Why boldness is needed

The nation spends a staggering amount of money on health care. Just to put the size and scope of the health care system in context, think of it this way. Last year the United States spent $2 trillion—16 percent of the economy—on health care. This is almost the entire gross domestic product of France, Britain, or China; it almost doubles the entire economy of Canada. Just what Americans spend on health care is larger than the gross domestic product of 175 nations. ^†

† The Center for Health Transformation, founded and led by former Speaker of the House Newt Gingrich, is a collaboration of leaders dedicated to the creation of a 21st century intelligent health system that saves lives and saves money for all United States citizens. Center members highlighted in this testimony include Microsoft, Intermountain Healthcare, WellPoint, IBM, UnitedHealth Group, UPS, WellStar Health System, Georgia Hospital Association, AT&T, Southern Company, American Academy of Family Physicians, and Blue Cross Blue Shield of Georgia. For more information on The Center for Health Transformation, please visit www.healthtransformation.net .

And health care costs continue to rise. According to the Centers for Medicare and Medicaid Services (CMS), last year was a good year, when health care costs rose only 6.8 percent. CMS projects that within the decade, by 2016, total health care spending will more than double to $4.1 trillion a year and consume 19.6 percent of United States gross domestic product. The country cannot sustain its current path.

States are not immune from the burden of health care. Both as employers and as insurers through the State Children’s Health Insurance Program (SCHIP) and Medicaid, states pay the price of the current system. For example, Florida spends about 25 percent of its budget on Medicaid. Former Florida Governor Jeb Bush told at the Center for Health Transformation that if nothing changes, 10 years from now Medicaid will consume 59 percent of all state revenue. This will crowd out every other priority, including education, transportation, law enforcement, and others. States cannot sustain this current path.

Individuals fare no better, despite the incredible amount of money spent on health care every year. Key quality indicators continue to show little improvement, and some even show decline. The rates of obesity and diabetes are increasing rapidly, and the real threat of preventable medical errors remains a dangerous reality for millions of Americans. According to the Institute of Medicine, individuals average one medication error every day they stay in a hospital—1.5 million medication errors every year. More than 7,000 Americans are killed every year from preventable medication errors, and up to 98,000 Americans are killed every year by preventable medical errors. And that is likely a very conservative estimate.

According to the Kaiser Family Foundation, between 2000 and 2007, health insurance premiums skyrocketed 87 percent. Over the same period, inflation rose by 18 percent, and wages grew by only 20 percent. In addition, the number of Americans without health insurance is also on the rise. According to a recent report by the Census Bureau, a record 47 million Americans lack health insurance.

Many policymakers, journalists, and industry leaders try to group all 47 million people into the same category. This assumes, incorrectly, that everyone without insurance is in this predicament for the same reason, when in fact there are three distinct groups with far different reasons for being uninsured.

The first group consists of Americans who are uninsured but earn more than $50,000 a year. According to the same Census Bureau report, there are 15 million Americans who lack insurance but earn more than $50,000 a year—eight million of whom earn more than $75,000 a year. According to a 2003 study by the Congressional Budget Office (CBO), nearly 11 percent of the uninsured were so because they did not believe in insurance or “have not needed insurance.” Many in this group choose not to purchase health insurance.

The second group is made up of individuals who do not have health insurance, because they have moved, lost a job, or their employer does not offer coverage anymore. Many in this group ultimately get coverage. The CBO estimated that 45 percent of those without insurance lack coverage for less than 4 months.

The third group consists of people who are chronically uninsured and are, in essence, locked out of the system. They were denied coverage or simply cannot afford or were not offered health insurance through their employer, but they earn too much to qualify for a public program.

Regardless of how or why someone is uninsured, to walk in his or here shoes can be a sad situation. These individuals have virtually no access to a primary care doctor, will likely be sicker, and may die needlessly. The Institute of Medicine estimates that the lack of health insurance leads to the deaths of 18,000 Americans every year. They often live in fear every day. Fear that their child will get sick but cannot see a doctor. Fear that their spouse will have a serious accident that prevents him or her from working. And the constant fear that they are one step away from medical bankruptcy.

