S P E E C H

PRESENTATION TO THE ANNUAL LEGISLATIVE FORUM
LEAGUE OF WOMEN VOTERS
GOVERNOR CALVERT HOUSE
ANNAPOLIS, MD
MARCH 17, 1998

      Good afternoon. Because of my respect for the work of the League of Women Voters, I am especially pleased with this opportunity to discuss with you the state of our nation’s health care system. As you know, our nation began, and the League was a part of, a major health care debate during the Presidential campaign of 1992, at which time both candidates agreed our health care system was already in crisis. That attempt at reform ended without action in 1994, and many breathed a sigh of relief assuming our problems had been solved. Only one thing has changed since then. That is, all the problems which existed then have grown worse, and because of that, you, your families, and our nation now face more serious problems than would have been the case if appropriate reforms had been enacted six years ago.

      I have been asked to do three things today: first, to review the present state of our health care system and its problems; second, to describe how these problems will affect us all; and third, to outline the reforms which will be necessary to address them. In doing so, I will share with you the views of the National Coalition on Health Care, the nation’s largest and most broadly representative alliance working to achieve necessary health system reforms.

      Like the League of Women Voters, we are rigorously non-partisan. Presidents Carter and Ford honor us as co-chairs and our 93 members touch the lives of over 100 million Americans. Our Coalition includes a number of the nation’s largest corporations, its major unions, provider and consumer groups as well as all three of our nation’s major religious faiths. Our concerns include the ethical and moral problems associated with a troubled health system.

      Today’s meeting occurs as the nation, the Congress, and the administration prepare for yet another debate on health system and Medicare reforms and a Consumer Bill of Rights. The Medicare Commission has just begun its work; the President’s Quality Commission has just submitted its recommendations; and the managed care debate is increasing in its intensity. We commend those who are working on these issues, but we are concerned that as a nation we have failed to learn from the mistakes of the past and continue to consider patchwork reforms to deal with the symptoms instead of with our underlying problems.

      The debate to this point on a variety of partial reforms and a Consumer Bill of Rights constitutes a graphic case in point. Let me explain. Last month our Coalition released a series of studies to serve as a reality check on the state of the nation’s health care problems. These studies showed that we face three interrelated and growing problems. First, our costs are out of control. Despite the recent and really quite modest pause in growth, costs continue to rise at 2 á times the inflation rate and are far higher than they need to be. All other developed nations are providing necessary health care services to all their citizens at about one-half to two-thirds of our costs, and their people are as healthy, or healthier than we are, and polls show they are far more satisfied with their system of care.

      In just the past 5 years costs have risen more than 500 billion dollars, and despite the explosive growth of managed care, our studies and Congressional Budget Office estimates indicate that our already huge costs will in only 5 more years increase by 500 billion dollars, and double to 2 trillion only 5 years thereafter.

      Middle-income families, those with children and incomes between $20,000 and $60,000–that is, half of all Americans–will lose the highest percent of their income due to health care inflation. This large and inequitable hidden income tax will adversely effect the standard of living and take home pay of our middle class.

      Rising costs in turn contribute to our second major problem which is decreasing health insurance coverage. We are already at a point where almost 80 million Americans–that’s one in three people under 65–are either totally uninsured or underinsured. This is 10 million more than when the health care debate began only six short years ago. In large part, due to rapidly rising costs, one million more Americans are being added to the ranks of the uninsured each year, and many of these are from working middle class families. Because of cost increases, business is hiring more contingent workers and fewer and fewer such employees are provided with health insurance coverage. This occurs especially in our small businesses, which represent the bulk of the nation’s economy.

      As costs increase, more and more businesses and federal and state governments are forced to cut coverage or shift costs, and as a result, out of pocket costs are growing dramatically and our safety nets, including our present dominant employment based health insurance system, are deteriorating. For all these reasons, the number of uninsured and underinsured will inevitably grow.

      The worrisome thing is that this cutback in coverage, and the resultant growth in the number of uninsured is occurring in spite of the best economic times in our history, questioning the views of those who claim a rising economy will grow us out of our problem. Just imagine what will happen to the number of uninsured and underinsured, and to the magnitude of cost shifting, when we experience the next and inevitable economic downturn.

