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National Conference of State Legislatures
Sixth Annual Health Conference
New Orleans, Louisiana
“Getting America Insured: A Bipartisan Approach”
November 17, 2002
Henry E. Simmons, M.D., M.P.H., F.A.C.P.
President, National Coalition on Health Care

Good morning. I’m especially pleased to be with you today, because I believe that the actions of the legislators in this room could have a major impact on the crisis I will be discussing.

The issues that you will be addressing in this conference represent a major challenge to our nation and to our political leaders. Make no mistake about it: The American health care system is in deep trouble. We are spending much more than we should, even though we fall far short of insuring all our citizens. And we are not getting good value for our money. As I will explain in a few minutes, much of the health care that we do provide is either unnecessary, inefficiently or ineffectively delivered, or outright dangerous.

It is high time that America faces up to these problems, for they are going to grow worse. It is especially important to emphasize that the cost of action – of the reforms that will be necessary – is far less than the cost of inaction. And while progress can be made and has been made by state governments, ultimately no one state can solve these problems on its own. We are going to need – and I hope that you will join us in seeking – comprehensive national legislation. Without major national reforms the citizens you represent will continue to suffer, your businesses will see more and more of their budgets eaten up by increases in health care costs, and your state budgets will be strained even more than they already are.

The National Coalition on Health Care has issued a report that graphically describes the huge storm facing our nation’s health care system. The main point I want to leave with you today is that the storm we face cannot be resolved by using the patchwork efforts of the past. Neither can the storm be dealt with by addressing only one or several of the problems we face. Resolution will require comprehensive health system reform. This briefing will explain why we have come to these conclusions.

Before beginning I’m going to take a few moments to describe who we are. The National Coalition on Health Care is the nation’s largest and most broadly representative alliance working to help our nation understand and to address the serious problems we face. Our Coalition is non-partisan and has always carried out its decade-long work in a “no-fault” manner. Former Presidents Bush, Carter, and Ford are our Honorary Co-chairs and our working Co-chairs are former Republican Governor Robert D. Ray of Iowa and former Democratic Congressman Paul G. Rogers of Florida. Our 95 members include major corporations, such as AT&T;, Georgia Pacific, S.B.C., and Alcoa. We also have at our table the nation’s largest consumer, provider and labor groups, including AARP, AFL-CIO, and the Association of Academic Health Centers, and organizations representing all the nation’s major religious faiths. We are the only broadly representative group in our country today working for comprehensive health system reform. Our members relate to, represent or employ over 100 million Americans.


I have been asked to do three things in this briefing:

  • First, to summarize the nature and magnitude of the storm which faces us, the trends we expect from this point forward, and how these problems will adversely affect our society, the health care system, and those in federal and state government who administer so much of our system.
  • Second, to describe in broad terms the reforms that we believe will be necessary to deal with this storm.
  • And third, to say a few words about what we feel must be done to move the health care debate toward solutions, the steps we are taking to help do so, and what I feel state governments can and must do to help achieve the reforms necessary to solve our problems.


Many of you are probably familiar with the best selling book “The Perfect Storm,” which chronicles the formation and unleashing of the most powerful storm in this century. It occurred because of the unprecedented confluence of nature’s most awesome forces. As with most storms there were warnings, and those who ignored those warnings lost their lives.

We recently described the problems besetting our health care system in similar terms in a report entitled “A Perfect Storm: The Confluence of Forces Affecting Health Care in America.” David Broder, the Pulitzer prize-winning Washington Post journalist, wrote an extensive essay on our report which appeared in newspapers throughout the country. Our report shows that a “Perfect Storm” has now formed in our health care system; but unlike nature’s storm, this one will not abate in short order.

In fact, there is no end in sight, and there is reason to expect ever increasing intensity and damage. Never in our history have we faced this number of problems and of this magnitude simultaneously.

What are the elements of the storm? There are three, they are interrelated, they are systemic, they are each rapidly growing worse; and, coming together, they have formed the equivalent of nature’s perfect storm.


The first element of the storm is costs. As this chart shows, health care spending in the United States, already the highest in the world on a per capita basis, will soon double to over 2.6 trillion dollars.

Despite all cost containment efforts to date, health insurance premiums rose this year at a rate eight times faster than general inflation – the biggest one-year surge in premiums in more than a decade – and there is no end in sight. In just the past three years, the already high premiums for employer-sponsored insurance have jumped more than 35 percent. It is estimated that in only two more years the average family health insurance premium will exceed $10,000 a year.

