Of all of the issues that we face in American business today, there’s none that comes up more often or that has a broader sweep then the issue of health care costs. I get major corporations, corporate leaders in my office saying, “Senator, we’ve got to fix the health care system. Health care is driving business, driving jobs overseas. Health care is driving costs up to the point where we’re not competitive. Health care is our biggest and most growing cost.”
And then the small businesses come in. NFIB comes in and they say, “Senator the biggest challenge that small businesses have is health care and we’ve got to do something about health care costs.” And then the academics and the think tanks come in and they all say, “The biggest challenge we have is dealing with the rising costs of health care.” Then the economists come in and they look down the road at the fiscal policy in the United States and they say, “The biggest threat to our fiscal stability in the long term is rising health care costs.”
Well it’s a little bit like Mark Twain said about the weather. He said, “Everybody talks about the weather but nobody does anything about it.”
We’re going to try in this Congress to do something about it. Senator Ron Widen of Oregon, a liberal Democrat, came to me and said, “I’m going to sponsor the Healthy Americans Act. And I would be grateful if you would be willing to be the Republican cosponsor to this act.”
Well, the partisanship in Washington being what it is, we’re not supposed to be talking to each other. But I’ve grown to know and appreciate Ron Widen. I like him immensely as an individual. He’s fair, he’s honest and he’s reasonable. So I said, “Well – this is what you always say when somebody approaches you – I will look at it.”
That’s code for “No way, Jose” or “If I can find something in it that’s good for me, I might.” Or in this case, given the relationship Ron and I had, it means “I’ll look at it with an open mind.” And as we went through it my staffers said to me, “You know senator, this sounds like what you’ve been talking about the whole time you’ve been in the Senate.”
And I said, “Is there anything in it that I can’t endorse?” “Well one or two things, but basically this is going in the direction that you’ve always said we had to go.”
So I said to Ron, “I’ll cosponsor it. There are a few things in it I don’t much like.” And he said, “Bob, everything is negotiable.”
Now, that doesn’t mean he’s going to be a creampuff and roll over because he’s not that kind. But he’s made it very clear and I’ve made it very clear that we are open for business to try to deal with this challenge. Today I will shamelessly exploit my opportunity before you to plug the bill.
So we’re going to go through the Healthy Americans Act and give you the background of why we think this is the way to go. And we’ll review the specifics of the act at least as it currently stands - and it is open for amendment.
I will tell you that it has attracted a very interesting group of supporters. Senator Widen has reached out to big business. He’s spoken to the U.S. Chamber. He has the endorsement of Steve Burd, the CEO of Safeway, also the CEO of General Mills, also Andy Stern who is the president of the largest labor union in the United States, the Service Employees International Union. NFIB, the National Federation for Independent Business, small business, is looking at it with some favor.
We’ve picked up two more cosponsors, one Republican, Lamar Alexander, one Democrat, David Pryor. Ron Widen says to me he has some additional Democrats who want to sign on board and he’s telling them no, wait until Bob can line up some additional Republicans. Because we want this thing to stay absolutely bipartisan and for every Democrat that gets added we want a Republican that’s added.
I’ve been fully open in my disclosure as to what I’m doing with Ron with Senator McConnell, the republican leader. And he has said, “Go ahead, do the best you can. Let’s see if we can’t in fact do something in this Congress about health care.”
So maybe we’re crazy, but I’m basically an optimist. You don’t run for the Senate if you’re not an optimist particularly when you start out at three percent in the polls and you’re opponent has 56. You have to be an optimist to do something like that. But we will see if we can get something going. And even if we can’t, we believe we are in the process of changing the ground on which this debate will happen.
We think that people will begin to endorse the principals that we have put into the Healthy Americans Act and that will shift the debate from its present situation. But I’m getting ahead of myself. Let’s get into the bill.
The big issue that we get always when we open the health care issue, a question for political debate is, we’ve got to do something about the uninsured. There are so many uninsured in this country. It’s a scandal that we have so many uninsured and the number of uninsured keeps growing. And that becomes the driving question.