      Before proceeding, it is important to note here the interrelationship between our cost and coverage problems and our third problem which is inappropriate use of technology and poor quality. Both of these result in extensive waste, unnecessary cost escalation and poor outcomes. As already noted, cost increases imperil our safety nets and lead to an increase in the number of uninsured. In the absence of insurance coverage it is becoming increasingly difficult to get needed care. When this happens, health and quality, in turn, suffer. In fact, studies show that, other than aging, the biggest risk factors associated with a poor outcome or death are poor quality or the lack of health insurance. Because of major variations in the quality of care, where you receive care, or whether or not you receive care (determined largely by your insurance status) can determine whether you live or die.

      It’s a vicious cycle. Without cost containment you cannot assure or afford universal coverage, without universal coverage, you cannot assure quality, and in the absence of quality you cannot contain costs.

      In light of this we have long considered quality a central problem, and quality in our definition is not just choice of physicians and health plans and appeals processes. Quality is doing the right thing, at the right time, with the optimal outcome.

      There are a number of reasons why we are deeply concerned about quality and why the American people should be concerned. First of all, there are major gaps in our scientific knowledge base which contribute to medical uncertainty. Much of our medical technology has been adopted and widely utilized without adequate evaluation. The evidence to justify treatment of even the most common medical and surgical conditions such as prostate cancer and low back pain is often questionable.

      At the same time, there is no credible national database on quality and no national technology assessment or standard setting mechanism. This makes it very difficult for health professionals to practice as well as they would like to practice or as well as you would like them to practice.

      Medical uncertainty leads to enormous regional variations in the amount and type of health care delivered with no evidence that those who receive more care have better outcomes than those who receive less care. In his pioneering work on regional variations, Dartmouth’s Dr. Jack Wennberg has shown that “in health care, geography is destiny: the amount of health care consumed by Americans depends more on where they live, the local supply of resources and prevailing practice styles than on patients needs and preferences.” The huge regional variation which exists in medical care is scientifically indefensible. When you next hear someone state that we have the finest health care system in the world, you can reasonably ask: Which one? For medical care is delivered very differently from region to region, hospital to hospital, doctor to doctor. In fact, the literature is replete with studies which show that we physicians disagree with each other and even with ourselves a high proportion of the time. Often no one knows who is right, nor can you the patient know who is right. Because of that, too often neither consumers nor health care professionals are able to make rational decisions.

      This is not to infer that my fellow health professionals are trying to harm people; they are not. But the fact is that they work in flawed systems with inadequate data. These flaws have to be acknowledged and fixed in a “no-fault” environment. Adopting mechanisms and policies to do so should be a high national priority.

      In a speech to the American College of Surgeons, Dr. David Eddy, a noted quality expert, summarized our situation as follows:

      “For centuries, the practice of medicine has been based on one huge assumption. The assumption that physicians instinctively know the right thing to do. Somehow, the assumption goes, physicians are able to assimilate all they have learned, process all the information they generate and make the right decision. That myth has been shattered. We are all coming up with different answers and it is impossible for all of us to be correct. Our practices are way out in front of our intellectual lines of supply.”

      Then, there is the problem of treatment error. Because our quality control mechanisms are so rudimentary, mistakes are much more common, costly, and harmful than generally realized. There are distressingly high error rates reported in a wide range of medical practices with serious, and often fatal consequences. For example, autopsy studies show high rates (35 to 40 percent) of missed diagnoses, often resulting in death. A recent poll done by the American Medical Association suggests that more than 100 million Americans have been touched by what they consider a medical mistake. Dr. Lucian Leape, a physician board member of the AMA’s National Patient Safety Foundation, has estimated that the number of injuries caused by medical accidents in inpatient hospital settings nationwide could be as high as three million and cost as much as $200 billion a year.

