S P E E C H

Health Care Cost and Quality Concerns: What the National Education Association Can and Should Be Doing for Its Members

Speech to NEA Board of Directors

Washington, DC

October 5, 2001

Henry E. Simmons, M.D., M.P.H., F.A.C.P.
President, National Coalition on Health Care

Thank you, Stan, for your generous introduction, and good afternoon, ladies and gentlemen.

Stan has just given you an excellent description of one of the critical problems in our health care system – i.e. rapidly rising costs, which will, with present trends, double in just seven more years. This is a disturbing finding in its own right but becomes even more so when you consider that despite that huge and rapidly growing expenditure, our nation’s health status is no better, and in fact in a number of important areas is worse, than that of other developed nations, all of whom spend far less per capita than we do. It is simply a myth that we need more money and more medical care to produce better health. In fact, often the exact opposite is true, i.e. more health care leads to worse, not better health outcomes. So there are a number of reasons why we should be disturbed about rising costs. But costs are not the only problem.

I have been asked to describe the two other critical problems which exist, and how they and the cost problem are interrelated. Then I will describe how these three problems, if left unaddressed, will adversely affect your millions of members and their families, as well as our nation.

In my judgment, the two central health care questions facing you as NEA leaders are, first: how can NEA’s tremendous political leverage and purchasing power be mobilized to improve the quality and value of care for your members. The second is – how can NEA work more effectively to help achieve the health system reforms necessary to address the problems our nation and NEA’s members face.

Since your members currently use tens of billions of dollars worth of health care each year, and since much of that huge and rapidly growing expenditure is currently wasted, it is important that NEA leadership succeeds in achieving better quality and value for those you represent.

There are many barriers which will have to be dealt with if you are to succeed. I have been asked to describe these barriers and what you and our nation will have to do to overcome them. I will conclude by suggesting to you a series of steps NEA can take, which could dramatically improve quality and safety and the health and welfare of your participants and their families and, at the same time, save billions of dollars.

The most important message I want to leave with you today is that, to achieve those goals, you will have to do many things far differently in the future than you have done in the past.

The views I will share with you are those of the National Coalition on Health Care, the nation’s largest and most broadly representative alliance working to achieve comprehensive health system reforms. Our members include NEA, the American Federation of Teachers, the American Federation of School Administrators, as well as most of the nation’s major unions, consumer, religious and provider groups, and a number of large businesses. We are non-partisan. Former presidents Bush, Carter, and Ford serve as honorary co-chairs. Former Iowa Republican Governor Bob Ray and former Florida Democratic Congressman Paul Rogers are our working co-chairs. Our 80 members represent or employ over 100 million Americans.

Our Coalition is working on three parallel tracks. The first focuses on building the case – and making the case – for system-wide health care reform. This involves issuing studies on the major problems in our health care system and then educating leaders in various sectors of American society, that is the press, members of Congress and the executive branch about these problems and the need to address them.

The second track focuses on current legislative debates that Coalition member organizations decide collectively to impact – by testifying and through meetings with the Administration and the Congress.

The third track of our work is our Quality Improvement Initiative which reflects a recognition by the Coalition’s members that even as they work collaboratively to affect public policy, there is a real opportunity to use the leverage of their individual and joint purchasing power to create real improvements in the care they buy. I will describe this Quality Improvement Initiative later in my presentation.

But first, what are the health care problems you as NEA’s leaders face? There are three, and they are interrelated.

PROBLEM #1 RISING COSTS

The first problem has already been described to you and that is costs – which are now out of control. Despite all your efforts to date, your premium costs are likely to rise annually at 4 – 5 times the inflation rate. In a very short time your already high health care costs will double and there is no end in sight.

Those most adversely and unfairly affected by rising costs will be employers, such as yours, who currently provide health insurance, and middle-class workers and their families, i.e. your members.

Rising health care costs will also have a huge negative impact on our economy. The Congressional Budget Office has warned that even under the most optimistic scenario in which every cent of the surplus was used to pay off the national debt, the future cost of paying for health and retirement benefits will break the federal budget. The CBO concluded that “runaway” health care costs are the largest single force that will drive our nation back into unsustainable deficits and that this will continue unless major changes are made at every level of our health care system, i.e comprehensive system reform.

