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57–129—PDF 2008

S. HRG. 110–1048

RISING COSTS, LOW QUALITY IN HEALTH CARE:

THE NECESSITY FOR REFORM

HEARING

BEFORE THE

COMMITTEE ON FINANCE

UNITED STATES SENATE

ONE HUNDRED TENTH CONGRESS

SECOND SESSION

JUNE 3, 2008

(

Printed for the use of the Committee on Finance

COMMITTEE ON FINANCE

MAX BAUCUS, Montana, Chairman

JOHN D. ROCKEFELLER IV, West Virginia

KENT CONRAD, North Dakota

JEFF BINGAMAN, New Mexico

JOHN F. KERRY, Massachusetts

BLANCHE L. LINCOLN, Arkansas

RON WYDEN, Oregon

CHARLES E. SCHUMER, New York

DEBBIE STABENOW, Michigan

MARIA CANTWELL, Washington

KEN SALAZAR, Colorado

CHUCK GRASSLEY, Iowa

ORRIN G. HATCH, Utah

OLYMPIA J. SNOWE, Maine

JON KYL, Arizona

GORDON SMITH, Oregon

JIM BUNNING, Kentucky

MIKE CRAPO, Idaho

PAT ROBERTS, Kansas

JOHN ENSIGN, Nevada

JOHN E. SUNUNU, New Hampshire

RUSSELL SULLIVAN, Staff Director

KOLAN DAVIS, Republican Staff Director and Chief Counsel

(II)

C O N T E N T S

OPENING STATEMENTS

Page

Baucus, Hon. Max, a U.S. Senator from Montana, chairman, Committee

on Finance ............................................................................................................ 1

Grassley, Hon. Chuck, a U.S. Senator from Iowa ................................................. 3

WITNESSES

Ginsburg, Paul B., Ph.D., president, Center for Studying Health System

Change, Washington, DC .................................................................................... 4

McGlynn, Elizabeth, Ph.D., associate director and distinguished chair in

health quality, RAND Health, Santa Monica, CA ............................................. 6

Fields, Felicia, group vice president, Human Resources and Corporate Services, Ford Motor Company, Dearborn, MI .......................................................... 8

Holt Baker, Arlene, executive vice president, AFL–CIO, Washington, DC ........ 9

ALPHABETICAL LISTING AND APPENDIX MATERIAL

Baucus, Hon. Max:

Opening statement ........................................................................................... 1

Bingaman, Hon. Jeff:

Prepared statement .......................................................................................... 31

Fields, Felicia:

Testimony .......................................................................................................... 8

Prepared statement .......................................................................................... 32

Ginsburg, Paul B., Ph.D.:

Testimony .......................................................................................................... 4

Prepared statement .......................................................................................... 39

Grassley, Hon. Chuck:

Opening statement ........................................................................................... 3

Holt Baker, Arlene:

Testimony .......................................................................................................... 9

Prepared statement with attachment ............................................................. 52

Responses to questions from committee members ......................................... 84

McGlynn, Elizabeth, Ph.D.:

Testimony .......................................................................................................... 6

Prepared statement .......................................................................................... 87

Responses to questions from committee members ......................................... 95

Salazar, Hon. Ken:

Prepared statement .......................................................................................... 99

COMMUNICATION

Wallace, Samuel B., IV ............................................................................................ 101

(III)

(1)

RISING COSTS, LOW QUALITY IN HEALTH

CARE: THE NECESSITY FOR REFORM

TUESDAY, JUNE 3, 2008

U.S. SENATE, COMMITTEE ON FINANCE, Washington, DC.

The hearing was convened, pursuant to notice, at 10 a.m., in

room SD–215, Dirksen Senate Office Building, Hon. Max Baucus

(chairman of the committee) presiding.

Present: Senators Rockefeller, Bingaman, Stabenow, Salazar,

Grassley, Hatch, Snowe, and Crapo.

Also present: Democratic staff: Bill Dauster, Deputy Staff Director and General Counsel; Elizabeth Fowler, Senior Counsel to the

Chairman and Chief Health Counsel; Shawn Bishop, Professional

Staff Member; Susan Hinck, Fellow; Tara Clay, Fellow; Mollie

Lane, Law Clerk; and Elise Stein, Detailee. Republican staff: Mark

Hayes, Republican Health Policy Director and Chief Health Counsel; Rodney Whitlock, Republican Health Policy Advisor; and

Lyndsey Arnold, Intern.

OPENING STATEMENT OF HON. MAX BAUCUS, A U.S. SENATOR

FROM MONTANA, CHAIRMAN, COMMITTEE ON FINANCE

The CHAIRMAN. The hearing will come to order.

People generally, but perhaps mistakenly, attribute to Mark

Twain the saying, ‘‘Everybody talks about the weather but nobody

does anything about it.’’ Health care reform is like that, too. People

talk about it often in Washington, DC and across the country, but

for some time now nobody has accomplished anything about it.

I hope and intend that the Finance Committee will prove that

old saying wrong, at least when it comes to health care. I hope and

intend that we can seize the opportunity to achieve what previous

Congresses and Presidents were unable to do. We must find a way

for all Americans to have access to affordable, high-quality health

care.

Today’s hearing will take stock of the current health system. We

will look at the current system so that we can craft the right reforms and make the right changes. We thereby hope to yield the

desired result: affordable, high-quality health care for all Americans.

Today we will hear about some of the major problems in the current system. We will hear about the difficulties that employers face

in providing health coverage to their employees and their retirees.

We will hear about hardships that employees have in paying for

their insurance and for health care that is not covered, and we will

2

hear how the current system impedes American business in competing in the global market.

We will also look at the value of the health care that Americans

buy. American health care is technologically advanced and sophisticated, but it is costly and it lacks focus on prevention, wellness,

disease management, and other basic efforts to increase efficiency.

We will hear how we can stretch our health care dollars further.

America spends more than $2 trillion a year on health care, but

47 million Americans are uninsured. That means 1 of every 6

Americans does not have access to health care, except in overcrowded emergency rooms, so 1 out of every 6 Americans has to

worry about every sniffle and every cough turning into something

serious.

In some parts of the country the share without insurance is even

greater. In my home State of Montana, it is 1 in 5 people who lacks

health insurance, and in Texas, 1 in 4 is uninsured; clearly unacceptable.

The trends are heading in the wrong direction. The number of

uninsured Americans increases every year. The cost of insurance

continues to increase faster than the economy and faster than

wages. Fewer employers offer coverage to their employees, and

fewer employees are able to afford it. Benefits have been scaled

back, co-pays expanded.

People are paying more and getting less, and the quality of care

being provided is not as high as it should be. We can do better. We

must do better. We have no choice. We can increase the number

of Americans who have health coverage, we can lower the cost of

insurance to help both employers and employees, and we can improve the quality of care to help everyone lead longer, happier,

more productive lives.

We can make American businesses of all sizes more competitive

by helping them to provide health coverage for their employees. By

providing all Americans with affordable, high-quality health care,

America can remain an attractive option for new job growth. We

should not just talk about jobs leaving our shores because other

destinations have health coverage that is less expensive; we need

to do something about it.

Our efforts to reform need to include ways to control costs. America simply cannot sustain its current rate of growth in health care

spending over the long run. We must find a way to bend the cost

curve, otherwise health spending will consume our entire economy.

Our efforts at reform must also include ways to improve the

quality of care. America trains the world’s best doctors, operates

some of the best hospitals, develops the most advanced medical

technology, but our health outcomes lag behind those of other industrialized countries. We must demand better health care outcomes from our health system. Our efforts at reform must include

a new focus on prevention, on wellness, and on chronic disease.

Health care should be about fostering good health, not just treating illness. We are gaining knowledge about how to prevent and

manage diseases. If we expand and apply that knowledge, we can

improve health outcomes and increase the cost of health care. Our

current system leaves too many people without coverage. It hinders

employers, it leaves employees exposed. Our current system is in

3

need of reform. We must do it right, and in order to do it right we

need to ask experts for help.

Today we have a panel of such experts. This is the second of a

series of hearings in health care reform that the Finance Committee will hold this year. These four witnesses can help us to understand the major issues in our current system and why we need

reform. Their diverse perspectives can help us focus reform so that

we reach our goal of having affordable, high-quality health care for

all Americans. So today let us talk again about health care reform.

Let us hear from the experts about how to do it right. Let us plan

this year so we can act next year to actually do something about

health care.

I will turn to Senator Grassley.

OPENING STATEMENT OF HON. CHUCK GRASSLEY,

A U.S. SENATOR FROM IOWA

Senator GRASSLEY. Thank you very much for holding this hearing as a forerunner to your idea, and I am working with you on

it, for the Health Care Reform Summit in 2 weeks.

In America, we pay a lot for health care. According to Kaiser, the

United States spends more on health care, as both a percent of

GDP and on a per capita basis, than other OECD countries.

Well, if we are going to be spending that much money for health

care, we should have the best health care in the world, right?

While health care spending continues to rise, it seems like the U.S.

continues to lag OECD countries on indicators of quality.

Obviously that is unacceptable, and we want to improve that situation. We have certainly made some forward progress, at least on

the Medicare front. Transforming the way in which Medicare pays

for health care has been a bipartisan priority that the chairman

and I share.

