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S. HRG. 111–347 

ACHIEVING HEALTH REFORM’S ULTIMATE 

GOAL: HOW SUCCESSFUL HEALTH SYSTEMS KEEP 

COSTS LOW AND QUALITY HIGH 

HEARING 

BEFORE THE

SPECIAL COMMITTEE ON AGING 

UNITED STATES SENATE 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

WASHINGTON, DC 

SEPTEMBER 30, 2009 

Serial No. 111–12 

Printed for the use of the Special Committee on Aging 

( 

Available via the World Wide Web: http://www.gpoaccess.gov/congress/index.html 

SPECIAL COMMITTEE ON AGING 

HERB KOHL, Wisconsin, Chairman 

RON WYDEN, Oregon 

BLANCHE L. LINCOLN, Arkansas 

EVAN BAYH, Indiana 

BILL NELSON, Florida 

ROBERT P. CASEY 

CLAIRE McCASKILL, Missouri 

SHELDON WHITEHOUSE, Rhode Island 

MARK UDALL, Colorado 

KIRSTEN GILLIBRAND, New York 

MICHAEL BENNET, Colorado 

ARLEN SPECTER, Pennsylvania 

AL FRANKEN, Minnesota 

BOB CORKER, Tennessee 

RICHARD SHELBY, Alabama 

SUSAN COLLINS, Maine 

GEORGE LeMIEUX, Florida 

ORRIN HATCH, Utah 

SAM BROWNBACK, Kansas 

LINDSEY GRAHAM, South Carolina 

SAXBY CHAMBLISS, Georgia 

DEBRA WHITMAN, Majority Staff Director 

MICHAEL BASSETT, Ranking Member Staff Director 

(II) 

C O N T E N T S 

Page 

Opening Statement of Senator Herb Kohl ............................................................. 1 

Statement of Senator Bob Corker .......................................................................... 1 

Statement of Senator Al Franken .......................................................................... 3 

Statement of Senator George LeMieux .................................................................. 5 

PANEL OF WITNESSES

Statement of Mark Pearson, Head of Health Division, Organisation for Economic Co-Operation and Development, Paris, France ...................................... 7 

Statement of Honorable Carolyn Bennett, Official Liberal Opposition Critic 

for Health and Former Canadian Minister of State (public health), Ottawa, 

Canada .................................................................................................................. 9 

Statement of Cathy Schoen, Senior Vice President for Research and Evaluation, the Commonwealth Fund, New York, NY ................................................. 30 

Statement of Arnold Epstein, Chair, Department of Health Policy and Management, Harvard School of Public Health, Boston, MA .................................. 69 

Statement of Michael Tanner, Senior Fellow, Cato Institute, Washington, 

DC .......................................................................................................................... 84

APPENDIX 

Prepared Statement of Senator Robert P. Casey, Jr. ........................................... 113 

Statement submitted by Premier Healthcare Alliance ......................................... 114 

(III) 

(1) 

ACHIEVING HEALTH REFORM’S ULTIMATE 

GOAL: HOW SUCCESSFUL HEALTH SYSTEMS 

KEEP COSTS LOW AND QUALITY HIGH 

WEDNESDAY, SEPTEMBER 30, 2009 

U.S. SENATE, 

SPECIAL COMMITTEE ON AGING, 

Washington, DC. 

The Committee met, pursuant to notice, at 11 a.m. in Room SD– 

106, Dirksen Senate Office Building, Hon. Herb Kohl, Chairman of 

the Committee, presiding. 

Present: Senators Kohl [presiding], Franken, Corker, and 

LeMieux. 

OPENING STATEMENT OF SENATOR HERB KOHL, RANKING 

MEMBER 

The Chairman. At this time, we’d would like to call this hearing 

to order and commence. 

We thank you all for being here today. Obviously, as we all 

know, there’s a lot happening on health reform. The debate is shifting and progressing every day, and we’ve been at this for a long 

time, as you know. 

Today, our committee will discuss one of health reform’s most 

important goals, which is to get healthcare costs under control. The 

United States spends $7300 per person per year on healthcare, 

while the other 29 most developed countries in the world spend an 

average of just $2900. That’s $7300 here in the United States 

versus $2900 per year elsewhere in the world. That means that 

we’re spending nearly two and a half times what these other countries spend. It’s not acceptable that we have so much more of our 

money tied up in healthcare, when we are not delivering demonstrably better healthcare than many of these countries. 

Studies show that the United States ranks below average on 

major health indicators, including infant mortality and life expectancy, when compared to the rest of the world, and we’ll be hearing 

more about that today. 

Several of our witnesses will shed light on the ways in which 

other nations deliver high quality care at a cost much lower than 

we do here in the United States. We must be willing to learn from 

the many examples of successful healthcare systems around the 

world that are doing it as well or better than we are. But, it’s also 

vital that we understand why our healthcare costs are higher. Our 

panel of witnesses will outline some of the reasons we pay more for 

2 

physician services, prescription drugs, medical equipment, and hospital services. 

We also expect to learn about why our administrative costs are 

so much higher across the board. In 2004, the United States paid 

more than seven times the average of other developed countries on 

administrative costs. Very importantly, we’ll also hear today about 

the need to reconfigure our healthcare system in a way so that it 

prioritizes the quality of care provided instead of the amount of 

care provided; in other words, value of care over volume of care. I 

support the provisions included in the Senate Finance Committee 

health reform bill that would transform the Medicare system to 

pay for value over volume, and I am hopeful that they will remain 

in the final health reform bill. 