I decided to start out by asking the question, how many uninsured are there? And here’s the chart that shows back in 1987 roughly 35 million and so on, it’s gone up to 45 million. There were some adjustments in the federal programs in this period that changed the statistics temporarily, but they went back up and now they’re beginning to go up to 50 million.
And we’re told in the language of politics, look at that strong upward trend, we are getting worse and worse and worse and everything has got to be changed. This is part of the propaganda for a single-payer, government-run system.
If you look at it slightly different though on this chart, you see that the number of uninsured as a percentage of the population has remained fairly stable. One of the reasons the number of uninsured in America has gone up is that the number of people in America has gone up. And percentage-wise back in 1987 it was 86 and now it’s 84. That’s not that big a shift. The uninsured it seems will always be with us no matter what we try to do.
One of the things that we must try to understand about health care and in the public policy arena is how the average citizen, how the average voter feels it in his or her pocketbook. And this chart shows you in 1960, the out of pocket expenses that the individual felt was 46 percent of health care costs. As the trend line shows on the chart, it’s going down until it’s now only 12 percent.
That means what you pay as an individual user of health care, is 12 percent of the total bill. The rest of it is paid by somebody else. Now, in fact, that somebody else is you. But you don’t see it or feel it because it doesn’t come out of your pocket. At the same time the chart shows the percentage coming down, the actual costs are going up very dramatically.
So in 1960 it was $148 and today $6,697 pushing towards $7,000. So this distorts the whole market situation as people think they are paying less for it but in fact the prices are skyrocketing. Now here it is in terms of the percentage of GDP or the total economy. What percentage of the total economy goes to pay health care costs? In 1960 it was 5.2 percent of GDP. You see that trend line going up, going up, going up. It’s now at 16 percent. This is why the businesses come in and say to me what I told you they say in the beginning. We cannot continue to do this.
And one very interesting comparison shows what we do compared to other countries in the world. We’ve taken five mature industrialized nation economies here, Canada, The United Kingdom, Japan, Germany, and the United States. Shown is the percentage of GDP that they spend on health care. The United States is substantially more than any of them. And that has to do with our competitiveness overseas.
What does that do then to employers being able to provide coverage? The system we use in the United States is a system of employer-based health care coverage. And you are employers and you are also connected in your families or in your own lives with others. These are the statistics that show how many firms provide health care. And they’re broken down by the size of the firm.
So the firms that have 200 or more employees, it’s 98 percent provide healthcare. It’s virtually everybody. Then you get in the firms with 50 to 200, it comes down to 93. If you have only 25 to 49 workers it comes to 87 percent. Ten to 24 workers, 72 percent. And if you have a very small business of less than nine workers, less than half of the businesses in that category provide health care benefits of any kind.
So the smaller the business, the more difficult it is to provide the health care for your employees. What kind of health care plans do you offer? What kind of health care plans are available for people in the various businesses? Well, look at the numbers.
If you’re a jumbo firm, that’s an interesting name, 5,000 employees or more, 17 percent of those very large firms offer only one plan, there’s no real choice there. Eighteen percent offer two. But all of the rest of them have three or more. If you belong, if you’re a worker in one of these kinds of firms or risk pools, you have a large area of choice available to you. I’m currently a federal employee and I have a whole bunch of options available to me.
Of the not quite so large firms of 1,000 to 5,000 the percentage that offer only one plan now goes up to 27. The two plans are 24 percent and then roughly half have three plans or more.
Go down to a firm that has only 200 to 1000 workers and now virtually half of them offer only one plan. And the number that offers three or more, the percentage is only a quarter.
But you get to the small firms, between three and 200 employees, 81 percent offer only one plan and only five percent offer three or more.
So that’s the challenge of dealing with the uninsured. The large firms can afford or have gotten into the pattern of providing a wider range of choice. But if you work for the smaller firm, your choice is very limited.
Now, taking these statistics to Utah, who are the uninsured in Utah? Well, children, that’s the bottom line, the red line, children 0 to 18. It’s between 50,000 and 100,000 children. Adults 19 to 64, this starts out in 2003 and goes up to 2006. There you have a fairly sharp rise and now leveling off as the economy gets a little better.