Last Congress, we introduced the Medicare Value Purchasing

Act. This bill starts all Medicare providers on the path to being

based more on quality of care instead of volume. We have accomplished much since the introduction of this act. Currently, a number of Medicare providers, including hospitals and ambulatory surgical centers, home health agencies, and physicians, report quality

measures in return for a full annual payment update and bonus.

The reporting of quality measures is an important first step towards transforming Medicare from a passive payer of health care

to a value purchaser. Hospitals by far are the furthest along in

reaching this goal.

A Medicare demonstration project on value-based purchasing for

hospital services shows promising results. Last year, the Secretary

of HHS released a value-based purchasing implementation plan for

Medicare hospital services. It is obvious that a lot of thought was

put into coming up with this plan. I look forward to working with

Senator Baucus and other members of the committee to implement

value-based purchasing for Medicare hospitals.

When the Federal Government can play a role in improving quality, we ought to. We have a lot to learn from the private sector as

well; in some ways, the private sector is ahead of us. We should

also ensure that nothing we do interferes with that private sector

effort. I am looking forward to this testimony.

4

Maybe parenthetically here, I am done with my statement, but

I ought to say something that came out in the 17 town meetings

I had last week. Iowa health care providers come, so I make this

statement based upon, one, we are looking at the United States as

a whole, but looking at how maybe people in the Midwest might

see quality.

There is some quoting of annual—I think it is Dartmouth University—studies showing a lot of places in Iowa being very high in

quality, second, third, fourth in the Nation, and maybe low in costs.

So they keep asking me, how come, if we are doing such a good job

delivering on health care, we are not getting paid more for doing

it? So that is kind of where the rationale comes in, moving from

quantity to quality for reimbursement.

So as we do look at the country as a whole compared to other

OECD countries, we need to know that in some places in America,

maybe we rank a little better according to OECD than what maybe

the country as a whole does.

Thank you, Mr. Chairman.

The CHAIRMAN. Thank you, Senator, very much.

Now I welcome the witnesses. First, Dr. Paul Ginsburg, who is

president of the Center for Studying Health System Change; second, Dr. Beth McGlynn, associate director of RAND Health. Our

third witness, I guess, will be introduced by my colleague from

Michigan.

Senator STABENOW. Thank you, Mr. Chairman, for giving me the

opportunity just to welcome Ms. Felicia Fields from the great State

of Michigan, representing Ford Motor Company. She has been with

Ford Motor Company since 1986, rising through the ranks to become Ford group vice president for Human Relations and Corporate Services since March 25th of this year, and, I would just

add, named by Automotive News as the 2005 Leading Woman in

the North American Automotive Industry.

So, welcome. Glad to have you.

The CHAIRMAN. Thank you very much, Senator. Ms. Fields, welcome.

Our final witness is Ms. Arlene Holt Baker, executive vice president, AFL–CIO.

As you all know, I am sure you know, it is our customary practice to have all of your statements automatically included in the

record, and we ask each of you to speak about 5 minutes.

Dr. Ginsburg, why don’t you begin?

STATEMENT OF PAUL B. GINSBURG, Ph.D., PRESIDENT, CENTER FOR STUDYING HEALTH SYSTEM CHANGE, WASHINGTON, DC

Dr. GINSBURG. Yes. Mr. Chairman, Senator Grassley, members of

the committee, thank you for the invitation to testify. I am going

to focus on health care costs.

The affordability problem in health care is not some academic

issue of the ideal percentage of GDP, but it is a real phenomenon

that is limiting many people’s access to health care and leading to

financial harm for some who are ill. As health spending continues

to grow more rapidly than our incomes, inability to afford health

5

insurance is moving up the income scale and is now becoming a

middle-class issue.

Rising costs are increasingly straining government budgets, with

revenues roughly constant as a percentage of GDP and there being

existing commitments to finance health care. So when health

spending trends outpace the GDP, other policy priorities are getting crowded out and, at the Federal level, deficits are higher.

Rising costs mean that initiatives by government to expand coverage are likely to become more expensive over time and to be partly undermined by increasing numbers of people needing assistance

in affording health insurance as time moves on. It is almost like

filling a bucket that is leaking badly.

We understand the drivers of rising health care costs fairly well.

Advancing medical technology is by far the largest factor, and

much of this technology improves patient outcomes. But often technologies are applied to many patients who do not have the potential to benefit, and the drug Vioxx is a classic example of this phenomenon. Our financing and regulatory system also leads to many

technologies with unknown benefits diffusing widely.

Aging is a driver of rising health care costs, but its impact has

been measured by many researchers and has been found to be modest, perhaps a half a percentage point per year. This is good news.

It means that much of the health care trend is not out of bounds

to attempts to lower it.

An overlooked factor as a driver of rising health care costs is

small gains in productivity in the delivery of health services. The

cost of automobiles has not increased rapidly and the cost of computing power has fallen over time because of substantial productivity gains each year. But we cannot expect to achieve such gains

in health care when the providers are paid on a piecework basis

for what they do rather than on the basis of providing an episode

of care for patients or management of a chronic disease.

There are many possible policy steps to address costs. No one is

likely to be powerful enough to achieve the slowing of the trend

that is needed. Consumerism can certainly contribute, but I doubt

it can do the whole job, especially in its current form. We need to

pursue many approaches simultaneously, both to compromise differing ideologies, but also to protect against some of them turning

out not to meet our objectives.

I urge attention to these three areas. One is a sharp increase in

government resources going to clinical effectiveness research, with

the directive to the entity to uncover technologies with either negative or low value for patients.

Second, we need to revamp the provider payment system so that

acute episodes of care are paid for using a single payment to all

providers involved, and where the management of chronic disease

is paid for on a capitated basis. Since Medicare provider payment

policies now influence Medicaid programs and private payers, the

Federal Government is well-positioned to lead on this while remaining a payer rather than a regulator.

Third, there is a great deal of potential to improving personal

health habits, but we do not yet have the effective tools to accomplish this. I urge you not to oversell some policy ideas that may be

worthwhile in general but have very uncertain potential to contain

6

costs. Examples of these would be health information technology,

quality improvement activities, and medical liability reform.

Here are my final thoughts. Containing health care costs is hard

work, and it is hard both because every dollar spent on health care

is someone’s revenue and those people all have lobbyists to represent their interests.

Beyond what we can accomplish by increasing efficiency, containing costs means people not having all the services that they

might like to. We need to define success in our cost containment

endeavors by the percentage of foregone services that have little or

no value, and by whether we think the sacrifices are being distributed equitably.

Thank you very much.

The CHAIRMAN. Thank you, Dr. Ginsburg, very much. I appreciate that.

[The prepared statement of Dr. Ginsburg appears in the appendix.]

The CHAIRMAN. Dr. McGlynn?

STATEMENT OF ELIZABETH McGLYNN, Ph.D., ASSOCIATE DIRECTOR AND DISTINGUISHED CHAIR IN HEALTH QUALITY,

RAND HEALTH, SANTA MONICA, CA

Dr. MCGLYNN. Good morning, Chairman Baucus, Ranking Member Grassley, and distinguished members of the Committee on Finance. I am honored to testify before you today about the problems

with health care quality.

On a personal note, I am delighted to appear before my Colorado

College classmate, Senator Salazar. Go Tigers! [Laughter.]

I applaud the committee for putting quality on the health reform

agenda. All too often, people assume that if we solve the problems

with access and cost the quality problem will be solved. The most

important message I can leave you with today is this: if we get everyone insured and we put a lid on health care costs, we will not

have solved the quality problem. It is a separate problem, it requires separate solutions.

Many people say that the United States has the best health care

system in the world. In 2003, my colleagues and I published in the

New England Journal of Medicine the first national comprehensive

study on quality of care for adults. We examined 439 indicators of

quality for 30 different clinical areas. We found that, on average,

American adults received just 55 percent of recommended care for

the leading causes of death and disability. We spend more than

$2 trillion annually on health care, and we get it right about half

the time. That may be the best in the world, but I hope you would

agree that we can, and should, do better.

Quality problems are more pronounced for older and younger

Americans. My colleagues found that the vulnerable elderly received only one-third of needed care for conditions unique to this

population, for example, falls that lead to hip fracture, urinary incontinence, and dementia. My own team reported last year that

children received just 47 percent of recommended care.

When we published these studies, people said to us, well, there

may be problems overall in the U.S., but the care in my community

is much better than that. We collected enough information to allow

7

us to construct quality scores for 12 metropolitan areas around the

country. We found remarkably little variation in quality, ranging

from 51 percent of recommended care delivered in Little Rock, in

Senator Lincoln’s home State, to 59 percent of recommended care

delivered in Seattle, in Senator Cantwell’s home State.

When we published these findings in Health Affairs, the Seattle

Post Intelligencer headline read, ‘‘Seattle: Best of a Bad Lot,’’ and

I thought they got it about right.

I am sure Senator Kerry would be disappointed to find that Boston, that well-known medical Mecca, was second to Seattle at 57

percent. Performance in other communities that are located in

States represented on this committee include 56 percent in Syracuse, 55 percent in Lansing, and 55 percent in Phoenix. The relatively small differences we found in these very disparate communities have led most people to conclude that their own community

probably performs similarly.