PROBLEM #2 IS DECREASING INSURANCE COVERAGE

Largely due to rapidly rising costs, coverage is decreasing and the employment-based health insurance system, i.e. the system which covers most of your members and their families, is eroding. As the next chart shows, there are 10 million more uninsured today than a decade ago. 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 economic downturn which is underway is likely to dramatically add to those already high numbers.

As costs rise and as coverage falls, more costs will be shifted to employers who currently provide coverage to pay the costs of care for the uninsured. Ultimately, those costs will be passed along to their employees and your members in the form of lower wage increases, reduced benefits, or higher out-of-pocket costs. This inequitable cost-shift will force more employers to drop or cut health insurance or go to defined contributions, and the erosion of the employment-based system will increase. Those who lack coverage will find it increasingly difficult to get timely care and thus their health is likely to be adversely affected.

PROBLEM #3 IS POOR QUALITY

These first two problems are bad enough. But this is not all. There is a third major problem, i.e. poor quality, which I want to focus on today. Many people have at least some understanding of the magnitude of the coverage and cost problems, but very few understand that our third problem, poor quality, is even more serious and that unless it 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 could end up wasting 35-50% of all that you spend. In recent Congressional testimony, Treasury Secretary Paul O’Neill, who has served as one of our important individual supporters and who has extensively studied the quality problem, stated that in his judgment this high percentage waste is now the case in our health care system. Lack of attention to quality then could result in more than 350 billion dollars of waste each year.

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, and NEA’s focus in bargaining, has been almost exclusively on cost. This has led to efforts to control costs by limiting fees, increasing beneficiary cost-sharing, decreasing benefits, and increasing the use of managed care.

A large and growing body of evidence raises questions as to whether any or all of these approaches will, over the long term, contain costs. The reason is that the major drivers of rapidly rising cost are increasing intensity of care and a sharp increase in our use of technology, especially for care of the growing number of chronically ill and the elderly. This raises the critical question: Just how appropriate is the use of our technology and 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 is that the major underlying cause of our 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 and 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 33 fold across the nation and there are many other examples of scientifically unjustified high variations in 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 varies dramatically depending not on need or solid evidence, but on where you receive your care. Dr. Jack Wennberg, of Dartmouth, puts it succinctly when he says: “In health care, geography is destiny.” With so many different approaches being applied to similar patients, it is not possible that all physicians are doing the “right thing”.

Medical accidents and errors are rampant in our health care system. The President of Kaiser Permanente has stated that, “Extrapolating from what we know, one can conclude that the third leading cause of death in the United States, just behind cancer and heart disease, is fatal mistakes that occur as a result of the misuse of our medical technologies.” He estimates that this results in millions of preventable injuries and more than 250,000 preventable deaths each year.

Dr. Lucian Leape, of Harvard, has estimated that one in every 300 hospital admissions ends in a preventable death, making hospitals one of the most dangerous settings in our nation.

But as big as the problem of errors is, they are only a part of the quality problem. After a year of study, the President’s Quality Commission 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”. These problems exist everywhere, in managed care, in fee-for-service, and in our supposedly preeminent institutions. The Institute of Medicine (IOM) of the National Academy of Sciences recently released its second quality report. The report concluded, and the majority of the nation’s health care providers now agree, that our health care system is “broken”, and IOM called for a major system overhaul and a major national quality improvement effort.

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 a trillion dollars a year for its services. Yet this is now the case in our health care system.

The question I believe you as leaders of NEA now need to ask yourselves is why do you and your members continue to pay for and waste billions of dollars to perpetuate and reward a system this flawed?

Here’s where some prevalent myths become barriers to action. For instance, some honestly believe there are quality problems elsewhere, but not with “my” doctor or “my” hospital. Some feel that report cards on the system will fix its problems. Some feel that if it wasn’t for managed care or the insurance companies or the bureaucrats, the system would be just fine. Some feel we just need to spend more money to fix the system. All of these are myths. The fact is the system is structurally flawed, and pitifully little is being done to fix it. We as a people and you at NEA continue to spend hundreds of billions of dollars per year to support the present 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 becoming available to help you do just that. Time will not permit me to describe them all, but let me review several which our Coalition has developed.

Under a two-year federal grant from the Agency for Healthcare Research and Quality (AHRQ), our Coalition and the internationally respected Institute for Healthcare Improvement have launched a joint initiative – Accelerating Change Today (A.C.T.) for America’s Health – to identify and disseminate exemplary cases of quality improvement in health care and to facilitate the adoption of such better practices by providers, health care plans, insurers, and consumers.