And the top line in green is all Utahns together. So all Utahns together now, it’s about 300,000 who have no insurance. Who are they? What’s the demographic makeup of Utah’s uninsured? Not what you might think. The assumption always in the political debate is that the uninsured are always the poor; the uninsured are those who, who are unemployed, can’t get jobs.
Healthy, young, working males constitute 30 percent of Utah’s uninsured. These are the people who graduate from Utah State University convinced they are indestructible. They’re going to ride their motorcycles without helmets. They can do whatever. They’re healthy, young working males. They believe they will never get sick. They will never have an accident. Why do they need any kind of coverage? And they do not reach out for that which might be available to them.
The Hispanic working poor, 19 percent. High school dropouts, 16 percent. There is a correlation between education and your ability to get health insurance because again it’s tied to your employer. Young, part-time workers, 14 percent. Rural homemakers, 12 percent. Laid off college graduates, nine percent.
This is a very important statistic to keep in mind. There are people who, on their own decision, resist getting any health insurance. All right, so now that’s the background of the debate we’re in.
We now get into the question of what the Healthy Americans Act is going to do about it? So we will run you through the act in the various things that Senator Widen and I have adopted as being our most important priorities.
The first one is portability. Do any of you know anyone who is stuck in a job that he or she hates but can’t leave because if he does he’ll lose his health benefits? Anybody know anybody like that?
The biggest problem connected with our health care system as it’s currently constituted in terms of the way it impacts people’s lives, is the fact that it locks people into a particular employer. Your health care since it’s provided at your place of work is something you cannot take with you if you leave that place of work. Oh, we have programs like COBRA where there’s a temporary bridge and the rest of it. But if you have a preexisting condition or any other sort of problem that’s going to make you less likely to get insurance where you’re moving, you don’t move.
The head of a family who has children that he or she has to worry about in terms of health insurance may say, “I stay here for my health insurance even though I would be better off, my family would be better off and being very blunt, the employer would be better off if I went someplace else – if I went someplace where I was happier and could be more productive – but I can’t do that because I’ll lose my health care.”
So the first principal we put into this bill is that we’ve got to have something that is portable. It belongs to you and not your employer and you can take it with you. This leads us to the next principal, which is individual access or individual ownership of the policy rather than employer ownership of the policy. Right now your access to the health care system runs through your employer. It should run through you.
We don’t have a health care system. We have an acute care system. It means you wait until you are sick enough to have to go to a doctor and then the system pays attention to you. But if you are engaged in personal activity that makes you less healthy, the health care system doesn’t pay any attention.
Or conversely; If you’re exercising, eating right, taking your medicine if you have a chronic problem, or getting screening tests, the health care system doesn’t reward you for that. The system should be built in such a manner as to encourage and reward healthy behavior. What’s the best thing we can do to lower the costs of health care in the country? Make everybody healthy.
But in all of the debate about health care, nobody ever talks about health. So we try to build in some incentives for healthy behaviors. The only way you do that is to change the tax laws. So the next item is tax reform. We cannot get where we want to be in the first three of these bullet points in our present tax system. So the Healthy Americans Act deals with the way the federal government handles taxes connected with health benefits.
Finally we’ve got to get market forces into the system. Here we have an issue that takes up 16 percent of the economy and there are no market forces present in it. By that I mean the consumer, the person who is getting the service or the product, is not the person paying for it directly. The person paying for it directly is the employer. And the employer has an incentive to drive the costs down as much as possible regardless of what it does to the quality of the service.
The person getting the service has the incentive to get as much service as he possibly can regardless of how much it costs, because he’s going on the false assumption that it’s somebody else’s money. How many times you hear people say, “Oh, I have a great health care plan. It doesn’t cost me a dime. My employer pays for all of it?” Where do you think the employer got the money to pay for all of it? He got it from value added by your work.
You have earned that money. It’s your money and you don’t get to spend it. Your employer gets to spend it in your name. And if the employer decides – go back to that chart that showed how many firms had only one possible choice for a health care plan – if your employer decides the plan for all employees and you don’t like it, there isn’t anything you can do about it even though it’s your money he’s spending to make that decision.