The next comment we heard was, well, quality may be a problem

nationally and even in my community, but my care is excellent.

But in fact we found that everyone is at risk. We found no substantial advantages for population subgroups defined by gender, age,

race, income, and insurance. We know these factors may make a

difference in determining who gets in the door of a medical care

system, but once in, it appears these factors convey relatively little

advantage.

The consequences of these failures to deliver needed care are significant. The quality deficits we documented contribute to 29,000

preventable cases of kidney failure annually among persons with

diabetes; 68,000 preventable deaths among persons with hypertension; 37,000 preventable deaths among persons who have heart

attacks; 10,000 preventable deaths from pneumonia. Make no mistake: poor quality is deadly.

While we were conducting this study, my father was hospitalized

with congestive heart failure for the third time in about 18 months.

In looking at his medical records, which he would only ask for after

he was discharged from the hospital for fear of upsetting his doctor,

we found that he was not on the preferred medications for his conditions and he was not getting adequate doses of the medications

he was receiving. My father was insured, educated, and had been

a hospital administrator for more than 30 years, and even he is

failing to get the care he needed.

I would like to close with an observation. The hearing today compares the problem of rising health care costs with the problem of

low quality. Many people believe that improved quality will lower

health care costs. While there are certainly examples of better

quality being cheaper, there are many other areas where we would

expect improved quality to increase costs.

The history of quality improvement for more than 5 decades

shows that there is greatest interest in improving quality if it

achieves cost reduction objectives. I hope this committee has the

courage to support efforts to improve quality whether or not they

save money. I hope you will commit to improving quality because

it is the right thing to do.

In the future we may even spend more money than we do today,

but we can substantially improve the value of that expenditure if

8

we focus on making real the claim that America has the best

health care system in the world. We can deliver on that promise,

and we must.

Thank you.

The CHAIRMAN. Thank you, Dr. McGlynn.

[The prepared statement of Dr. McGlynn appears in the appendix.]

The CHAIRMAN. Ms. Fields?

STATEMENT OF FELICIA FIELDS, GROUP VICE PRESIDENT,

HUMAN RESOURCES AND CORPORATE SERVICES, FORD

MOTOR COMPANY, DEARBORN, MI

Ms. FIELDS. Good morning, Chairman Baucus, Ranking Member

Grassley, Senator Stabenow, and members of the committee. I commend the committee for this important hearing and am pleased to

discuss our experience and challenges in providing high-quality

health care coverage at Ford Motor Company. Last year, Ford spent $2.2 billion, or about $1,000 per vehicle,

to provide health care coverage for 535,000 U.S. employees, retirees, and their dependents. Of that, $1.2 billion was for retiree care.

While we are pleased to provide high-quality benefits to Ford employees and retirees, we have had to take significant steps to address this cost to help secure the financial viability of Ford.

Last November, Ford and the UAW ratified a contract establishing a new independent, voluntary Employee Benefit Association

Trust to which Ford will contribute $13.2 billion. This trust will administer post-retirement benefits to former hourly employees and

active employees as part of the new contract effective September

2007.

These measures are necessary to continue offering health care

benefits to our employees and retirees without compromising the

company’s financial viability; however, they still do not address

projected health care cost increases. Therefore, we are working to

create a culture of health and wellness as a central portion of our

health care strategy. As the first step, we started providing resources and tools to improve employee health status and aid sound

choices about health care services and coverage.

We recognized that one important tool employees need to improve health status and become better health care consumers is an

information infrastructure. In 2004, Ford, in conjunction with others, created the Southeast Michigan E-Prescribing Initiative, one of

the country’s largest employer-driven e-prescribing efforts. In 2006,

we led the formation of the Southeast Michigan Health Information

Exchange to create the infrastructure for regional transmission of

health care information among health care providers and patients.

We also recognized that many employees with chronic diseases

need greater involvement by their primary care physicians; therefore, we took a leadership role in Michigan’s participation in the

Improving Performance and Practice Initiative to provide tools to

ensure these patients receive recommended treatments and preventive services.

Despite these efforts, much more can be, and must be, done. I

would like to leave you with some policy suggestions on how the

Federal Government could assist. Much recent discussion on health

9

care reform has justifiably centered on the uninsured, however, too

much of that discussion focused simply on expanding coverage,

such as financing, modifying insurance markets, and mandates.

A better approach is to improve health care coverage affordability, evaluating the cost drivers, and addressing them. Simply

subsidizing excessive health care spending does not offer a longterm solution to America’s health care problems, and it may well

exacerbate them. Instead, by first making health care coverage

more affordable for the entire population, uninsured and insured

alike, we benefit both immediately and over the long term.

Over the last several years generic substitution has allowed some

control of prescription drug costs, yet one element of our prescription drug costs continues to increase rapidly: biologics. We urge

Congress to enact legislation giving FDA approval to approve safe

and effective biogenerics and eliminate perpetual monopoly pricing.

Incentive-based wellness programs are currently limited to 20

percent of cost of coverage. Raising this to a higher percentage

would also allow greater incentives for people taking an interest in

their wellness. This is good for them, good for us, and good for the

country.

To prevent gaming of the system, we further suggest modifying

regulations regarding voluntary behaviors to enable wellness programs to offer differential rewards and rewards based on outcomes.

This would reward those who actually do the hard work to improve

their health status and adopt better health policies.

Similarly, we recommend strong Federal leadership for establishing one set of standards for health care quality and one set of

best practice guidelines for improving the population’s health status. The Federal Government, including CMS, can provide a central leadership role by adopting constructive policies. These can,

and certainly will, be replicated in the private sector.

Many systems benefit from adoption of health information technology, but are only achievable if infrastructure allowing electronic

storage and exchange of such information exists. This infrastructure requires start-up funding and incentives for physicians to

make the investment to participate. We suggest Federal assistance.

As an employer offering health care in 50 States, the ability to offer

uniform benefits is also vital.

Mr. Chairman, thank you again for the opportunity to share our

experiences with this committee. Thank you very much.

The CHAIRMAN. Thank you, Ms. Fields.

[The prepared statement of Ms. Fields appears in the appendix.]

The CHAIRMAN. Next, Ms. Holt Baker?

STATEMENT OF ARLENE HOLT BAKER, EXECUTIVE VICE

PRESIDENT, AFL–CIO, WASHINGTON, DC

Ms. HOLT BAKER. Good morning, Chairman Baucus, Senator

Grassley, and distinguished members of the committee. Thank you

for the invitation to participate in this morning’s hearing and to

offer our perspective on behalf of working women and men on the

need for health care reform.

I would like to commend the committee for launching this series

of hearings on health reform and laying the groundwork for a naVerDate 11-MAY-2000 14:49 Jul 21, 2010 Jkt 000000 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 57129.000 TIMD PsN: TIMD
10

tional debate on how best to secure affordable, high-quality health

care for all Americans.

The AFL–CIO represents 10.5 million members, including 2 million members in Working America, our new community affiliate,

and 56 national and international unions that have bargained for

health care for more than 50 years.

Our members are among the most fortunate; through bargaining,

they have good benefits from their employers. Yet even the wellinsured are struggling with health care cost hikes that are outpacing their wage increases, and far too many working families

just cannot keep up.

Earlier this year we launched an online survey that captured

working families’ concerns about health care. More than 26,000

people took the survey over a 7-week period. Most are insured and

employed, most are college graduates, and more than half are

union members. These are the people, it would seem, most likely

to have positive experiences with America’s health care system. Instead, their responses tell a sobering story about the breadth of the

problems with health care in America.

Nearly all survey-takers with insurance, 96 percent, say they are

‘‘somewhat’’ or ‘‘very concerned’’ about affording coverage in the

next few years. Almost two-thirds who have employer-provided coverage say their costs have gotten worse. More than half of surveytakers say their health insurance does not cover all the care they

need at a price they can afford, and preventive care, if uncovered,

is unaffordable for more than a third.

Almost 7,500 people posted their stories of health care system

failures. One of these stories comes from Doreen in Venetta, OR.

She wrote, ‘‘I worked for a manufacturer for over 15 years. My

wages stayed the same for over 6 years. As I found myself paying

more and more for health care, co-pays went up, deductibles went

up, and the last year I worked there I was paying a portion of the

premium. In late 2006, the company sent my production job to

Mexico and China, and I was laid off. I could not afford COBRA

premiums. I am 2 years away from Medicare and unemployed and

on the faith-based health care system: I pray I don’t get sick. Oh,

yeah. I’m a cancer survivor, and I haven’t done the yearly checkup in 3 years.’’

These survey results and stories put a human face on the statistics that are perhaps numbingly familiar, yet all too telling. Health

premiums are rising 3 times faster than wages and inflation, annual premium costs for family coverage have almost doubled between 2000 and 2007, and, as the number of uninsured grows, so

too does the cost-shifting that occurs in our fragmented system.

More than $900 of the average premium covers treatment for the

uninsured. Year-in and year-out, health care costs are the toughest

issue in bargaining, and workers regularly forego bigger wage

hikes to fend off greater health care costs, demonstrating the value

workers place on the security of health benefits they can count on

to cover the care they need.

