Washington, DC – This week, as the federal government marks the three-year anniversary of the Affordable Care Act, Health and Human Services Secretary Kathleen Sebelius has used each day to highlight a different aspect of the law. Today, the Secretary focused on the law’s delivery system reform provisions, which will help to lower health care costs while also improving care for patients.
U.S. Senator Sheldon Whitehouse (D-RI) was a strong advocate for the inclusion of delivery system reform provisions in the Affordable Care Act. Since the passage of the law, he has continued working to make sure the reforms are implemented quickly and effectively, and has called on the Obama Administration to set a clear cost-savings target to drive the reform process.
Today, Senator Whitehouse joined Secretary Sebelius in celebrating these provisions by submitting a statement to the Congressional Record. The full text of his statement is below.
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Sen. Sheldon Whitehouse Statement for the Congressional Record
March 20, 2013
This Saturday marks the third anniversary of the passage of the Affordable Care Act. At age three, the law is protecting consumers against abusive insurance practices, helping seniors by lowering prescription drug costs, and building the infrastructure to expand health insurance coverage to millions of Americans. For the first time, patients’ interests and needs are being put ahead of those of the insurance and drug companies.
The Obama Administration has worked tirelessly to implement the law, in the face of constant opposition. My Republican colleagues in Congress have voted to repeal or defund the Affordable Care Act well over 30 times. It’s a chilling, if useless, political refrain from the Tea Party.
On this third anniversary, it is important not only to reflect on how far we’ve come, but to continue pressing forward on the Affordable Care Act’s many improvements to our health care system, particularly the delivery system reforms.
The Council of Economic Advisers’ 2013 “Economic Report of the President” identified a number of sources of waste in our health care system, including the fragmentation of the delivery system; duplicate care and overtreatment; the failure of providers to adopt best practices; and payment fraud. The Council notes:
“Taken together, [these factors] have been estimated to account for between 13 and 26 percent of national health expenditures in 2011. The magnitude of this waste offers an equally large opportunity for spending reductions and improvement in quality of care – an opportunity that underpins many of the provisions of the Affordable Care Act.”
Thankfully, we have the tools necessary to seize the opportunity described by the Council of Economic Advisors; to drive down costs and improve the quality of patient care. The Affordable Care Act included 45 provisions dedicated to improving the way we deliver health care, in five priority areas: payment reform, primary and preventive care, measuring and reporting quality, administrative simplification, and health information technology.
The effort to extract from the wasteful swamp of our health care bureaucracy a lean, humane, patient-centered system is vital. National health spending hit $2.7 trillion in 2011, or about 18 percent of GDP. The next least efficient developed country—the Netherlands—spent 12 percent of its GDP on health care in 2010. Germany and France spent 11.6 percent of their GDP on health care. If we were as efficient as the Netherlands, if we merely moved from last place to second-to-last place in health care efficiency, we would save over $800 billion per year.
For all of our excess spending, one might expect that Americans live longer, healthier lives. But that’s not the case. The Institute of Medicine recently compared the United States to 17 peer countries. We were worst for prevalence of diabetes among adults, worst for obesity across all age groups, and worst in infant mortality. We suffer higher death rates and worse outcomes for conditions such as heart disease and chronic lung disease.
According to The Week, avoidable infections passed on due to poor hospital hygiene kill as many people in the U.S. —about 103,000 a year—as AIDS, breast cancer, and auto accidents combined.
These deaths are tragic because they are largely preventable. As we’ve shown in Rhode Island, when hospital staff follow a checklist of basic instructions—washing their hands with soap, cleaning a patient’s skin with antiseptic, placing sterile drapes over the patient, etc.—rates of infection plummet, and the costs of treating those infections disappear. The costs of treating the 100,000 who die, as well as the hundreds of thousands who suffer non-lethal infections, disappear.
Delivery system reform has real promise in improving the management and prevention of chronic disease. These diseases accounted for seven out of ten deaths in the United States in 2011, and at least 75 percent of our health care spending.
I am not alone in saying that a correct diagnosis of the problem will lead us to delivery system reform. Gail Wilensky, the former Administrator of the Center for Medicare and Medicaid Services under President George H.W. Bush, said in 2011, “If we don’t redesign what we are doing, we can’t just cut unit reimbursement and think we are somehow getting a better system.”
In the private sector, George Halvorson, Chairman and CEO of Kaiser Permanente said, “There are people right now who want to cut benefits and ration care and have that be the avenue to cost reduction in this country and that’s wrong. It’s so wrong, it’s almost criminal. It’s an inept way of thinking about health care.
Saving money by reforming how we deliver health care isn’t just possible, it’s happening. At a 2011 hearing I chaired of the Senate Health, Education, Labor, and Pensions Committee, Greg Poulsen of Intermountain Healthcare said, “Intermountain and other organizations have shown that improving quality is compatible with lowering costs and, indeed, high-quality care is generally less expensive than substandard care.”
So when Republicans say we must cut Medicare and Medicaid benefits to fix our deficit, that assertion is flat-out wrong.
Attacking Medicare and Medicaid is consistent with a particular political ideology, but it is not consistent with the facts. It ignores the fact that we operate a wildly inefficient health care system, and that our health care spending problem is systemwide, not unique to federal health programs. It’s not just Medicare and Medicaid: former Secretary of Defense Robert Gates said of the Defense budget, “we’re being eaten alive by health care.”
The President’s Council of Economic Advisers estimates that we could save approximately $700 billion every year in our health care system without compromising health outcomes. The Institute of Medicine recently put this number at $750 billion. Other groups are even more optimistic: The New England Healthcare Institute has reported that $850 billion could be saved annually. The Lewin Group and former Bush Treasury Secretary Paul O’Neill have estimated annual savings of a staggering $1 trillion.
And most recently, The Commonwealth Fund laid out a set of policies that would accelerate health care delivery system reform and slow health spending by $2 trillion over the next 10 years.
These savings will have a dramatic impact on the federal budget. The federal government spends 40 percent of America’s health care expenditures. If the estimate by the Council of Economic Advisers is correct, we could reduce the federal deficit by up to $280 billion per year. If we achieve only one-quarter of the Council of Economic Advisors’ estimate, the federal savings would be $70 billion annually. Over a ten-year budget period, that amounts to $700 billion in federal health care savings—all without taking away any benefits, all while likely improving quality of care.
In a report I issued last year for the Senate Health, Education, Labor, and Pensions Committee, I found that the Administration has made considerable progress on implementing the 45 delivery system reform provisions in the law. But more can and must be done. Specifically, I again urge the Administration to set a cost-savings target for health care delivery system reform. A cost-savings target will focus, guide, and spur the Administration’s efforts in a manner that vague intentions to “bend the health care cost curve” will not. As The Commonwealth Fund concluded, “the establishment of targets…can serve both as a metric to guide policy development and as an incentive for all involved parties to act to make them effective.”
In 1961, President Kennedy declared that within ten years the U.S. would put a man on the moon and return him safely. The message—and the mission outlined—was clear. The result was a vast mobilization of private and public resources to achieve that purpose.
This Administration has a similar opportunity—particularly now, at the height of the implementation of the Affordable Care Act. We need to put the full force of American innovation and ingenuity into achieving a serious cost-savings target for our nation’s health care system. But it’s hard to do that if they won’t set one.
I urge the Administration to set a cost-savings target, with a number, and a date. And then let’s get to work to give American families the health care system they deserve. Instead of waste and inefficiency, poor outcomes and missed opportunities, we would have a health care system that is the envy of the world.
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