poorly relative to other industrialized nations and relative to achievable benchmarks for health outcomes, quality, access, efficiency, and equity. In addition, where you live in the United States matters greatly in terms of access to care when it is needed, the quality of that care, and the opportunity to lead a healthy life. A major culprit in the inconsistent performance of the nation's health system is that we fail to provide health insurance to nearly 45 million people and inadequately insure an additional 16 million more. Universal coverage is essential to placing the system on a path to high performance. But the way in which a universal coverage system is designed will matter greatly in terms of whether the overall health system is ultimately able to make sustainable and systematic improvements in access to care, efficiency and cost control, equity, and quality of care.
The U.S. Health Care System Performs Poorly Compared with Other Countries
- The Commonwealth Fund Commission on a High Performance Health System's National Scorecard on U.S. Health System Performance found that out of a possible 100 points based on benchmarks that have been achieved within the U.S. or other countries, the U.S. received a score of 66, or one-third below benchmark levels of performance. The U.S. scored particularly poorly on indicators of efficiency, with wide variation in cost and quality across the country and with much higher spending levels than other countries.
- The U.S. ranks 15th out of 19 countries on mortality from conditions "amenable to health care"that is, deaths that could have been prevented with timely and effective care. The U.S. ranks last on infant mortality.
- Universal participation is essential for dramatic improvement in health care outcomes as well as overall performance of the U.S. health system.
- Not having stable, adequate coverage limits access to care. Out of five industrialized countries studied, the U.S. had the highest share of adults reporting that they had cost-related problems accessing needed health care.
- Our health insurance system is complex and inefficient, and it is based on incentives that are not always aligned with improving quality and efficiency. In 2003, spending on health and insurance administration commanded 7.3 percent of national health spending, compared with 5.6 percent in Germany and around 2 percent in France, Finland, and Japan. If the U.S. had had a level of administrative spending similar to that of France, Finland, and Japan, it would have saved an estimated $97 billion on health care costs in 2004. Even reducing spending closer to that of countries with mixed public and private insurance systems like Germany and Switzerland would have saved an estimated $32 billion to $46 billion in that year.
There Are Wide Differences Across States in Access, Quality, and Costs
- The Commonwealth Fund Commission on a High Performance Health System released its State Scorecard on Health System Performance in June 2007. This report finds that where you live in the U.S. matters for access to care when it is needed, the quality of care, and the opportunity to lead a healthy life.
- Among the states, there is a nearly threefold variation in the percent of adults under age 65 who were uninsured in 20042005, ranging from a low of 11 percent in Minnesota to a high of 30 percent in Texas. Although in all states children are more likely than adults to have health insurancethanks to Medicaid and the State Children's Health Insurance Program (SCHIP)the proportion of uninsured children ranges from 5 percent in Vermont to 20 percent in Texas.
- Across states, better access to care and higher rates of insurance are closely associated with better quality. States with the lowest rates of uninsured residents tend to score highest on measures of preventive and chronic disease care.
- States with higher medical costs tend to have higher rates of potentially preventable hospital use, including high rates of Medicare readmissions within 30 days of discharge and high rates of admission for complications of diabetes, asthma, and other chronic conditions.
Universal Coverage Is Essential to Achieving a High Performance Health System
- It is critical that the entire population be brought into the health care system in a way that ensures timely access to care across the full length of people's lives.
- Uninsured and underinsured patients and the doctors who care for them are far from able to obtain the right care at the right time in the right setting. Uninsured patients are more likely to receive wasteful and duplicative care because of a lack of care coordination.
- Quality and effectiveness measurement will not be meaningful unless those measures reflect the experience of a fully and continuously insured population and the work of providers who care for them.
- It will be impossible to realize efficiency in the operation of provider institutions and financing arrangements in the presence of billions of dollars in uncompensated care now paid for through pools of federal, state, and local government revenues and a highly uncertain amount of cost-shifting to other payers.
Design Matters: Key Questions to Consider in Evaluating Health Reform Proposals
- The way in which a universal coverage system is designed will matter greatly in terms of whether the overall health system is able to make sustainable and systematic improvements in access, efficiency, equity, and quality of care.
- Key questions that the public and policymakers might consider in evaluating health reform proposals:
- Does the proposal improve access to care?
- Does the proposal have the potential to lower cost growth and improve efficiency in the health care system?
- Does the proposal improve equity in the health system?<?li>
- Does the proposal have the potential to improve the quality of care in the health system?
Approaches to Health Care Reform: Key Features for Improving Access, Cost Control, Efficiency, and Quality
- The majority of recent proposals at both the federal and state levels build on the current system by connecting public and private insurance to ensure more coherent and continuous coverage over a person's lifespan.
- A framework for such an approach would create a new group insurance option similar to the Federal Employees Health Benefits Program (FEHBP), with income-related subsidies for the purchase of coverage; expand Medicaid and the State Children's Health Insurance Program (SCHIP) for lower-income families; and expand the Medicare program for older adults. It would require employers to offer coverage or pay into a fund and require individuals to obtain coverage.
- An alternate framework might include a more substantial role for Medicare. All uninsured people, people with private individual coverage, and most Medicaid beneficiaries would enroll in Medicare. Employers would pay 80 percent of their employees' premium, and workers would pay 20 percent of the premium. Employers could opt out if they elected to provide an actuarially equivalent benefit. Individuals could not opt out. The program would subsidize both premiums and cost-sharing for families living below 500 percent of the federal poverty level.
Key components of health reform proposals to achieve high performance include:
- Insurers should compete on providing added value to the health system in greater quality and efficiency, rather than on segmenting or excluding poor health risks.
- Payers (private insurers and public programs) should negotiate with providers to create coherent policies and fair payment rates for health services and pharmaceutical products.
- Patient and provider incentives should be aligned to encourage use of all effective services, and avoid use of ineffective services, overuse of services, duplication of care, and waste.
- All patients and providers should be part of an organized care system that is accessible and accountable for patient health outcomes, preventive care, and care coordination.
- Information on the cost and quality of care should be transparent and publicly available.
- The health care system should be patient-centered and the health environment should be supportive of living healthy lives.
- The health system should be scientifically grounded.
Ultimately what is needed to move the health care system to high performance is a coherent set of policies with goals and properly aligned incentives that move all participants in the system in the same directiontoward improving access, quality, equity, and efficiency for everyone. It is critical that all adults and children are able to fully participate in a health care system that is well organized and is based on incentives that ensure that everyone receives the right care, at the right time, and in the right setting over their lifespan. It will not be productive in the long run if we focus overly on the impact of reform policies on the federal budget, or on the budgets of major corporations, or even the impact on our families' budgets. Instead, we can only move forward when we keep our eye on the number that really matters: the $2 trillion that we spend as a nation on health care each year. This ultimately determines the size and growth of all participants' budgets and should be the focal point of our collective energies as we develop coherent, consistent, and equitable health care policy.