But these trends are unsustainable, and the status quo is unacceptable. Our employers are, for the most part, the good guys. Our

unions work with them to make limited dollars stretch as far as

possible to meet escalating health care costs, yet they increasingly

11

find themselves competing domestically and internationally with

firms that do not bear the same cost pressures. Globally, U.S. firms

pay more as a percent of payroll and as an hourly cost than our

major trading partners.

Here at home, firms that provide good benefits to their workers

and their families find themselves picking up costs for firms that

either do not cover dependents or do not provide coverage at all.

Even public employers that have typically provided good health

benefits are struggling under growing cost pressures, especially as

more States find their budgets hit by the economic downturn.

We regularly work with employers to tackle these problems.

Value-based purchasing and electronic prescribing are two policies

that make sense and have the support of many in the business,

labor, and consumer worlds. We know we are not getting consistently high quality for the money that we spend, and disparities of

care persist across our population based on race, ethnicity, language, and gender.

We can do better and we can save money at a time when 47 million Americans are uninsured and tens of millions more worry

about losing the coverage that they have. It is crucial that we understand health reform as a process of transforming the way care

is structured and provided, not just a debate over who pays the

bills. But reform must address costs and coverage as well. We need

comprehensive reforms that will not only improve quality, but

lower costs and extend coverage for everyone.

Last year, the AFL–CIO launched a campaign to mobilize our

members to push for national reform that will guarantee affordable, high-quality coverage for all Americans, and we will measure

various plans and proposals against our principles of reform. These

principles are built on group coverage and pooled risk rather than

the flawed individual insurance market.

Everyone would get health care as good as they have now or better, and everyone must share in the responsibility for financing

that coverage: government, employers, and individuals. Everyone

would get a choice of health plans, including the right to keep their

current coverage, or to choose another private plan or public plan.

The government should act as a watchdog on cost, quality, and

fairness. These principles are consistent with those of many other

stakeholders, but we recognize that there will be other approaches.

Our members and our employers have an important role to play in

the national debate to come, and this committee will of course be

at the center of that debate.

We look forward to working with you to enact legislation that

will guarantee affordable high-quality health care for all Americans.

Thank you, Mr. Chairman.

The CHAIRMAN. Thank you very much, Ms. Holt Baker.

[The prepared statement of Ms. Holt Baker appears in the appendix.]

The CHAIRMAN. Dr. Ginsburg, I would like to ask you how we

might structure public/private institutions to look at comparative

effectiveness as one way to curb excessive and inappropriate costs.

Basically, a couple of questions. One is, what might this structure

be? Second, what might such an institute focus on?

12

Dr. GINSBURG. Yes. There are two keys in this structure. One is

to provide some insulation from micromanagement by both the

Congress and the President. There cannot be influence on particular reports and analyses that the entity performs. Also, it requires a large, stable funding stream.

Areas of focus should be both those where there is a possibility

that a technology is harmful to some patients that it might be used

for, but also technologies where the benefits to some of the patients

it might be used for turn out to be very small in relation to costs.

The history of advancing medical technology in this country is applying it to too many patients, not only the ones who can benefit

tremendously, but some who cannot. So I think that these should

be some thoughts on the structure.

The CHAIRMAN. Right. But could you expand a little bit on your

point about insulation from micromanagement?

Dr. GINSBURG. Sure. The Medicare program has a governance

problem, where both the Congress and the White House, no matter

what party is in control, get very involved in the details. In a

sense, it is like a company having a Board of Directors of 535 pulling it in different directions. The entity for effectiveness research

and for the Medicare program needs to have some insulation,

where it gets broad directions and its gets oversight, but it is not

subject to having each individual decision, like how much to pay

for oxygen or whether to have competitive bidding for durable medical equipment, reviewed by the Congress.

The CHAIRMAN. There is a lot to be said for that. I feel, often,

that this Congress is not qualified to make a lot of those individual

decisions that we now do make. We are just not competent, in

many cases, to know which of those micro-decisions are appropriate

or inappropriate. As you say, a lot of it is just due to political pressure. We want to do what is right, clearly, and try to balance out

different interests. But I sometimes think that something has to

change, because we are bogged down too much in details. But if

you have some thoughts on down the road on how to provide that

insulation, we would surely appreciate it.

You mentioned something about a substantial resource lull.

Could you expand on that a little bit, please?

Dr. GINSBURG. Yes. I think in recent years, when you look at the

amount of resources the Agency for Healthcare Research and Quality spends on effectiveness research, it is very, very small in relation to either funding for biomedical research or to what the Medicare and Medicaid programs spend. It just seems as though there

is a potential, with some ramp-up time, to accomplish a lot more,

but resources are needed.

The CHAIRMAN. Do you think such an institute is necessary to

get control of the costs?

Dr. GINSBURG. Effectiveness research?

The CHAIRMAN. Yes.

Dr. GINSBURG. Yes. I think it can contribute if the direction, if

the focus is broad enough, is on value issues and cost-effectiveness

issues and not only looking for technologies which turn out to harm

patients. I think the key thing is the charge that Congress gives

to the entity.

The CHAIRMAN. All right.

13

Dr. McGlynn, I was interested in your comment that quality is

separate from coverage and cost. I was a little unclear about what

the impediments, in your view, are to insufficient care, that is, why

so few patients get the recommended care and what the solution

might be, in 5 seconds. [Laughter.]

Dr. MCGLYNN. In 5 seconds. Let me start with, I think, the main

thing, which is, we have this antiquated delivery system that was

built at a time when there was not much we could do, and most

of what we could do was in response to acute, frankly, self-limited

illnesses. So we have this very reactive system. We have not done

anything to change the fundamental delivery of health care, and

yet the problems facing physicians are quite a bit different. There

is relatively little planning. I think every time a patient shows up

in a doctor’s office, it is sort of like a surprise party. Nobody goes

in with a sense of the things that need to be done for the particular

patient that is in front of the doctor.

We also have this nutty idea that doctors are not subject to the

same cognitive limitations of the rest of the world, so we have doctors who operate with handwritten medical records, and they either

cannot read their own writing or could not possibly find the relevant information in the 17 minutes they have with the patient.

So I think we need some fundamental restructuring of the way

that the health care system is delivered. I think it starts with

health information technology. It is pretty hard for me to imagine

how we would make significant progress if we do not introduce the

benefits of computers into the health care delivery system. I do not

think that is a panacea. I think there is a lot of evidence of how

that cannot meet the promise, but it is pretty hard to imagine how

we would make progress without that.

The CHAIRMAN. Thank you. Thank you very much.

Senator Grassley?

Senator GRASSLEY. Thank you very much.

I am going to start with Ms. Fields. You testified that Ford has

taken steps to provide resources and tools to your employees that

allow them to become better health care customers. What did you

learn through your culture of wellness program? Can you document

positive results over the period of time? I suppose it is a relatively

short period of time that you have been involved. Will this ultimately save Ford money or is it perhaps already saving Ford some

money, the extent to which you can document any of those things?

Ms. FIELDS. Yes, Senator Grassley, it has been a relatively short

period of time. I can say that we have strong experience to draw

on relative to the cost savings. We do know that, by involving employees in their care and also more proactively involving attending

physicians working with employees around chronic disease, that

over time we are going to reduce their risk of chronic disease.

There is a very strong correlation between lowering risk and lowering cost.

So as we get the risk factors down in our employee population

base, we can see the reductions that will go down in our health

care spending. Also, everything related to wellness, relating to

their involvement, the comprehensive way that we can be on the

prevention side rather than the reaction side, obviously over time

14

will lead to a healthier employee, and also a reduction in cost over

time.

Senator GRASSLEY. But even though you cannot actually see

costs right now, you have still a very positive view towards what

you are doing as not only increasing the quality of life for people,

but also saving your plans money. Is that right?

Ms. FIELDS. That is exactly right.

Senator GRASSLEY. All right.

Dr. McGlynn, you testified that increasing access to medical information technology would increase the quality of care because patients would have access to their own information. Even with access to their own medical information, how do you go about changing what I consider a decades-old attitude of American patients not

to really question their doctors, just to do what the doctor says? It

seems to me you have to change the culture. How do you suggest

that?

Dr. MCGLYNN. Thank you, Senator Grassley. I think the transparency initiatives, the public reporting of quality information has

been critical in beginning to break down the public’s perception

that their doctor gets it right all the time. I have had these experiences in my own family with my father being unwilling to question

his doctors. For him, having printed information like checklists of

the things that should be going on for somebody with his condition

from an authoritative source was critically important.

Publishing information that says that quality falls short in hospitals and in doctors’ offices makes people believe that it is incumbent upon them to get into more of a dialogue with their doctor.

So I think all of the transparency initiatives and putting tools like

checklists in patients’ hands are two things that could be done that

would be important.

Senator GRASSLEY. All right.

Ms. Holt Baker, kind of the employee side of a question I asked

Ms. Fields, but not quite exactly the same question. Since a lot of

the companies your unions deal with have instituted wellness and

prevention programs, and Ford being one of them, since your union

represents millions of people, it would be interesting to gauge how

many of them are taking an active role in their own health care

and well-being. In your recent survey, what did you find about your

members’ willingness to do more to stay healthy?