Rising health care costs will have a huge negative impact on our economy. The Congressional Budget Office has reported that what it termed “runaway” health care costs are the largest single force that will drive our nation back into unsustainable deficits unless major changes are made at every level of our health care system. In other words, unless we achieve comprehensive system reform.


The second element of the storm is decreasing insurance coverage. Largely due to rapidly rising costs, coverage is decreasing and the employment-based health insurance system is eroding. Over time, an average of almost one million more Americans are added to the ranks of the uninsured each year. Most of these are from working families. We are already at a point where almost 80 million Americans are either uninsured or underinsured. That’s one out of every three non-elderly Americans. The current economic downturn has already added significantly to those already high numbers and will continue to add more.

Because our nation lacks a system of universal coverage, as costs rise and as coverage falls, more costs will be shifted to those employers who provide coverage in order to pay for the growing number of uninsured. If the presently proposed and inadequate Medicare and Medicaid budgets are sustained, even more costs will be shifted to private sector payers and individuals. This inequitable cost-shift, which states in their efforts to control Medicaid costs will contribute to, will force more employers, especially small businesses, to drop or cut health insurance. This will directly impact the middle class most of whom currently depend on the employment based health insurance system as their and their families safety net.


These first two problems are bad enough and in themselves create huge storm forces. But this is not all. There is a third major element of the storm — poor quality — which I want to focus on today, because until the quality problem is addressed, our coverage and cost problems cannot be fixed. The reason is that these three problems are inextricably linked.

Any good businessman knows that if you don’t pay attention to quality, you will end up wasting huge amounts of money. In Congressional testimony Treasury Secretary Paul O’Neill, who has served as one of our individual supporters and who has extensively studied health care quality, estimated that because of our lack of attention to quality, we are currently wasting 30-50% of all that we currently spend for health care. A recent study by the Midwest Business Group on Health and the Juran Institute came to a similar conclusion. Lack of attention to quality then results in waste of more than 500 billion dollars each year. To business payers this translates into $1,700 – $2,000 of waste per covered employee.

Even though we have long known how difficult it is to contain costs in any sector if quality is poor, to this point in health care the focus – by government and private payers alike — has been almost exclusively on cost.

It is now clear that all the strategies used to date have not succeeded, and will not succeed, in containing costs. The reasons are that the major drivers of rapidly rising cost are increased intensity of care and a sharp increase in our use of technology. This is especially for care of the 120 million Americans who are chronically ill and the rapidly growing number of elderly. This raises the critical question: Just how appropriate is the use of our technology, and just how good is the quality of our care?

A discussion of the quality problem is very timely, because Congress has been attempting to craft a “Patients’ Bill of Rights Act” to “fix” the quality problem which has allegedly been caused by managed care. This is a graphic illustration of how poorly understood the quality problem is.

We do have very serious quality problems, but the real problems are not due to managed care and will not be solved by more appeals, greater access to specialists, more second opinions, more choice, an increased right to sue, or unlimited amounts of health care.

The reason for the major underlying quality problem is not bad health professionals, though there are some. Poor quality is mostly due to inadequate science, a lack of evidence-based medicine, inadequate technology assessment, deficiencies in our data, major gaps in our quality control, standard setting, and information dissemination systems. In other words, we have a structurally flawed system.

As a result, too often no one, specialist or not, knows the right thing to do. The uncertainty which pervades much of medical practice today is manifested by the huge variation in care which exists from region to region, doctor to doctor, hospital to hospital. For example, breast cancer surgery rates for similar conditions vary 10 fold across the nation and there are many other examples of high variations in use (ICU care, prostate surgery, antibiotic use). In fact, the next time you hear someone claim that we have the best health care system in the world, you can reasonably ask, “Which one?”, because the type of health care delivered often varies dramatically depending not on need or solid evidence, but on where you receive your care. Too often we have huge differences in cost, with no differences in outcome. With so many different approaches being applied to similar patients, it is not possible that all physicians are doing the “right thing.”

Studies from Harvard and elsewhere show that medical accidents and medical errors are rampant in our health care system, and that the combination of medical negligence, errors, and accidents constitute the nation’s “hidden epidemic.” After a year of study, the President’s Quality Commission, on which five of our members sat, concluded, “Exhaustive research documents the fact that today, in America, there is no guarantee that any individual (insured or not, rich or poor), will receive high-quality care for any particular health problem. The health care system is plagued with overuse, underuse, and misuse of health care services.” The Institute of Medicine of the National Academy of Sciences in its second quality report concluded that our health care system is “broken” and called for a major overhaul. They also called for a major national quality improvement effort backed by a billion dollars of federal funding.

