Rationing or Reform? Rep. Jim Cooper speaks at David Lipscomb University on the topic “The Perils of Health Care Today & Tomorrow” June 22, 2009
I Choose Reform! Surprise, surprise I support the Healthy Americans Act
Rationing is a dirty word Street definition Some jerk saying “no” to my sick wife Standard definition Withholding needed medical care Doesn’t matter who the bad guy is: insurance company or government U.S. definition? No other nation spends so much, gets so little Slowing growth of health sector to 17+% GDP
Possible to reconcile these views? Only if people understand that 2/3 of America’s financial problems are due to overspending on medical care Only if government understands that people have a right to all the medical care they can afford, and enough care so that everyone can live up to their potential
What we have is a failure to communicate
How can we spend so much, and people still feel short-changed? Demand for medical care is unlimited, whether is helps us or not “More is better”
“…unalienable Rights… Life, Liberty and the pursuit of Happiness” Declaration of Independence, 1776
We don’t need to ration health care! We are wasting $700 billion annually We can slow spending without denying needed care Proof McKinsey Global Institute – top private consultants Dartmouth Atlas of Health Care Peter Orszag at OMB and CBO Shannon Brownlee’s book “Overtreated” Even industry admits to $200 billion waste a year June 2009 White House Summit of industry leaders promises $2 trillion savings over ten years
Private Health Spending http://www.worldmapper.org/images/largepng/214.png
Remember: Don’t use static analysis No one is thinking of reducing current $2.4 trillion to $1.7 trillion in annual spending We are talking of slowing the rate of growth of medical spending to the rate of inflation No more “inflation plus 2.5%” Slowing growth by even 1% avoids 2/3 of our entitlement solvency problems While allowing growth that other industries envy Every basis point (1/100th of 1%) matters
Current Trends Wyden-Bennett Healthy Americans Act Does this look like rationing to you? HAA Ten-Year Savings = $1.48 Trillion (4.5%) Lewin Group, Cost and Coverage Estimates for the “Healthy Americans Act,” Dec. 12, 2006
“What is federal government?A giant insurance company that is $56 trillion in the hole, with a side business in defense.” “And we are an insurance company that uses cash accounting. What is an insurance company that does that? It’s not an insurance company. It’s an accident waiting to happen.” - Peter Fisher, former Asst. Sec. of Treasury, now at Blackrock
Your choice: double taxes or cut benefits by 1/2 Regular government is sacrificed to entitlements
The first Baby Boom retiree
Out-of-control medical costs of little value ? ? ? The Baby Boom problem
$56T Real National Debt And this does not count Medicaid!
Wrap your mind around it: One million seconds = 12 days One billion seconds = 32 years One trillion seconds = 32,000 years We almost need new words to describe these completely different quantities
Are we fiddling while Rome burns?
How to get healthy? 40% behavior 30% genetics 15% social conditions 10% remedial health care 5% environment Steven A. Schroeder, M.D., We Can Do Better – Improving the Health of the American People, New England Journal of Medicine, 357:12, p. 1221, Sept. 20, 2007.
We don’t need to ration health care!
May need to ration health hazards
Reducing smoking, alcohol, sloth, and gluttony could save 900,000 deaths annually, or 40% of annual U.S. mortality
Jeffrey Liebman and Richard Zechhauser, “Simple Humans, Complex Insurance, and Subtle Subsidies,” NBER Working Paper 14330, Sept. 2008, p. 15. Health insurance for all could save 20,000 lives a year
Still, many will oppose reform by claiming it is rationing. They will say anything to keep the profitable status quo, even if it sinks America
Some patients will oppose reform;Blame Game v. Responsibility Easier to blame someone else than to lose weight, exercise, make more money, and get a positive attitude
Medical industry will oppose reform$2.4 Trillion = $2.4 Trillion Health spending = Vested interests No one will admit they are wasting a single penny
What Is the Right Amount? This is why we disagree:
We don’t have a health care system. We have a sickness care non-system. Dr. Jonathan Perlin, Chief Medical Officer, HCA We do need medical reform:
But status quo is still popular 96% of voters have health insurance Don’t want to give up anything Afraid of change Not aware of own responsibility for health, or nation’s fiscal nightmare
Existing rationing we don’t notice Rationing by income level by insurance companies Rich can get experimental procedures, assisted living Bigger tax breaks to buy health insurance Rationing by poverty status by doctors 2/3 physicians refuse to see most Medicaid patients Rationing of prevention/wellness care by insurance Rationing of U.S.-born physicians by medical schools Rationing of primary care physicians by med schools Rationing by racial and ethnic group by doctors Rationing by region by Medicare Miami = 3x Minneapolis; McAllen = 2x El Paso
We supported rationing in WWII,but not formedical caretoday
Don’t ignore price of care Has grown much faster than wages or inflation But our out-of-pocket spending is lower % of total Growing feeling that no family should have to spend more than 5% of income for care Equivalent housing number is 30% Is health so much less important than housing? How can U.S. spend 16+% of GDP on health while families will only spend 5%?