Ms. HOLT BAKER. Well, Senator, our members certainly believe

in wellness, and we believe that you have to take personal responsibility for that. But in the survey, what we discovered from the

members, and others who were not members, their responses primarily were about their concern and their fear about the rising cost

of health care, their ability to afford it, and for those who had it,

the ability to hold onto it. So, certainly that was what was expressed most in those surveys that we had taken. We would concur

that certainly wellness is very important, but we need to first move

toward fixing this broken system, and in doing that we believe that

the wellness programs also will be able to have better and more

preventive efforts in those areas also.

Senator GRASSLEY. All right.

15

In a very short answer, because my time is up, to you and to Ms.

Fields, what one measure could the Federal Government take that

would do the most good to improve quality in the private sector?

Ms. FIELDS. It is hard to prioritize on, Senator Grassley. But I

would say health information technology infrastructure is very important to our ability to get transparency, data consistency, and

protocols that really support high-quality care.

Ms. HOLT BAKER. Senator, we think that Medicare has led the

way on health care quality. One of the things I would say is that

Medicare is laying the groundwork for private sector efforts, and

more of those efforts to provide purchasers with greater information about quality of care provided would help private sector purchasers use their buying power.

Senator GRASSLEY. Thank you.

The CHAIRMAN. Thank you, Senator Grassley.

Senator Bingaman?

Senator BINGAMAN. Thank you all for being here.

Dr. Ginsburg, you suggested three things that we could do to

deal with the cost issue. One of them was to pay for management

of chronic diseases on a capitated basis. I gather Medicaid and

Medicare, you are suggesting, should do that. Is this one of these

areas where Congress needs to act? Why can CMS not do this?

Dr. GINSBURG. Certainly there is movement at CMS now, such

as planning a demonstration of a medical home, which really is a

step towards capitated payment for management of chronic disease.

In that case the capitated payment would be for the services that

typically are not paid under fee-for-service so that physicians can

do those and not be financially penalized.

But I would imagine that the entire thing might be within the

authority of the Medicare program to do, but, if it is a big change,

it always helps to have a directive from Congress to say, this is the

priority and we will back you if you go in this direction and ruffle

some feathers in the process.

Senator BINGAMAN. But I gather a significant portion of our medical cost in the Medicare system, for example, is connected to these

chronic diseases—diabetes, hypertension, congestive heart failure,

these types of chronic diseases. If we were to just direct Medicare

to begin compensating for treatment of those through this on a

capitated basis, you think that would save some money?

Dr. GINSBURG. Yes. I think this would be one area where there

would be both substantial quality improvements if this succeeded,

and this is an area where quality improvements come with cost

savings. They are not in conflict with each other.

Now, going all the way to full capitation payment, that is something down the road. There would have to be intermediate steps,

and probably medical home is the first step to it, where you continue paying for things that are billable today on a fee-for-service

basis and the capitation payment is for the coordination services,

the educational services, whatever is important to the management

of chronic disease that is not supported by our current payment

system.

Also, I think, because of the position that Medicare is in today

when it comes to provider payments, we are seeing that many of

the advances in payment methodology that Medicare puts out are

16

adopted by Medicaid programs and often adopted by many private

insurers.

So in a sense Medicare is in the unique position where it can reform its own payments and it does not have to require others to

use its methods, and it is likely that they will because the program

has the credibility and the size so that Medicaid programs or private insurers might be able to pursue payment changes that they

would have liked to, but did not think they could pull off on their

own.

Senator BINGAMAN. These are very large bureaucracies we are

talking about here. I understand that you cannot turn around on

a dime, but there is a frustration that I feel about, whenever we

think about some kind of reform, first we have to take baby steps

and see how that works, then we have to think about maybe taking

another step, and sometime 2 or 3 decades from now maybe we will

get it reformed. Is that the best we can do in this area? I mean,

can we not just basically say, effective a certain date, the reimbursement or the payment for treatment of these chronic disease

will be on a capitated basis?

Dr. GINSBURG. Yes. Yes, we can do that. In fact, my looking at

our history is that the major progress that the Medicare program

has made in provider payment has not come from years of demonstrations and little steps, it has come from big steps. Hospital

prospective payments, paying on the basis of DRGs, was authorized

in 1983 legislation. It was implemented in that same year, phased

in, and it really transformed the hospital payment system.

Similarly, paying physicians based on a resource-based fee schedule was also legislated. It was phased in. Often I have seen demonstrations as something you do when you do not have the votes

to move forward, but, if you do have the consensus to move forward, I agree with you that we should take risks, and then go back

and fix things rather than proceed so cautiously that it takes us

decades to get there.

Senator BINGAMAN. Thank you, Mr. Chairman.

The CHAIRMAN. Thank you, Senator Bingaman.

Senator Hatch?

Senator HATCH. Well, thank you, Mr. Chairman.

Welcome to all of you. I am pleased to have you here. This is naturally one of the biggest discussions we can possibly have; health

care, of course, is on the minds of all of us.

Dr. Ginsburg, I found your presentation on the forces driving

health care inflation and the appropriate solutions to this problem

to be particularly informative. I appreciated your efforts at cost

containment strategies that are, in your words, ‘‘compatible with

American values.’’

Now, I worry about proposals for cost containment that rest on

government decisions about what care will be available, and, while

extending access to health care is no doubt important, I do not

think that the American people will stomach expansion of care

through the creation of a system in which the government dictates

your coverage and the availability of care.

Now, your discussion of the failure of the health care marketplace to achieve cost containment through increased productivity,

I find helpful. As I read your testimony, you believe that the FedVerDate 11-MAY-2000 14:49 Jul 21, 2010 Jkt 000000 PO 00000 Frm 00020 Fmt 6633 Sfmt 6633 57129.000 TIMD PsN: TIMD
17

eral Government effectively incentivizes inefficiency and health

care inflation by reimbursing particular services rather than episodes of care, if I have it right, and I think I do.

Given that the Federal Government is the largest purchaser of

health care in the country and that it has an over-sized influence

on the cost of delivery of private health, is it your view that the

problem is us, the Federal Government, the Congress? In your

view, is the manner in which the Federal Government participates

in the health care system the most significant driver of health care

inflation?

Dr. GINSBURG. I would call the problems I was speaking about

in the payment structure in the Medicare program inadvertent.

The intention of the Medicare program, and also Medicaid programs and private insurers, is that their payment methods should

be neutral and should not provide incentives for providers to go in

a particular clinical direction.

But because of the shortcomings in our keeping up the accuracy

of our payment structures, we have inadvertently gotten to systems

where hospitals have incentives to develop service line strategies,

strategies where they have identified those types of cases that are

most profitable, not because any payer intended them to be profitable, but probably because of some details in the reimbursement

system.

So I think that the Federal Government is in an admirable position because it can focus on its own program, the Medicare program. To the degree that it succeeds in having Medicare payment

structures for hospitals, physicians, and others more accurately reflect the relative costs today of providing the different services, others will follow on their own. The net effect will be that some of the

pernicious, unintended incentives will be diminished.

Senator HATCH. Well, thank you. I am going to submit questions

because we cannot get very much done here. But this has been a

particularly invaluable panel, as far as I am concerned.

Ms. Holt Baker, let me just ask you a couple of questions. I will

probably be writing to you for some of the details, and will probably submit some questions to you that way and will follow-up with

you after the hearing, because you are particularly important in

this discussion because of how many people are involved. You are

not the only one who is important, but you are very important as

far as I am concerned.

Now, I noticed that President Bush was trying to set certain levels of care. I would be interested in your answers to these questions: what percentage of employees in the AFL–CIO have health

coverage with yearly premiums of up to, say, $15,000, or $18,000,

or $20,000? I would kind of like to know that, because we have to

know where we are before we can really try to resolve some of

these problems that currently exist. I see them as huge problems.

But go ahead. I am sorry.

Ms. HOLT BAKER. Senator, I will be glad to get you the exact percentages there, but certainly we would recognize that our employers do have some of the better premiums because we have negotiated this over the years.

Senator HATCH. Well, I acknowledge that. But can you give us

a range of what the premiums are a year for most?

18

Ms. HOLT BAKER. Well, the average premium a year, the cost, annual average, is $12,000 a year, about $1,000 a month.

Senator HATCH. Across the whole automotive industry?

Ms. HOLT BAKER. Across the board. Across the board. As we have

indicated, about $900 of that goes toward the uninsured.

Senator HATCH. Sure.

My time is up, Mr. Chairman.

The CHAIRMAN. Thank you, Senator Hatch.

Senator HATCH. Thank you all. I wish I had more time to ask

questions.

The CHAIRMAN. Don’t we all? [Laughter.]

Senator Salazar?

Senator SALAZAR. Thank you very much, Chairman Baucus and

Senator Grassley, for holding this hearing.

I think the question is very apparent here in terms of higher

costs and low-quality health care. When you look at some of the

comparisons to what is going on in other countries, you have to ask

the question whether we are all wrong here, and maybe we are

being too tepid as we look at reform initiatives, and maybe we

ought to look at some of the bigger-picture issues in terms of reform.