In a speech at the National Press Club, Dr. David Lawrence, President of Kaiser Permanente, the nation’s largest HMO and a member of our Coalition, concluded that, “Extrapolating from what we know, one can conclude that the third leading cause of death in the U.S. (just behind heart disease and cancer), is fatal mistakes that occur as a result of the misuse of our medical technologies.” He estimated that poor quality results in over 250,000 preventable deaths each year. He concluded that, “Aside from the 43 million Americans lacking health insurance, the safety of health care is the single most important health care issue today.”

There is no other business in this country that would be allowed to continue to operate even a day with quality problems of the magnitude I have described, nor would society pay more than 1.5 trillion dollars a year for its services. Yet this is now the case in our health care system.

The question I believe we all need to ask ourselves is: why do we continue to spend more than 1.5 trillion dollars each year to support a deeply flawed system and virtually zero to reform it or to improve its quality.

We know we can do far better. There is absolutely no doubt that we can, and fortunately tools are now available to help do just that. A number of these tools have been developed by our Coalition.


So these are the problems we face. We have concluded that systemic problems of the magnitude I have described cannot be solved by a “patch work” strategy. Forty years of national experience attests to the bankruptcy of such an approach.

The real tragedy here is that none of the tools the private sector, the states and federal government are currently using — or contemplating using — including a Patients’ Bill of Rights, cost sharing, managed care, tax rebates or MSA’s — have even a remote chance of successfully dealing with the storm we face.

We believe that through a public-private partnership and a partnership of federal and state governments, our nation will have to craft a set of policies that ultimately achieves the following goals:

  • Making sure every American has health insurance coverage; not just those over 64;
  • Improving the quality of all care;
  • Controlling total system costs and stopping cost shifting;
  • Creating a more viable and equitable mechanism of financing (i.e., creating a level playing field), and
  • Simplifying administration.

Why must all these goals be achieved? Because our problems are inextricably intertwined; you cannot solve one without addressing them all.

It’s a vicious cycle. Without universal coverage, you cannot assure equity or quality, and in the absence of quality, you cannot afford universal coverage, nor can you contain costs. In addition, without universal coverage you can neither make the system less complex, control costs, stop cost-shifting, achieve a level playing field of equitable financing, or create a truly competitive market-based system. In fact, those who advanced the managed competition hypothesis warned us that it could not work in the absence of mandatory universal coverage and government oversight.

To those who claim that our nation cannot afford a system of universal coverage, we would say this: Every other advanced nation in the world has done so while spending one half to two thirds as much per capita as we do while attaining health outcomes at least as good as, and in a number of areas better than ours. We do not need more money, we need a better system.

If we do not achieve major reform, the problems of our health care system are going to overwhelm state governments and private sector payers. The fact that these problems are so large and continue to grow worse – and that they are so adversely affecting our economy and millions of working middle class Americans — means that at some point this situation will blow up. The political process will be forced to deal with it. Since incrementalism is clearly not a sufficient response, major reforms will be necessary.


Growing public and business anger about health care will accelerate this process. The most recent Harris Poll shows that only 19% of the public are happy with the health care system. In fact, more than 56% of the public now support what the pollsters termed “radical” health system reform. This is now the shared view of the public, employers, health plan managers, and even physicians. The support for major reform among these groups is now higher than at any time in the past.

Because of this business and public concern, political support for reform is growing. There are now key leaders in both parties, in both houses of Congress, and in many states who are ready to return to the pursuit of universal coverage and comprehensive reform. Many of these political leaders have asked for our help. In our last meetings of the Coalition’s membership, Senators Kerry, Breaux, and Grassley have spoken to us of their concerns. We are working behind the scenes with a growing number of Republican and Democratic leaders.

The sharp increase in media coverage on this subject is another sign that this issue is growing rapidly in importance. Just in recent weeks, our Coalition’s work has been noted in major articles in the New York Times, Wall Street Journal, Washington Post, Los Angeles Times, and Christian Science Monito, and in a piece in Fortune magazine entitled, dramatically, “The Coming Crash in Health Care.”

Another indicator of growing support for comprehensive reform is growth in the Coalition’s membership. We have added more new organizational members in the past year than in any previous year in the Coalition’s existence. In the past several months alone, 21 organizations have signed on to our effort, including Georgia-Pacific, Alcoa, the American Heart Association, the American Cancer Society, and the Motion Picture Association and all of the major guilds in Hollywood. In addition, we have attracted support from a number of the nation’s largest state health and pension funds including CalPERS, Ohio, and New York State.