So that’s what we’re talking about when we say market forces. I’ll get into that in a minute when we go into this with more specificity. Okay. Let’s take each one of them one at a time.
Portability. Coverage follows the individual. If you have coverage, you’re working for employer A, and you decide to switch jobs and go to employer B, you take your coverage with you. Seamless, no interruptions, no changes. That takes care of the preexisting condition problem that takes care of the eligibility problem, you’ve got your plan. You take it with you to the next employer.
It can’t be denied therefore because of age, gender, industry or health status. One can’t say we don’t want you in our pool because you have a genetic predisposition towards diabetes and we’re trying to keep the pool clean of anybody that would cost us anything.
So that means that not only will it be affordable, you’ll always have access to it. That’s what portability means.
Individual access. Guaranteed private coverage for all Americans. Now that’s a phrase that is loaded with political implications. Because in the health care debate up till now, you have had Republicans on one side saying we cannot have a single payer, government run system and Democrats on the other side saying, but we’ve got to have universal coverage. And universal coverage is seen by the Republicans as a code name for a government run system.
Well, step back from the political debate and look at it in an objective way. We have to have a program that provides health care coverage for everybody. And we’re foolish if we say, somehow it’s a good thing that somebody doesn’t have access. Those healthy young males who make up the largest percentage of people without access are going to have that motorcycle accident. And guess what? They have access now. It’s just the most inconvenient, expensive and inefficient kind of access. Because the law says if you show up at an emergency room, and say, “I just had a major accident but I haven’t’ got any insurance,” by law they have to treat you anyway. By law they can’t throw you out onto the street to die. So who pays for that treatment? Everybody else who has paid a premium in another plan pays for that treatment.
We already have access for everybody in the United States in fact. It’s just very inefficient, very expensive, and totally unfair to the people who are paying premiums. That’s why I say I go along with the idea of guaranteed private coverage for everybody because de facto we have it now. Let’s manage it, make it efficient, and intelligent and more affordable than the system we’re using.
So individual coverage, individual ownership of health care coverage, we talked about that. And this is Ron Widen’s line but it’s a great line. Ensures choice similar to members of Congress. Ron says when he holds his town meetings and says to people, “What do you want?” They say, “We want the same plan you have as a member of Congress,” assuming that we have an absolute gold plated, magnificent, wonderful plan.
So Ron put into the bill that it will assure every American the same plan as members of Congress. And I said, “No, Ron. What you’ve got to say to be fair about it, is that it ensures choice.” Because we have something like 20 different choices we can Make. And my plan is different than his.
Remember that chart that showed the giant firms, the jumbo firms and how many of them had more than three plans? Well there isn’t anybody jumboer than the federal government. And we have a whole series of plans. And I choose something that is appropriate for my family. He chooses something appropriate for his.
So we’ve changed the language. Instead of saying, the same plan that members of Congress have, it’s choice similar to what members of Congress have and if you want a gold plated plan you can get one. Frankly, you’ll have to pay a little more for it but you have the same choice available to you. And we have different levels of payment as members of Congress.
Frankly if I want people to really understand what I have, I say, “I have the same plan that they have at Hill Air Force Base because I’m a federal employee.” And every federal employee has a wide range of choices.
Okay, healthy behavior. How do we reward healthy behavior? Because this is yours, because you now begin to see what it’s costing you, you have transparency that promotes responsibility and prevention. And without getting into the weeds of the program, there are incentives built in for people who do healthy things. There will be incentives built in for nonsmokers. There will be incentives built in for people who have screening tests.
We haven’t quite figured out how to do this but we’re looking at the Swiss program where they have individual ownership of their health care plans. And in Switzerland they divide it into five year contracts. If you stay healthy for the full five years, you get a large percentage of your premiums back. There are people in Switzerland who at the end of their five year contract with their health care plan, get a check for $25,000 back if they stay healthy.
A radical idea; that the best way to lower health care costs is to give people incentives to stay healthy. But it’s an idea that we’re trying to build into this program.
Discounted premiums for participation in wellness programs. That’s how you encourage healthy behavior. If you enroll in this program and you stay in this program and we monitor that, your premium will be a little less.