To me, and when I compare the statistics that staff provided us

and that you have testified to relative to what is happening, for example, in the United Kingdom versus what is happening here, I

have to ask the question, well, why not look at places where we are

delivering high-quality care at a much lower cost and simply adopt

that system for the United States of America?

I know there are lots of political reasons not to do that, and you

will probably tell me. So I would like you to tell me what it is that

we could learn from those countries where we essentially have

achieved a higher quality of care at a much lower cost. When I look

at the statistics that were provided to us by staff, when you look

at the United States’ rank out of the OECD countries, the United

States ranks 37 out of 191 of those countries, yet we are spending

16 percent of our GDP on health care costs. If you look at the

United Kingdom, ranking 18th out of 191, they are only spending

6 percent of GDP.

So starting with you, Dr. Ginsburg, then coming across the table,

what can we learn from those international experiments that we

could bring into our health care system?

I will preface this as well that I think this dialogue here in this

committee is important today, but I think this Nation has to engage itself in a major dialogue about where we go with health care

reform because it simply is not working, it is broken. I think, Dr.

Ginsburg, you said it is kind of like trying to fill a leaky bucket.

We have all tried to do that. Lots of reforms try to do that. So how

do we change it in a way that is going to be meaningful to the 300

million people of America, and what do we learn from these other

countries?

So why do we not just start with you and just come across the

table. Dr. Ginsburg?

Dr. GINSBURG. Yes. Well, there is a lot that we can learn from

systems in other advanced countries, but we need to think of it not

as if we were going to choose their system instead of ours. We are

19

going to continue our system and we are going to modify it. The

notion that——

Senator SALAZAR. Why is that so? Why is that a premise that you

make?

Dr. GINSBURG. Well, first of all, take a single-payer system. I do

not think our country would be as successful at implementing such

because of our culture, because of our political system. But when

you start looking at the delivery of care in these systems, that is

where we can learn things that can be applied here.

We can say, look, at certain conditions, hospitals in Germany

seem to be doing a much better job than hospitals in the U.S. How

can we take what we have learned about what is working in Germany and put that into our system? I think that is where the potential is. I am optimistic because today Americans are looking

abroad more, not in debates about whether their system is better

than ours, but what is transplantable from their system here.

We also have the potential to learn from policymaking in other

countries. For example, Japan faces similar problems with rapid

volume growth for some services, such as imaging. The Japanese

have adopted routines in which services experiencing very rapid

volume growth receive automatic reductions in payment rates. The

rationale is that rapid growth in volume is likely to be a reflection

of payment rates being too high.

Senator SALAZAR. I appreciate your comment. Dr. McGlynn? And

welcome, Colorado College classmate.

Dr. MCGLYNN. Thank you. Well, I think the one thing we can

learn from the UK is the aggressive——

Senator SALAZAR. For those of you who do not know much about

Colorado College, it is at the foot of Pike’s Peak. It is where ‘‘America the Beautiful’’ was written in Colorado, and produces some of

the greatest Ph.D.s. I do not know about lawyers and Senators.

[Laughter.] Thank you.

Dr. MCGLYNN. Thank you. As I was saying, I think one of the

key things to learn from the UK experience is that, when they

went to increase their health spending by 30 percent, which is really what they did, recognizing that they were not spending nearly

enough on health care and it was giving them very bad outcomes

in the area of cancer mortality, cancer survival, they announced a

date certain by which, to be eligible for their pay-for-performance

program, general practitioners would have to have IT systems in

place that would routinely report on, originally 75, now 135 measures of quality.

Overnight, they went from having a penetration of HIT in primary care similar to what we have in the U.S., which is around

10 percent, to over 90 percent. What they have seen is a rapid acceleration in the management of chronic disease in primary care,

and really a sort of countrywide engagement in discussions not

only about what the health care system could do, but more importantly I think, what regular people can do to manage their own

health. I really think a useful further discussion for the committee

is health versus health care, to recognize that it is not all about

services.

Senator SALAZAR. Thank you, Elizabeth.

20

Mr. Chairman, may I ask 15 seconds just from the other witnesses on that other question?

The CHAIRMAN. Yes.

Senator SALAZAR. Could you take 15 seconds apiece, Ms. Fields

and Ms. Holt Baker?

The CHAIRMAN. Go ahead. Fifteen each.

Ms. FIELDS. Yes. I would have to leave it to my esteemed colleagues relative to their knowledge of plans in other countries. Certainly at Ford Motor Company we do have global participation with

benefit structures, and I am not very close to all of those structures, but I do know that the differences in the plans are not just

about the health care that is provided and the differences, whether

they are single-payer systems.

A lot of what we consider as a company relates to how those

plans impact other areas of cost for the company and those tax

structures, so it is not just what we can learn from those systems,

but it is also going to be the impact of the way that health care

and costs and the entire package for employees impacts everyone.

Senator SALAZAR. Thank you. Thank you.

Ms. Holt Baker?

Ms. HOLT BAKER. Yes, Senator. I can tell you what we have certainly learned from our surveys and in talking to our members.

What they emphasize is that, whatever system we have, it has to

be a system that is uniquely American, in their minds. When they

think about ‘‘uniquely American,’’ it has to include, certainly, the

employers, the government, and individuals. That is a lot of what

we hear. So again, as we think about what we are doing, I also

would concur with Dr. Ginsburg and his remarks on that.

The CHAIRMAN. Thank you very much, Senator. I deeply appreciate that.

Senator Stabenow?

Senator STABENOW. Thank you, Mr. Chairman.

Not to be outdone by my friend from Colorado, I want to just emphasize that Ms. Fields is from the beautiful State of Michigan,

surrounded by Great Lakes, not to be outdone in their beauty. So,

we would welcome you to come and to visit. [Laughter.]

I appreciate very much all of you speaking about health IT,

which personally I think is fundamental to us moving forward on

quality in addressing so many issues. Specifically on e-prescribing,

Ms. Fields, you speak about that in your written testimony, as do

you, Ms. Holt Baker. We think about e-prescribing in terms of cost

savings, but I wonder if you might speak about it as it relates to

other benefits in terms of quality and so on.

I do have to say, I appreciate that Ford is involved with GM,

Chrysler, and the UAW, Blue Cross, and so on in Michigan in a

project which has been in place since 2005, the SEMI, the Southeastern Michigan E-Prescribing Initiative, which has some very significant early results in terms of benefits to patients and so on. I

wonder if you might speak to that.

Ms. FIELDS. Yes, Senator Stabenow. As you mentioned, there are

certainly cost benefits—the alerts that go through the system that

help physicians understand how to reduce costs through generics.

But we have had over a million drug-to-drug interactions that have

21

been alerted and have saved our employees from being exposed to

dangerous drug interactions because of this e-prescribing.

As was referenced earlier, just the quality of moving to electronic

e-prescribing versus the inability of pharmacists to sometimes read

and decipher those handwritten prescriptions. So we know that the

communication is much better now with our physicians, between

them and pharmacists. The productivity has improved. They are

more efficient. We know that our employees are getting better care.

So there is a lot more than just cost associated; it is protecting the

health care of our employees.

Senator STABENOW. All right.

Ms. Holt Baker?

Ms. HOLT BAKER. I would say, Senator, that for us, e-prescribing

will save lives. That, in itself, is so premier. We certainly support

the legislation that you have introduced, or are co-sponsoring with

regard to e-prescribing, in particular with Medicare.

Senator STABENOW. Thank you.

Anyone else want to respond specifically on e-prescribing? I

know, Dr. McGlynn, you talked about the physician and being unable to read handwriting, and certainly it addresses that.

Dr. MCGLYNN. Right. Let me just say, we looked at e-prescribing

systems, and one of the big lost opportunities right now is the ability to use those systems to detect under-use of needed medications,

and that is, frankly, a bigger problem with probably more mortality

associated with it than the drug-drug interactions, which are certainly important.

So we would urge that there be some further development of

these systems to raise those opportunities. There are some things

that can be done, like regular refilling of prescriptions, for example,

in the context of these systems where the patient actually does not

have to do quite as much to get a monthly renewal of a prescription, for instance. So I think there are a lot of opportunities still

to be realized from those systems.

Dr. GINSBURG. Yes. I am very optimistic about the potential for

e-prescribing to improve the quality of care and benefit patients.

The point I was making before as relates to this is that whether

we will save money with e-prescribing or not, I am not sure. It is

worth doing even if we do not. But what we should not be doing

is saying: I have solved the cost problem because I am in favor of

e-prescribing, in the sense that it is easy to go to things that are

perhaps valued anyway, or valued for a different reason, and somehow infer that there is going to be a big cost containment return

from it.

Senator STABENOW. Thank you.

Mr. Chairman, I want to thank you for, in the Medicare bill, including and working with us on e-prescribing because it is a really

important step to getting us closer as we are looking at electronic

medical records and health IT. Thank you.

The CHAIRMAN. Thank you, Senator.

Senator Rockefeller?

Senator ROCKEFELLER. Dr. Ginsburg, and also Dr. McGlynn, I

want to ask you a very different kind of question. We will spend,

projected, about $450 billion on Medicare in 2008. As one of you indicated, virtually everybody who comes into our offices who has

22

anything to do with health care is not talking about decreasing

health care, they are asking for more money. Everything is more

money.