The plight of the uninsured affects every citizen—even those who are insured. Every individual who has health insurance pays a hidden tax to cover the cost of delivering care to the uninsured. After all, people without insurance still need and ultimately do get medical care, but it is often in an emergency department, the most expensive health care setting one can find. The cost of this care is passed along to those who have insurance in the form of higher insurance premiums. Ken Thorpe of Emory University estimates that in 2010 these higher premiums for those with insurance will total more than $60 billion—more than $1,500 in hidden costs for every insured family. Individuals and families simply cannot sustain this current path.

Such failure cannot be accepted. Coverage can be extended to all Americans, but it will take bold, transformational solutions. This requires collaboration, consensus, and action from everyone—from employers, providers, insurers, and citizens, to policymakers of both parties.

What presidential candidates, trade associations, think tanks, governors, and others have proposed so far, however, is typically more of the same tired financing that has been seen many times before. Most plans focus exclusively on coverage, and while that is an essential focus of any solution, they try to cover the uninsured within the current system. This is akin to building a house on quicksand. These plans have nary a word on how to make health care more affordable, and that is why they will all fail.

The uninsured crisis is a symptom of the larger structural problem of rising health care costs. As in medicine, one must cure the disease, not just alleviate its symptoms. By driving down costs and making health care more affordable for every American, 100 percent coverage can be achieved. But to get there, four transformational changes must be implemented:

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  Improve individual health

  
  
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  Create a culture of health

  
  
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  Modernize and improve the delivery of care

  
  
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  Transform the financing of health insurance

Improve individual health

First, one must focus on health—then health care—and individuals must take an active role in becoming healthier. The Centers for Disease Control and Prevention (CDC) report that 64 percent of adults are either overweight or obese. The CDC also reported that diabetes is a major factor in killing more than 220,000 Americans every year. These two conditions alone cost the system hundreds of billions of dollars every year. But they are, for the most part, a consequence of poor individual choices. Individuals must be incentivized to improve their health and prevent disease by making more responsible decisions. This can be done through closer relationships with their physicians, proper education, and through wellness programs that reward healthy living.

For example, Blue Cross Blue Shield of Michigan introduced Healthy Blue Living, where individuals can save 10 percent or more on their premiums, copayments, and deductibles if they work with their physician, exercise, eat right, control chronic conditions, and do not smoke.

Under former Governor Jeb Bush, Florida Medicaid introduced a new approach to incentivize beneficiaries to focus on their health. Medicaid members could earn credits, up to $125 in value, if they met certain goals, such as preventive care maintenance, immunizations, and completing health screenings.

United Healthcare has introduced a product called Vital Measures, where individuals with a high-deductible health plan coupled with a Health Savings Account can earn up to $2,000 toward their annual deductible of $2,500 if they meet certain health benchmarks.

These examples are the exception, not the rule. State and federal laws often stand in the way of making these types of plans the norm. State and federal rules, Heath Insurance Portability and Accountability Act (HIPAA) most notably, must be reformed to give private health plans, including those that participate in Medicaid and Medicare, more latitude to design insurance products to encourage and reward individual healthy behaviors.

New models of care and payment that make health and wellness a priority must be established. The American Academy of Family Physicians and others have advocated the medical home model. This approach strengthens the doctor–patient relationship by focusing both the consumer and the physician on improving individual health. Primary care physicians deliver care that focuses on wellness, early intervention, and the prevention of chronic illness, in addition to acute illness, as necessary. In addition to this focus on wellness, another hallmark of the medical home concept is for physicians to help coordinate the services that consumers receive in other sectors of the health system.

North Carolina’s Medicaid program spent $20 million in payments to 3,500 primary care physicians who transformed their practices to participate in a medical home pilot. Through reduced hospitalizations, better control of chronic disease, and the reduction of complications, this investment saved Medicaid more than $231 million in 2005 and 2006.

Consumers also must have the tools with which to better manage their health. The use of personal health records can be portals to health education, cost and quality data, and personal health histories. These kinds of online tools can bring to health care the kind of consumer technology available in every other aspect of life. Personal health records can deliver:

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  Wellness and education content

  
  
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  Better understanding of treatment options

  
  
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  Connectivity with doctors

  
  
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  Unlimited online access to personal health information

  
  
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  Cost and performance data on physicians, hospitals, and insurers

  
  
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  Emergency information, such as family contacts, allergies, current medications, and medical history

The Wall Street Journal released a survey that asked, “Which of the following technologies would you like to have access to when seeking care from a doctor or hospital?” Seventy-four percent of respondents said they would like to use E-mail to communicate directly with their doctor; 75 percent said they would like the ability to schedule a doctor’s visit online. Sixty-seven percent said they would like to receive the results of diagnostic tests by E-mail, and 77 percent said they would like to receive E-mail reminders from their doctors.