Paying full price for care is unfair? 80% of people turn down traditional COBRA coverage – the only time you see full price Half of personal bankruptcies are due to health costs? Yes, but discharged medical expense was $3,600 Yes, but entire episode of illness was only $11,500 So people declare bankruptcy for less than the cost of a used car
Existing “reverse rationing” “Reverse rationing” ignores income levels Mayo Clinic, VA have best quality, lowest prices More people would go there if they could see quality and price more clearly – “Less is More” Middle-class has less risk of adverse drug event Less likely to be over-medicated Some Medicaid patients get better benefits Higher actuarial value than Blue Cross Meth burn patients get millions at Vanderbilt
What new rationing do you fear? Limits on doctor or hospital services? Doctors and hospitals slow work without more $$$? Hospitals eliminate more emergency rooms? “Comparative effectiveness” testing will reduce choice of meds or technology? But FDA doesn’t do this work New insurance networks may not want your doctor or hospital if they don’t measure up? Do you want a bad doctor? Limits on insurance options? Choices should increase if you can shop like a federal employee does
What ethical guidelines do you use? Your family’s needs? Your faith’s doctrines? Christianity opposes artificially-prolonged life? Devil says “How much better for us if all humans died in costly nursing homes amid doctors who lie and nurses who lie, promising life to the dying.” C.S. Lewis, The Screwtape Letters Catholic Church dislikes for-profit care? Jehovah’s Witnesses oppose many forms of care? Your country’s needs?
Right to health care v. Rationing “If criminals have the right to a lawyer, I think working Americans should have the right to a doctor… I am Harris Wofford and I believe there is nothing more fundamental than the right to see a doctor when you are sick.” 1990 Senate campaign ad Talk like this stops rationing But could obscure U.S. solvency problems until they are too big to fix?
Short history of U.S. medical care 1912 – safe to go to doctor 1932 - invention of health insurance 1942 – employer-based insurance 1953 - no more “natural” deaths 1965 - Medicare and Medicaid 1983 - DRGs 1996 – SCHIP 2009 – reformed American health care?
Conclusion: Rationing is unnecessary $700 billion in annual waste; often hurts health Reform is necessary Must reduce this annual waste; won’t hurt anyone Reform will still be attacked as rationing Disagreement over which spending is wasteful Can’t duck need to solve fiscal problems U.S. health spending is unsustainable
Guide to Health Care Reform Public Option Insurance Reform
The Kennedy Bill
$1+ trillion price tag
Subsidizes up to 500% of poverty
Income of $110,000 for family of four
New disability entitlement program
The Senate Finance Bill: $1.6 Trillion
Senate omits Medicaid reform? 2nd Class medical care? Low reimbursement 2/3 doctors shun patients States vary widely Dominates most state budgets Long-term care, end-of life issues ignored
Healthy Americans Act Covers everyone Bipartisan No new taxes Scored by CBO Fits Obama’s 8 principles The perfect breed?
Other bills to come…?
Obama’s choice will matter most
Big issue is the tail: public option Tail must fit dog Must not wag dog
Some tails look ridiculous
Public option: no bullies allowed Need a level playing field
Schumer Option Fair competition between dogs
Conrad’s Co-op Option
Isn’t this radical? .
Key relationships in health care Triage Convenience Reimbursement Self-referral Medicare Medicaid Tax subsidies Tax exemption Rationing? Anti-trust exemption Managed care Utilization review Capitation payments HMOs