Dr. McGlynn said what is important is, no matter if it costs

more, that the quality of health care be better. That may have been

a small range or a large range she was thinking of, but with that

in mind I want to put this to you. Approximately 25 percent of

Medicare spending is for care in the last year of life. About 5 to

10 percent of people account for 50 percent of that money. A Dartmouth study came out recently and said that we could save, for example, $50 billion just in the last 6 months of life.

Now, that is a very delicate subject. Jack Danforth and I started,

in 1989, addressing this through a durable medical power of attorney, all that kind of stuff. All the names have changed, charts at

the end of the bed routinely ignored by doctors. I would just briefly

describe my mother, who died from Alzheimer’s in 1992. She had

it for 10 years. She was not with us for the last 5 years.

Now, the hospital would not release her because of the Hippocratic oath. I have read the Hippocratic oath. There is nothing in

that about stopping care, it is only ‘‘do no harm.’’ So the question

of what ‘‘do no harm’’ means when you are taking money away

from other people because you are spending it on the last, all the

oxygen tanks, all the nurses, all of those things that go on—I want

to ask you both, we never talk about this subject because we are

afraid to.

Now, advertising is just constantly pumping, 80 to 90, 90 to 100.

If you get to be 90, you get to be 100, and then be over 100. We

are celebrating the length of life. But in this 5 to 10 percent, many

of those are in dementia and beyond, Alzheimer’s and lots of other

things where there is no positive outcome, there cannot possibly be

a positive outcome. Children can stop the hospital from releasing

if there is one child out of four. In our case there were four and

we all wanted her to be released from the hospital. The hospital

would not do it.

We took her out, took her home where she had spent 50 years

of her life, and she got a lot of morphine and died very peacefully

about a month later. But the doctors would not let her out. When

they came to our house, they literally had beads of sweat on their

brow because they felt that they were violating either New York

State law, which I know nothing about, or the Hippocratic oath.

So what is the sense of ‘‘do no harm’’ in terms of quality of living

and the enormous amount of money that is spent and could be

saved in that last 6 months of life involving about 5 to 10 percent

of people?

Dr. GINSBURG. Yes, Senator. I think this is an awful problem

when lots of resources are being used against the wishes of the patients or the family. I actually feel fortunate so far because my

mother, who has severe dementia and who is alive, her physician’s

philosophy is, I am going to do things to keep her comfortable, but

I am not going to do aggressive things.

I am keeping my fingers crossed. I know that is what she would

want. I am keeping my fingers crossed that, if she should somehow

wind up in the hospital, that her wishes could still be respected.

But I really do not know what to tell you as far as how to resolve

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this thing, where enormous resources are used against the wishes

of patients.

Senator ROCKEFELLER. I am not going to question anything about

your mother, but, when you get to dementia at a certain stage, to

keep somebody comfortable, I am not sure if that is quality of care.

Or you say, that is what she would want. How do you know that?

When you get to a certain state of dementia you cannot possibly

communicate that to your children or to your doctor.

In my mother’s case, she finally, in an extraordinary thing, bit

down on her feeding tube and would not release that feeding tube,

which was her way of saying ‘‘I want out of here.’’ The doctors

would not go along with that, the hospital would not go along with

that, so we had to take other steps. So to say that, ‘‘I do not know

how we can address this,’’ Dr. Ginsburg, is not worthy of you. You

are too smart and too deep and too thoughtful for that.

Dr. McGlynn, what would you say?

Dr. MCGLYNN. As a starting point, Senator Rockefeller, I would

recommend that we invest much more heavily in hospice and palliative care programs. I sit on a hospital board. We have recently

introduced, in the last 5 years, both of those programs into our hospital. The advantage is that the doctors who run those programs

and deeply understand the issues that you are talking about have

been much more effective in educating other doctors on our hospital staff about helping the doctors learn to let go. They are

trained to cure. It is very hard for them to turn that off, even when

it is not——

Senator ROCKEFELLER. No, they are trained to ‘‘do no harm.’’

Dr. MCGLYNN. No, they are actually trained not to let go. I think

they take an oath to do no harm.

Senator ROCKEFELLER. Yes.

Dr. MCGLYNN. It is not so clear to me that that is exactly how

they are trained.

Senator ROCKEFELLER. All right. But it is a factor. It is a factor.

Dr. MCGLYNN. It is a factor.

The other thing is, these physicians are very skilled in working

with families and getting families to come to accept the reality of

the situation in front of them. So I think we need to look at those

kinds of programs, because I think we are really talking about a

culture change that is necessary, and we need people who can lead

that culture change.

At least the results I have seen from those programs locally and

when my father was at the end of his life, those programs were

hugely important in terms of easing the transition. My family was

lucky in that, much like yours, we all agreed about where we were

at, my father included. He was quite aware that he was at the end

of his life, and the hospice program was terribly helpful in allowing

him to come home and die at home, which is where he wanted to

die.

There were some odd things. He had an implanted defibrillator

which we could not get anybody to turn off without taking him

back to the hospital and taking him into surgery, which was totally

unnecessary. But the hospice provider was a good intervention step

between the desires of other doctors on his team and kind of what

his desires were.

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The CHAIRMAN. If I might, just following up on this subject, what

incentives can you all think of for hospice care, palliative care, living wills, consultation in a very sensitive way, but very appropriate

way, to deal with this?

Dr. MCGLYNN. A starting point might just be to make as a condition of participation in Medicare, meaning for a hospital to be reimbursed under Medicare, they would have to have such a program.

I think that there are things like that that just, anything that can

get it introduced into the environment is positive. We have a shortage of these kinds of providers, so I think it may take some incentives to have more people trained.

There is a challenge in that we do not often know, and have a

hard time predicting, when we are in the last 6 months of life. I

mean, those research analyses are sort of looking over your shoulder after it has happened. There is some difficulty in the way that

the Medicare hospice reimbursement is organized in that you have

to be pretty sure you are in the last 6 months to be eligible for reimbursement under that program.

That, I think, causes people to be a little nervous about it. There

is sort of a psychological barrier to recommending, for a Medicare

patient, that they be referred to that program because it really is

declaring you are at the end, and that is a very hard thing for a

lot of physicians to do. So we might also look at whether that represents an unnecessary barrier to entry into these programs.

The CHAIRMAN. But what if they come back?

Dr. MCGLYNN. What?

The CHAIRMAN. What if you come back? Say you are referred to

one of those and it turns out that you are not at the end?

Dr. MCGLYNN. Well, palliative care is nice because those programs do not necessarily require that you are at the end of life, but

it is moving into more comfort and maintenance rather than necessarily rescue. I think it is all right if you come back. My grandmother lived 8 years. The doctor said there is no medical reason

she should be alive, she is just too stubborn to die. We have to acknowledge that is going to happen, and we should not put barriers

in the way of people like that. Another good friend of ours lived 5

years after she was given 2 months to live. I mean, those things

are going to happen, and we should not treat that as somehow

fraud or mal-intent, or whatever. It is hard to predict when someone is going to die.

The CHAIRMAN. How does this help with the cost problem?

Dr. MCGLYNN. I think, because for the bulk of people, moving

them out of intensive treatment, moving them out of hospitals,

moving them out of intensive care units is much more possible with

these programs, and that is less expensive. I mean, if you can reduce the number of physicians they are seeing, if you can reduce

the intensity of the care setting that they are in, that is a lot of

what contributes to these huge costs at the end of life. These programs allow for that transition.

The CHAIRMAN. On this subject?

Senator ROCKEFELLER. On this subject, yes. You say people come

back, or it is not possible to predict. That is going to be true in

some cases where it is simply an aging process. But there is no

coming back from Alzheimer’s. There is no coming back. And a

25

number of other diseases. It will not happen. It is as predictable

as the sun will come up and go down that people are at the end

of their life. Their children know it, their doctors know it, the hospitals know it. Hospice, if there is one around, knows it. That is

why they are there.

My question is simply about your idea of making more quality

care in spite of the price, that, if you do not try to artificially prolong because of hang-ups with children, or hospitals, or doctors, or

lawyers in whatever State—I mean, this doctor was afraid of getting sued, as simple as that.

Dr. MCGLYNN. Yes. Right.

Senator ROCKEFELLER. Then you make Medicare money available. For example, Chairman Baucus and I spent a year trying to

figure out a way to fund the CHIP program. Now, that is not Medicare, that is Medicaid, but the point is the same. You are making

more available for others while you are doing nothing to help with

this 5 or 10 percent.

Dr. MCGLYNN. My point is only that it is hard to predict the

exact time at which somebody is going to die sometimes, and that

we should not somehow put barriers in the way of getting that prediction wrong, because, if we do, that will keep more people out of

easing into those systems. That is really the only point. It is not

that, in the cases I was citing, those people were not on a fairly

certain path. It was just hard to predict how long it was going to

take.

The CHAIRMAN. I would like to turn to another subject, too. That

is the tax treatment of employer-sponsored health benefits. President Bush obviously has proposals to limit the exclusion. Some of

the presidential candidates suggest limits. I think it is clear that

the current treatment of employer-provided health care, because it

is not taxable to the employee and is deductible to the employer,

that that has a couple of consequences. One is, different health

care. The more you work for a bigger company, to some degree the

better your health care plan. The more you do not, to some degree

the health care plan is not so good.