And for the provider, if in the program or in the plan you provide to those signed up you have built in certain incentives for them to stay healthy, you get a reward. You get a tax break. You get some kind of economic benefit. Radical idea. We’re trying to structure the system towards health and not simply a payment system for acute care.
All right, tax reform, how are we going to do this? Sever the link between the employer and health insurance. You can’t get portability unless you do that. Well, right now the link between employer and the employee is driven by tax policy. The employer gets a tax deduction for the amount of money he puts into the health care plan. Let’s create a tax credit for that amount of money and the amount of money you put in.
Virtually every plan now is not 100 percent employer contribution. It’s a combination of employer and employee. As a federal employee, I pay about 25 percent, the federal government, my employer – it is money again that I have earned for them – but nonetheless it’s labeled an employer contribution, it’s about 75 percent.
We’re going to take that money, we’re going to continue to treat it in a tax advantaged way but it’s no longer going to be run through the employer tax system. It’s going to be available directly to the provider on behalf of the employee. This strengthens incentives for families to seek lower costs coverage by establishing a health premium tax deduction.
Now you the employee have control of those dollars. You’re going to begin to shop. As long as the employer has control over the dollars, he’s shopping for the group. Now you’re shopping for yourself. And if you can find something that rewards you in a proper way for making good decisions, you’re going to go in that direction because you’re controlling the money instead of the employer.
That’s market forces, when you control the money. Markets require transparency on cost and quality to work. How many employees have any idea about the efficiency of the health care plan that their employer has chosen for them? There is no transparency. So the employee simply says, okay, this is what I got and tell me about it, but I’m trapped and I can’t really influence it.
If we do the tax changes that allow the individual to influence it and control it, now the individual’s going to want to know, how good is the plan? How cheap is the plan? Who is competing for something else? It empowers the individual to make choices and so then market forces and competition begin to show up which they aren’t really there now.
Private sector competition drives down costs and offers innovative solutions. We know that because we’ve had an actual experience. I’ll take you back to the debate over the Medicare Part D. And I’m not picking on him but this is what one of my colleagues had to say as we moved in this direction with Medicare Part D. Where the individual was able to choose plans offered by the various drug companies.
And this particular senator who believes in a single-payer, government-run system and said it’s terrible that you’re going to reward big pharma by making them in charge of the pricing, and the individual will never be able to fight big pharm’s price fixing.
He says, “The idea of choice, that somehow we are giving seniors more choice is just false. The rhetoric around this bill does not match reality. The president and this administration have said many times that seniors deserve choice. That the seniors deserve what members of Congress have. I’m all for that but that is not what they are getting.” That was the rhetoric in the debate.
And one of my other senatorial colleagues, a senator from Wyoming said, “I was worried about this because I thought Wyoming would represent so small a market to the big drug companies that they wouldn’t come into Wyoming. That Wyoming residents wouldn’t get any choices at all. The drug companies would go after the big areas, the big pools and we’d just get left out.”
Well here are the actual results. That was the rhetoric about the bill. Here are the actual results of what’s happened since market forces have gotten into Medicare Part D. There are nearly 2600 Medicare Advantage plans in the United States today. They have all sprung up virtually overnight in response to the market power of all of the Medicare people having the choice to make their own decisions as to which drug plan they’re going for.
And all of a sudden people said, “You mean we’re going to have to compete senior by senior? Every individual senior can decide they want our competitor’s plan? We better come up with a more attractive plan.” And then the competitor says, “Well I’m not going to let them get ahead of me.” And somebody else says, “I see a market niche that neither one of these big ones are going after. I’m going to offer a plan.”
There are now 2600 plans in the United States – massive amounts of choice. Wyoming has 34. They were afraid they wouldn’t get a single one but in Wyoming there are 34 different plans offered in that state. Utah has 75. And just to be a little bit local about it, Cache County has 20.
Twenty different plans available in Cache County right here and you don’t have to go outside of Cache County to have some choice. But if you do go outside of Cache County and down to Weber County or go to Davis County or to Salt Lake County, the number grows up to 75.