Our A.C.T. initiative has already released authoritative reports on best practices in two areas – how to reduce medical errors and improve patient safety, and how to improve care at the end of life. Both demonstrate how dramatic improvements have been made by a wide variety of health care institutions. They show the way. They can now be replicated by other institutions. And that’s where NEA’s leverage in the negotiation process with health care plans and providers becomes important. Using your bargaining leverage and purchasing power you and other large health care negotiators can cause these “best practices” to be rapidly adopted by the providers who care for your members. There is no longer any excuse for the status quo. We will soon have available two other important case studies on how to improve care in our intensive care units and how to improve care for the 125 million Americans with multiple chronic diseases.

We recognize that the development of best practices case studies is only the first step. In order to assure that such best practices are applied to the care of your beneficiaries, your negotiators will need additional tools which must still be developed. Our Coalition is prepared to develop these tools with you and we are currently in discussion with your leaders and staff of a number of the nation’s largest unions and Taft-Hartley plans to raise the resources necessary to complete this process. Lynn Ohman, Stan Wisniewski, and Mike Kahn deserve a great deal of credit for recognizing the need here at NEA for a major system reform and quality improvement effort.

WHAT ELSE MUST BE DONE AND WHAT LESSONS HAVE WE LEARNED?

As I noted at the beginning, although quality is a central problem and one which you can impact, it is not the only problem which must be addressed. How do we deal with the totality of the systemic problems we face? We know how not to do it. We know we can’t do it with band-aids or patches or partial reforms such as a bill of rights or changes in tax treatment of health care benefits. We have forty years of experience attesting to the failures of partial strategies. Partial steps can make a contribution, but more extensive reforms will be necessary. What are those reforms?

STEPS NECESSARY TO ADDRESS OUR PROBLEMS

After a great deal of study, our Coalition has concluded that solution will ultimately depend on the achievement, through a public/private partnership, of the following goals:

• Making sure every American has health insurance coverage;
• Improving the quality of all care;
• Controlling total system costs and stopping cost shifting;
• Creating a more viable and equitable mechanism of financing; and
• Simplifying administration.

Why must all these goals be achieved? Because all these problems are inextricably intertwined. You can’t solve one without addressing them all.

As I indicated earlier, it’s a vicious cycle. Without universal coverage, you cannot assure equity or quality, and in the absence of quality, you cannot 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.

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 and attaining health outcomes at least as good as, and in a number of areas better than ours.

CONCLUSION

As a major cause of unnecessary harm and cost escalation, quality has become a central problem. Since there is no greater opportunity to control costs than by improving quality, it is essential that you as NEA leaders allocate the resources necessary to allow your staff to mount an extensive effort to address the issue of quality now. As I said earlier, our Coalition is prepared to help your staff develop the tools and processes that will enable you to do so, but substantial additional resources will have to be allocated to them.

However, no matter how hard you try, your actions alone cannot solve the whole problem you face nor achieve the essential reform of universal coverage. Nor can you alone stop the deterioration of the employment based health care system or stop cost shifting to you and your members. These are going to require national policy changes.

But believe me – the needed reforms will not happen unless those currently hurt by the status quo, i.e., those such as you, become much more active and effective and better resourced. Last year, groups opposing necessary reforms spent over $120 million lobbying their views, while those supporting needed reforms were badly underfunded. This must change because the system will not correct itself as long as you and other payers are willing to spend 1.3 trillion dollars on the status quo. The system will not change as long as the public and your members fail to understand the magnitude and severity of the problem and demand change. It will not change if payers and consumers don’t find a way to identify, reward and support those providers and systems who want to, and who are ready to provide better quality and value. Until leaders such as you begin to use your influence, your credibility with your members and your considerable economic and political leverage, the system will not change.

As fiduciaries for millions of NEA members, I believe you have an obligation to channel much more of your energy and multi-billion dollar annual health outlay into efforts to make major quality improvements and to reform the system. If you and others like you do so, this system will change and it will change rapidly to the benefit of the millions you represent and to the nation.

Working together NEA and the other members of the National Coalition on Health Care can and will make a difference. In doing so, we will create a better, more equitable, and more affordable health care system.

Thank you for this opportunity to be with you and for your help.