Second is the cost problem, because there is no limit currently

on what can be deducted or provided. So let us just talk about this

subject a little bit and the degree to which that perhaps should be

modified or changed.

Dr. Ginsburg?

Dr. GINSBURG. Yes. Actually, I am very encouraged. For the almost 30 years that I have been aware of, policy analysts have

talked about this issue of the tax treatment of health insurance

and what it does to the type of insurance that people have, which

is not a surprise. This is the first time it is really getting attention

in the political arena.

Our existing policy, I think, leads to health care costs being higher than they would be otherwise, and it is a particularly regressive

aspect of our tax system because the people who are better off get

the bigger benefits, both because they are in higher tax brackets,

but also because they have the most expensive health insurance.

So the Wyden-Bennett bill is really taking that tax expenditure

and reprogramming it, converting it from the exclusion to tax credits, to target it more on the people who need support to be able to

26

pay for health insurance. Discussions about that, and this whole

approach of reprogramming it, could be very fruitful for our country.

The CHAIRMAN. All right.

Dr. McGlynn?

Dr. MCGLYNN. It is not my particular area of expertise, but I

agree that it would substantially change the generosity of benefit

packages. I think we just would have to look at making sure, as

we move there, that the incentives are aligned with what we are

trying to accomplish, the incentives and new packages.

We know when people are responsible for paying for their own

care that they reduce both necessary and unnecessary services, so

I think we cannot ignore the fact that that decision does not always

go in the direction of best value.

The CHAIRMAN. Ms. Fields?

Ms. FIELDS. Yes. And I also agree with Dr. McGlynn. It is very

much about getting the tax structure to support, however it is paid,

employees or employers, to make sure that everyone is——

The CHAIRMAN. Should we limit it? I mean, let us kind of drill

down a little more here. Do you recommend and think there should

be some change from current law?

Ms. FIELDS. I am not necessarily proposing that. I have a point

of view, to be honest.

The CHAIRMAN. And what is that? That is why you are here.

Ms. FIELDS. Yes. [Laughter.] Well, relative to the tax law, what

I do know is, wherever the burden is held, it has to be more affordable for everyone. So we do not have the perfect view on where the

shift should occur, but it has to be affordable for all, and everyone

has to participate in it, including our employees.

The CHAIRMAN. Good.

Ms. Holt Baker?

Ms. HOLT BAKER. Well, our concern would be if we eliminate this

tax exclusion.

The CHAIRMAN. Right. Nobody is talking—well, some are talking

about eliminating it. I would just ask you to kind of stand back,

with a little more perspective, and just kind of talk about it. Can

it be modified or not? If it is, how can we modify it in a way that

is not detrimental to the people you are representing?

Ms. HOLT BAKER. Well, certainly we feel that we just really cannot do any harm because our biggest concern is 160 million Americans right now who have employer-based health care coverage. So

that would be our biggest concern, is we cannot do any harm.

The CHAIRMAN. What about a limit, a cap, say? Right now there

is no limit.

Ms. HOLT BAKER. I think, Senator, we would have to look at it.

We would have to really look at it.

The CHAIRMAN. That is a wise response.

Ms. HOLT BAKER. All right.

The CHAIRMAN. Dr. McGlynn, you have already answered this,

but, if you could go deeper into it, people just not getting the recommended care. I just again do not quite understand. What is happening here? Why not?

27

Dr. MCGLYNN. Well, I think that there are a number of reasons.

I think the main thing I try to keep people from doing is pointing

fingers and saying, it is your fault, or your fault.

We have had an explosion in the possibilities of what can be done

in health care. In my testimony I talk just simply about the number of articles that are published each year in specific clinical areas

that would be hard for any practicing physician to keep track of,

let alone figure out what it means for that doctor’s own practice.

Each individual is quite unique. If you think about all the people

in this room, each and every one of them has very different health

care needs. So we have this rapid explosion of what we can do, we

have this remarkably differentiated customer that is coming in,

and we do not use any kind of technology that all of the rest of us

use to do our jobs to try to put the two together in a sensible fashion. So I think that it is actually remarkable that we do as well

as we do, given how poorly organized the health care delivery system is, to make sure that people get connected to the things that

they need.

I think that we have a very reactive system. If a patient does not

happen to mention that something is going on with them, the physician does not have——

The CHAIRMAN. So how do we deal with that?

Dr. MCGLYNN. Well, I think that we could get a lot more systematized. I think we can focus on things like chronic disease management where we have a pretty good idea of what we need to do to

manage people’s health and well-being, and we need to get sort of

an agenda organized between physicians and patients about what

should be done for those health care problems. There needs to be

things like reminders, and prompts, and alerts, and decision support tools, all of which require some kind of underlying technology

to help everybody make sure to efficiently get connected to the care

they need.

I think we need to find ways to make people more responsible

for their own health, too. I mean, I think this is not all on the medical care system. I think we have a culture in America where we

think we can do whatever we like and the health care system is

going to rescue us when we get sick.

The CHAIRMAN. So again, just pushing ourselves here, how do we

make people more responsible?

Dr. MCGLYNN. Well, it is interesting. Last week I was at Johnson

and Johnson, and yesterday was talking to some people from Anderson, IN who have both done a similar thing, which is to give

employees reductions in health insurance premiums for hitting certain health objectives. Those are weight, blood pressure, no smoking, exercise, and I think there are five things.

The CHAIRMAN. Right. Yes. Right.

Dr. MCGLYNN. The J&J people have been doing this for more

than a decade, and they have seen substantial reductions in their

costs and substantial improvements in the health profile of their

population. The Anderson, IN folks, they have people who can reduce their health insurance premiums by $1,500 a year. That is

real money. And they have been doing it for, I think, 2 or 3 years

on about a half a million people, and they have seen big changes

in terms of their employees’ health. So it is interesting that these

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two different groups, kind of independent of one another, have

taken a similar approach, which is to connect some financial incentive to the behaviors that we would like to see people achieve.

We did some modeling, some colleagues of mine, about what

would save the Medicare program money. The main thing that we

found was reducing obesity. I mean, there were a lot of other

things that are cost-effective, meaning they are good value for the

money, but there were very few things that actually saved Medicare money. This is the one area. This is also what has been found

in private companies. It looks like providing incentives could be

helpful.

I think my colleagues have also done some research on just the

environmental cues. There are a lot of other things that contribute,

I think, to the current obesity epidemic that we need to take a look

at that are, frankly, outside the health care system. They have to

do with the way our cities are built, they have to do with a lot of

different sort of cultural factors about how we live our lives. This

is what I mean by paying as much attention to health as health

services. We sort of put a lot, I think, off on the health care system.

The CHAIRMAN. All right. But say someone gave you carte

blanche to address obesity.

Dr. MCGLYNN. Right.

The CHAIRMAN. What would you do?

Dr. MCGLYNN. Well, I think we would start by looking at

reducing——

The CHAIRMAN. You are the person.

Dr. MCGLYNN. I am the person.

The CHAIRMAN. If whomever is President says, Dr. McGlynn, we

want you to solve the obesity problem, and whatever you recommend, we are going to do.

Dr. MCGLYNN. All right. I think that it starts by providing people

incentives in some way.

The CHAIRMAN. What would some be?

Dr. MCGLYNN. I do not know. Tax incentives. Financial rewards.

Trading them something they value for something else. This is not

my particular area of expertise.

The CHAIRMAN. Sure. It is not fair.

Dr. MCGLYNN. But I have people who study this, and I would be

glad to share with you some of the ideas that they have come up

with.

The CHAIRMAN. Could you?

Dr. MCGLYNN. Some are quite heavily regulatory in terms of—

and I am sure the food companies would be in here protesting some

of those ideas. But the easy availability of high-calorie foods and

an environment that largely means that people do not get any natural exercise in their day-to-day life are two very big contributing

factors.

We are also learning—there was a whole section in the L.A.

Times yesterday about all of the things that we are learning about

how the body is programmed to respond to these cues about eating

more, that I think are quite interesting. So I think some of the

basic science that is going on right now may contribute to finding

some solutions that are not currently available to us, but I think

it is an important problem.

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The CHAIRMAN. Sure.

Well, I deeply appreciate the time that you have all taken to

come here today. This has been very informative and very, very

helpful. There is a series of hearings that we are having. The earlier one was just a basic kick-off with Secretary Shalala and Secretary Thompson and provided a lot of energy. This one is kind of

the cost problems and some of the quality issues. We are having

our Health Care Summit, an all-day summit at the Library of Congress on the 16th, where we will probe these issues more. The

other hearings we are going to be having this year are more on solutions, the best we can do at this point.

I just urge all of you to keep doing what you are doing, just keep

pushing and keep helping us. You are going to give us, basically,

most of the answers, people like you who study this and know this

subject very, very well. Then we will react to it and figure out what

we think is best, but we need you very much to tell us what to do,

not just today, but in the future. Thank you very much.

The hearing is adjourned.

[Whereupon, at 11:37 a.m., the hearing was concluded.]

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