Guess what’s happening to cost? The cost of Medicare Part D is lower than any of the estimates that were made about it. When you get transparency and choice and competition and market forces what happens? Prices come down because people compete on the basis of price.
One of the statements that was made about Medicare Part D was nobody will be able to understand them. It’s far too complicated. The seniors are going to be baffled by it. We just need the government to take it over and have a single-payer government-run system that will be simple to understand. Because the government will tell you what it is you get.
Well, the cost of Medicare Part D is substantially lower than anybody anticipated and the approval rating of Medicare Part D among seniors is over 80 percent. Can you think of anything else that the government does that has over an 80 percent approval rating? Market forces work. We’ve proven it with Medicare Part D. Its time to expand those concepts into the health care system as a whole.
Take your choice as to where you enter but let’s start with transparency. Here are the plans we have. Here’s how much they would cost you and here’s what they do for you. It’s a choice. And as people make choice, then they own the plan. It’s individual to each of you and therefore it’s portable. And when it’s portable, you begin to think about prevention to stay healthy and that takes you up to transparency.
And this is the cycle that will break the first trend we saw with health care costs inexorably going up; now with 16 percent of GDP. And market forces will start to bring health care costs down, health benefits up, and healthy lifestyles increase and we’ll get this monster under control.
Now putting health back in health care. Are we going to pass it? I don’t know. Are we going to try? Absolutely. One of the most interesting things and no this is not a commercial, but it is a piece of history. There is now a state that has a plan built on these principals.
The reason it’s a little bit controversial to mention it is because it is the state of Massachusetts. And the governor who devised it and put it in place is now somewhat in the national eye. And I don’t want to turn this into a commercial on behalf of that particular governor and his political ambitions.
But I am interesting in hearing members of the Senate of the opposite party talk to me about the Massachusetts plan and say how interesting it is and how encouraging it is that the Massachusetts plan now covers everyone in Massachusetts and was done without an increase in taxes or an increase in state expenditures.
The National Governor’s Association has now let it be known that other governors are not that far behind the former Massachusetts governor. Other governors are looking at similar plans in their own states. Governor Schwarzenegger and others are trying to move in this same direction.
It may very well be that we will see in health care what we saw in welfare reform. I was there when we passed welfare reform. And what happened is that various states, very much including the state of Utah under the leadership of Governor Leavitt said, we do not want to continue to run the mandated federal welfare program in our state. Governor Leavitt was able to get a, a waiver from Donna Shalala, the secretary of Health and Human Services, so that Utah could formulate its own plan.
And Utah formulated its own plan under many of these same principals I’ve been talking about here today. That is the whole focus in Utah was not as the federal program had been: What are you eligible for? But the whole focus in Utah became: What do you need to get back on your feet and get a job? What are you eligible for means you stay on welfare for the rest of your life. Helping you get what you need to get on your feet and get a job means you get off of welfare and into the workforce.
I remember the debate in the Senate very well as we were debating health care. And one of my good friends in the Senate and one of my heroes – I think he’s as outstanding a U.S. Senator as we have ever had in our history, Pat Moynahan from New York – was thundering against the welfare reform bill. And he said to the Senate, “This will produce a race to the bottom. Every state will compete to see how little it can do.
And to protect the people who are on welfare, we have to have the federal government run the program.” And I said respectfully to my colleague from New York, “I don’t think it will be a race to the bottom because we have experimented in the state of Utah and come up with a whole series of things that are better for the people in Utah.”
And Senator Moynahan said, “I say to the senator, I have no doubt that Utah will do the right thing. But I guarantee you it will be a race to the bottom in New York.”
Well, now we look back on welfare reform as one of the signal accomplishments of the 1990’s. The welfare rolls are down dramatically. The cost of welfare has gone down dramatically. And the number of people who have finally gotten out of the trap of lifetime dependence on welfare and gotten into the workforce and have dignity and self respect coming from having a job is enormous. We’re trying to do the same thing with health care.
And as the governors, starting with Governor Romney in Massachusetts, are beginning to do the same thing they did with welfare reform, It may well be that the governors will come forward and demand the federal tax changes that will empower them to do the kinds of things that we’re trying to do with the Healthy Americans Act. |
