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National Coalition on Health Care
“Crisis and Cost of Inaction”
National Press Club
May 19, 2003

Henry E. Simmons, M.D., M.P.H., F.A.C.P. President

Good afternoon and thank you for attending today’s briefing on the impact that the current crisis in health care is having on America’s business, and the cost of inaction.

I am Dr. Henry Simmons, president of the National Coalition on Health Care — the nation’s largest, most broadly based alliance working to improve our health care system. Our members represent large and small businesses including giants such as AT&T;, SBC Communications, Ahold USA, Verizon, Georgia-Pacific and ALCOA, as well as the largest labor, provider, religious, and consumer organizations, and five of our nation’s largest health and pension funds. We are non-partisan. Our Honorary co-chairs are former Presidents Bush, Carter, and Ford. (A letter commending our work and signed by President Ford and President Carter is in your packet.) Our Co-Chairs are Bob Ray, former governor of Iowa, and Paul Rogers, former Congressman from Florida. Bob is with us today, and you will be hearing from him shortly.

Your packets contain information on the Coalition as well as a listing of our member organizations and individual supporters. Our almost 100 member organizations employ or represent more than 150 million Americans. Thirty-seven (37) organizations have joined the Coalition over the past several months because they have come to the conclusion that the problems in our health care system are so enormous and so pervasive that they can only be solved by a coordinated effort of all segments of our society. Their actions are a powerful sign of strong, broad and growing support for comprehensive health system reform.

No responsible group today disagrees with the statement that our health care system is in crisis — a crisis of unprecedented magnitude which adversely affects us all, those who use, deliver, or pay for health care.

More and more observers are adopting the characterization we introduced in our recent report, “A Perfect Storm” — a health care storm caused by the destructive combination of massive cost increases, rapidly decreasing coverage and serious, pervasive, costly and wasteful quality and safety problems — problems which a number of authoritative reports have estimated result in waste of between 300 and 500 billions of dollars each year, as well as unnecessary harm or death to millions of our fellow citizens. (By the way, this waste results in an unnecessary cost borne by all businesses who provide health care coverage of almost $2,000 per employee, per year.)

Congressional Budget Office and Treasury officials have concluded that our health care system is broken and must be restructured from top to bottom. Undersecretary of the Treasury Peter Fisher has warned that over time we face trillions of dollars of deficit if this cost problem remains unaddressed.

After a great deal of study, our Coalition has concluded that systemic problems of this magnitude cannot be rectified with a “patchwork” strategy or with any of the proposals currently before Congress. Neither can they be dealt with by any one private sector company or group. It is too large.

We need comprehensive national policy changes which achieve the following principles – principles we have long supported.

  • Health insurance for all
  • Improved quality of care
  • Controlling total system costs and stopping cost shifting
  • Creating a more viable and equitable mechanism of financing (i.e. a level playing field) and
  • Simplified Administration

Your press packet and our website contain materials which explain why we have come to these conclusions.

Your packets also contain a report, “Charting the Cost of Inaction”, and a letter to America’s business leaders that will sent by businesses in our Coalition encouraging others to join our effort.

We have three primary purposes in our briefing today. The first is to give you an opportunity to hear concerns and views of a diverse group of our nation’s corporate leaders as to the profound effects this crisis is having on American business and its continuing ability to provide employees and their families with health care coverage.

The second is to demonstrate that there is now strong, broad, and growing support for political action that will lead to necessary and comprehensive health system reforms.

The third purpose is to show that contrary to conventional wisdom and over the long term, the cost of action, of the reforms necessary, is far less than the cost of inaction. Reform makes economic sense, delaying reform does not.

We will now proceed to our speakers.

Biographies of all of the speakers are included in your packet, so I will introduce them in the order in which they will speak:

  • William Daley is the President of SBC Communications
  • Morton Bahr, President of the Communications Workers of America, is representing both CWA and the AFL-CIO
  • James Rogers, Chairman of the Board, President and CEO of Cinergy
  • James Parkel, President of AARP
  • Carlos Gutierrez, Chairman of the Board, President and CEO of Kellogg Corporation
  • Sean Harrigan, President of the Board of Administration of CalPERS
  • Dick Baird, President and CEO of Giant Foods, and
  • Robert D. Ray, former Governor Robert D. Ray, Co-Chairman of the National Coalition on Health Care

You have now heard our Coalition’s views on the health care crisis and the views of prominent business leaders as to the impact of that crisis on them. We now want to cover our third agenda item, i.e. the cost to the nation of inaction.

As perceptions of crisis deepen and demands for reform intensify, the political discussion of potential health care policy changes – and, especially, of options for comprehensive reform – has turned, predictably, to the issue of budgetary impact: How much would reform cost?

In the welcome burst of political buzz about reform, another question, at least as important as the first, has received much less attention; How much will inaction cost? What will happen if we do nothing to reform the health care system – nothing to secure health coverage for all Americans, nothing to contain or constrain surging costs, nothing to improve the quality of care?

Mark Goldberg, our Senior Vice President for Policy and Strategy, and I have prepared a chartbook, which we are releasing today, that is a first cut at an answer to that question. We do so because we see a need to address, at least preliminarily, the cost of inaction – before the momentum for reform gets compromised by calculations on only one side of the ledger.

The report makes five points:

First, in the absence of reform, health insurance premiums will continue to rise rapidly. We project that the average annual premium for employer-sponsored family health coverage will reach $14,545 in 2006. This figure is more than double the average premium in 2001 and is more than $5,000 higher than this year’s estimated average of $9,160.

Second, in the absence of reform, the number of uninsured Americans will climb substantially over the next several years. We project that the number of uninsured Americans will reach 51.2 to 53.7 million in 2006. This would represent the addition of a least 10 million Americans to the ranks of the uninsured in just five years. That huge toll needs to be counted as a cost of inaction, even if it is not expressed in monetary terms.

Third, most Americans are apprehensive and, as we have shown, realistically, so – about the future affordability of health care. In a new Harris Poll, commissioned by the National Coalition on Health Care, 78 percent of those surveyed said that they expected that the number of people like themselves “who won’t be able to afford the medical care they need” will be bigger in 2008 than it is today. Only 17 percent expected that number to decline.

Fourth, any reckoning of the potential budgetary impact of reform would be one-sided and incomplete without taking into account the potential impact of effective cost containment. The National Coalition on Health Care has long believed that the savings from cost containment, in a comprehensive package of health care reform, could more than offset the cost of securing universal coverage.

In the report, we make some assumptions about total health expenditures and compare these to the government’s current estimates. The difference between our estimates and the government’s projections represents an estimate of how much money an effective cost containment strategy could potentially save – not, we would caution, a calculation of expected saving from any particular set of measures. Over three years, these estimates of potential saving total $418 billion. It seems clear that over time, if not in the very first year of reform, the potential saving from effective cost containment would exceed, and by growing amounts each year, the incremental cost of universal coverage.

Lastly, time makes a difference. In the absence of reform, as we have said, health insurance premiums will rise to an average of more than $14,500 for family coverage in 2006 and the number of uninsured Americans will climb to at least 51.2 million in that same year. And the longer our nation waits to reform its health care system – to achieve universal coverage, contain costs, and improve the quality of care – the more reform will ultimately cost. As noted before, reform makes economic sense: delaying reform does not.

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