      Tragedies such as these are not isolated events. The “Harvard Medical Practice Study for the State of New York” has demonstrated this dramatically. If the New York rates are extrapolated to the country as a whole, then the Harvard researchers estimate that approximately 120,000 people die each year as a result of medically induced injury or negligence. One-half of these deaths, or 90,000 each year, are considered preventable. The Harvard team concluded that medical injury and malpractice constitute the nation’s “hidden epidemic.”

      By the way, all these quality problems I have just described were reaffirmed in last week’s report of the President’s Quality Commission. There is no other business in this country that would be allowed to continue to operate even a day with quality problems of that magnitude, 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 executive editor of the New England Journal of Medicine has written that: “far from being beneficial, much of the medical care in this country is unnecessary, is of no demonstrated value to those who receive it, and some of it is harmful.”

      These are the problems you as consumers and we health professionals face. They are large, they are serious, they are growing worse, and there is no end in sight. These problems existed long before the advent of managed care.

      Now let me conclude by talking about solutions. Unfortunately, it appears that none of the incremental approaches which state and federal governments and private sector payers are using will be powerful enough to address our problems.

      So, where does this leave us? If we are to have a rational dialogue on health care, and ultimately achieve necessary reforms, what do we believe are some of the most important things for the public and for leaders such as you to understand and to do? What is the educational task which faces us, and which, if not accomplished soon will continue to be a major barrier to necessary reforms? Here are four suggestions.

      First, we believe we must help the American people recognize that this problem is not going to go away or be corrected by current approaches. It will grow worse.

      Second, we must all recognize that, for a number of reasons, market forces and competition alone will not solve our problems. Successful markets rely on a fair transaction between an informed buyer and an informed seller. That doesn’t exist in health care where the consumer, and often even the provider, is at a severe disadvantage, lacking the information necessary to make an informed decision. Consumers can’t buy solely on price because they have insufficient information on quality.

      Competition can help contain costs in real markets, but to get competition, you need good information and a wide variety of choices. We’re getting the exact opposite as large segments of our health care market move toward more and more consolidation and therefore less competition and choice.

      Markets need independent oversight to assure public accountability. There is no such mechanism to protect consumers and payers in today’s health care system.

      Third, we all have to recognize that our problems cannot be solved by each of us acting alone, by the private sector acting alone, or by each state acting alone. In fact our health care system, which is already the most complicated on the face of the earth and which costs 100 billion dollars each year to administer, could become an even greater nightmare if 50 states adopt 50 different and uncoordinated policies to deal with our problems.

      Fourth, the nation needs to proceed in a “no-fault” manner to establish a publicly accountable quality assurance and quality improvement system that will bring together the strengths of the public and private sectors, with the resources and authority necessary to do the job.

      Finally, we do need adequate consumer safeguards including a sound “Bill of Rights.” But in our view, there is no more fundamental consumer right than to be assured that care is evidenced based, effectively delivered and available to all when they need it. Absent these elements, no Bill of Rights will fulfill its promises or meet the public’s needs. But more importantly, costs will not be contained and the vicious cycle of increasing costs and cost shifting, decreasing coverage and the resultant poor quality will continue. And without universal coverage, meaningful competition cannot be achieved.

      We believe the public must come to understand that because our problems are interrelated, solutions must include, (and indeed, you must insist on) the principles of improved quality, effective cost containment, equitable and stable financing and universal coverage. These are the bedrock principles on which a better and more ethically defensible system must rest. All reforms must be designed to achieve and be judged against these principles.

      There is a very large educational task to be done before the necessity for those principles is understood. Until this is understood, it will be difficult to achieve needed reforms. Recognizing this need, our Coalition has committed itself to that educational effort and you in the League could play an important role. Time does not permit me to discuss this further but we can do so in our question and answer session.

      Finally, is there hope? Absolutely. Improved quality, universal coverage, equitable financing and cost containment are not partisan principles, and working in a bi-partisan fashion with the administration and Congress, we believe these principles can be and indeed must be achieved. Can we get there in steps? Yes we can. But the steps have to be designed with the essential principles in mind. This is the task ahead for all of us. We look forward to the possibility of working with the League of Women Voters in the educational efforts necessary to achieve our mutual goals of a better, more equitable and affordable health care system.

Thank You!