But when asked if they had access to these services, most consumers said they did not. Ninety-two percent of the public cannot E-mail their doctor; 93 percent cannot schedule an appointment online. Ninety-five percent of consumers cannot get their laboratory results online, 93 percent do not receive E-mail reminders from their doctors.

When it comes to information technology, consumers are ready, but the system is not. From Microsoft to health insurers to physician-driven portals, public and private institutions must find effective ways to engage consumers to improve their health. And technology can play an important role.

It is only through engaging individuals to become healthier will health begin to be transformed. The kind of change needed cannot be brought about if health indicators continue to stagnate and decline. It is a recipe for higher costs and poorer health.

Create a culture of health

A culture of health must be created that encourages more responsible individual choices. This can be done by redesigning how public and private institutions influence individual behavior, and nowhere is this needed more than in public education.

The CDC reports that nearly 80 percent of students—40 million of them—do not eat the recommended five servings of fruits and vegetables a day, and only one in three high school students participates in daily physical education. Nearly half of America’s youth, aged 12 to 21 years, are not vigorously active on a regular basis. It should come as no surprise then that the number of obese children has tripled since 1980. This, however, can be corrected with smart policies that give children an encouraging environment to be more active and choose healthier foods.

For instance, physical education five days a week should be required for every student in grades kindergarten through 12. Individual student health reports, including weight and body mass index, should be collected and sent home to parents, along with relevant educational material. School lunches, breakfasts, and vending machines should promote healthy foods, so that unhealthy alternatives are penalized or prohibited. The University of Virginia Health System has an innovative program that prices and color codes snacks according to their health value in all vending machines and cafeterias.

Another example is Somerville, Massachusetts. This community should be a model for all others to follow to promote individual health, particularly that of children. In 2002, 46 percent of Somerville’s first through third graders were either at-risk of becoming overweight or already were overweight. With the specter of serious health implications looming down the road, the community came together, from teachers, school officials, and parents, to restaurant owners, city government, nurses, and physicians. They created the “Shape Up Somerville” program, which was a three-year initiative that sought to prevent obesity in first, second, and third grade students.

Specific changes included:

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  Improving school cafeteria menus

  
  
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  Food education at both school and at home

  
  
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  Before-, during-, and after-school curriculum that was modified to promote health, activity, and nutrition

  
  
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  Restaurants modified their menus to be “shape up approved”

  
  
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  New bike and walking paths were constructed within a half-mile of schools

  
  
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  Education and training toolkits for community nurses and physicians were created to educate providers on the best approaches to treat childhood obesity

In just one year, the rate of overweight students started coming down.

Outside of public education, there are other community-based changes that could create a culture of health. Grocery stores should receive tax incentives to open in urban areas if they provide a wide selection of fresh fruits and vegetables. (The city of Detroit does not have a single national grocery chain operating within city limits.) The federal government should redesign the food stamp and Women Infants and Children (WIC) programs to incentivize the purchase of healthier foods. State and local governments should invest in bike paths, sidewalks, public parks, and active recreation programs to encourage physical activity. And consumers need tools to be better educated on their choices, as Safeway has done by creating an online portal called FoodFlex. This site allows consumers to view a personalized history of the foods that they purchased, with tips and recommendations on nutrition and healthier alternatives.

Employers can use the workplace to create a culture of health and influence better individual decisions. Not only do healthier employees enjoy a better quality of life, but they are very good business. IBM has more than 40 wellness programs that address health promotion, industrial hygiene and safety, medical management, and benefit design. These programs have reduced emergency room visits by as much as 24 percent and hospital admissions by as much as 37 percent. Researchers in the American Journal of Health Promotion reviewed 73 studies of similar worksite health promotion programs and concluded that employers had an average return of nearly $4 to $1.

These kinds of changes can play an important role in creating an environment that encourages individuals to make better decisions about their health.