The rationale for these large health and pension funds joining our effort is illustrated by several excerpts from the letter CalPERS’ President sent to other funds urging them to join us:

“I am writing to you at this time to invite your State Health Benefit Plan to join with CalPERS in becoming an active member of the National Coalition on Health Care. CalPERS joined the National Coalition a few months ago because we have determined that there must be an intensified effort to obtain federal government focus in confronting the current destructive increases in the cost of health care. Any coalition must be broad-based and outspoken to make any progress in this difficult area.

CalPERS has struggled for several years with the challenge of providing affordable high-quality health care protection to the 1.2 million lives for which we are responsible. At the present time,however, CalPERS is confronted with increases in health insurance premiums that are so great as to destroy our ability to provide the health care protection our members deserve and expect. In our opinion, neither current market economic forces nor current public policies offer any hope for relief from these accelerating prices in the foreseeable future. We know that these same conditions confront all organizations, public and private, that are charged with similar responsibilities to provide health care protection….

It is CalPERS’ belief that the NCHC provides an opportunity to help focus and influence public policy. Collectively, the organizations present in the NCHC have extraordinary credibility. The Coalition’s breadth, non-partisan nature and reputation for reliable analysis make it a potentially powerful voice for national health reform.”


Over the last decade, many of the efforts to deal with the issues facing our health care system have taken place in the states rather than at the federal level. State legislatures have implemented many programs to address the availability and affordability of health insurance, especially for small businesses and individuals who have the greatest difficulty obtaining coverage.

Many states have made substantial progress in covering the uninsured through expansion of Medicaid and implementation of the State Children’s Health Insurance Program. Unfortunately, the growth of these programs has not been able to offset continued growth in the numbers of uninsured Americans. And with states facing a combined budget deficit of an estimated 58 billion dollars or more this year, the funds available to you to continue to expand – or even to maintain – current levels of coverage are just not there. In addition, the ability of states to address these problems has been limited by many factors, including ERISA and other restrictions placed on you by the federal government.

There are other ways that states can make headway in addressing the problems of the health care system. States have been – and can continue to be – laboratories for testing the effectiveness of various reforms and strategies. Your ability to regulate health care providers and insurers – and your financial clout in the health care marketplace — makes it possible for you to take important steps to improve the quality of care provided in public programs and through private insurance. Additional malpractice reforms, which could have beneficial effects on the cost and quality of care, are also possible.

But I would urge you to add another strategy to the range of steps that you are taking to expand access, reduce the growth in health care costs, and improve the quality of care. States – and state legislators in particular – can collectively be enormously effective advocates for comprehensive reform at the national level. Nobody knows better than you do how problems in the health care system affect the lives of your citizens – their health, their economic well-being, their hopes and prospects for the future.

Individually, states can continue to do all that is possible to make progress on health care. But at the same time, collectively you can make a huge difference by pushing the national government to take the steps that only it can take – toward universal coverage, effective cost containment, and a major and sustained effort to improve the quality of care throughout our health care system.

Congress and the President need to hear from you — not as partisans, but as elected leaders who know first-hand how important health care reform could be to the people you represent.

Health care is likely to be the transcendent domestic issue in the next presidential election – and it should be. I hope that you will do all you can to call for, and contribute to, a broad national debate about what should be done.


I will close with a few comments on what our Coalition will be doing between now and the Presidential election to help energize, frame, and advance a renewed national debate.

First, we will issue and publicize important new reports on the limitations of the incremental health care measures that have been passed since 1994 and on the inequity of health care financing. With these reports we will be able to focus increased attention among policymakers and voters alike on the evidence and the chain of logic that support comprehensive system-wide reform.

Second, we will step up our activities on Capitol Hill. We will continue to meet with members and their staffs individually and in groups. In those meetings and in public testimony, we will press the case for comprehensive reform and for proceeding selectively and sensibly with incremental changes.

Third, the Coalition’s team in Washington will continue to brief reporters, editorial writers, and columnists, many of whom we have helped, as trusted sources of information, for years.

And fourth, we will continue to grow. As our membership expands, so too does our reach, our breadth, and our political leverage.

We hope that you will add your voices, your prestige, your political significance, your understandings and experience, your capacities to articulate the concerns of your constituents – to the growing pressure, and the growing momentum, for comprehensive national health care reform.

You and we know that reform will not be easy. It will take hard work, political courage, and imagination. And it will take something else besides: the recognition that the stakes are so great, and the need for reform so compelling, that we will have to put aside partisan differences for the good of the country.

In other words, we need statesmanship — and where better to find statesmanship than in state legislatures?

© 2003 National Coalition on Health Care. All rights reserved

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