But, more must be done in order to get healthcare costs under 

control. With so many industries and special interests tied up in 

our healthcare system, reining in healthcare costs is not an easy 

task. 

I urge my colleagues to be open, and to stay open, to the lessons 

that we hope to learn today, and take them into account as we 

make tough decisions and carry healthcare reform through to the 

finish line. If we pass a piece of healthcare reform legislation without sufficiently addressing the issue of healthcare spending, then 

we will have failed. 

So, we thank you all, our witnesses particularly, for being here 

today. 

At this time, it’s an honor and a pleasure to turn to my new partner on this committee, our ranking member, Senator Bob Corker. 

Senator Corker. 

STATEMENT OF SENATOR BOB CORKER 

Senator CORKER. Mr. Chairman, first of all I want to thank you 

for the kindness you’ve extended through your staff to us as we’ve 

come on board. I certainly look forward to working with you and 

other committee members. 

I think this hearing, by the way, is most appropriate. I think the 

timing of it is excellent and I certainly appreciate the testimony 

that each of the witnesses have put forth. 

I, you know, constantly was throughout our State in townhall 

meetings during August, and the whole issue of the us being 

ranked the 37th in the world, as it relates to health, continued to 

come up. I brought it up, myself, of course. But, I think, also, when 

you look at the comparisons, there are a lot of things that just 

aren’t apples to apples. I’m sure that this testimony will certainly 

lead to that conclusion. 

The fact is that if you happen to have a cancer episode, you want 

to be here in the United States of America. You have a heart issue, 

you want to be in the United States of America. If you want something electively done quickly, you want to be in the United States 

of America. 

So, much of the comparison obviously is not accurate; on the 

other hand, I think much of your testimony has—will point out 

that there certainly are huge areas of improvement that need to 

occur in this country. I thank you each for those contributions. 

3 

The whole issue of our country being the third largest in the 

world, and having the most diverse population compared to other 

countries that we are compared to, certainly creates much of the 

distortion, if you will, as it relates to our health. But, again, I think 

much of what you have brought forth in your testimony, and will 

again orally today, will be helpful to us. I think it’s appropriate 

that, when we hear numbers like 37th in the world as it relates 

to health, as we hear things as it relates to how much we pay, 

which is exorbitant—and I think all of us want to focus on that— 

that we deal with facts, and not myths. That’s why I look forward 

so much to your testimony today. 

So, Mr. Chairman, thank you for calling this hearing, and I look 

forward to hearing from the witnesses. 

The CHAIRMAN. Thank you very much, Senator Corker. 

Senator Franken. 

STATEMENT OF SENATOR AL FRANKEN 

Senator FRANKEN. Thank you, Mr. Chairman and Senator 

Corker, welcome—— 

Senator CORKER. Thank you. 

Senator FRANKEN [continuing]. In your new role as ranking 

member. 

Senator LeMieux, this is, I think, the first hearing I’ve been in 

when I’ve had someone junior to me— [Laughter.] 

Senator FRANKEN [continuing]. So, I’d like to point that out, if 

you don’t mind. But, welcome to the committee. 

It’s an honor to be here today, and I’m glad you’re holding this 

hearing, Mr. Chairman, on such a critical and timely topic. 

Since I’ve been in Washington, I’ve been disheartened about how 

little discussion there’s been about containing healthcare costs. 

When I travel around Minnesota, people ask me over and over 

again, ‘‘What is Congress doing to make healthcare more affordable?’’ They know that, unless we get to the source of what’s driving up healthcare costs, health reform will be incomplete. 

I look forward to hearing, today, about models from other countries, and from within our own country, that can show us the way 

to bring down healthcare costs for everyone. 

One of the most logical ways to get costs under control is to 

transform how we pay for and incentivize healthcare. Right now we 

have perverse incentives in Medicare, which actually pay doctors 

more if they just provide more procedures. There’s no accountability for the quality of services or for getting and keeping patients healthy. In fact, there’s incentive, in some ways, to not keep 

them healthy. But, the Finance Committee is making progress, and 

I commend Chairman Baucus for including an amendment to 

incentivize value in Medicare. The provision is called the ‘‘Value 

Index,’’ and it’s designed to move Medicare toward rewarding providers who provide high quality care at lower costs. I believe this 

is the only way to make the rest of the country more like the Mayo 

Clinic, in my State, improving healthcare delivery and bending the 

cost curve. 

Even though I’m a proud Senator from Minnesota, I know that 

no other system is identical to Mayo, but Mayo is not alone in Minnesota. We have other great examples of high quality integrated 

4 

systems in our State, like HealthPartners, Allina, and Fairview. 

We know, from systems like Geisinger and Cleveland Clinic, and 

Kaiser, that this high-value healthcare is possible in other parts of 

the country. 

These coordinated health systems distinguish themselves by focusing on patients, and not profits. They have physicians engaged 

in leadership, high levels of teamwork and collaboration, and more 

sharing of electronic medical records and information. 

Perhaps more importantly, systems like Mayo have much greater 

use of what’s called the ‘‘science of healthcare delivery.’’ This 

means that their leaders are systematically looking at how patients 

flow through the organization in order to reduce waste and reduce 

errors. I look forward to hearing from the witnesses about policies 

that will foster this type of patient-centered care. 

Administrative simplification is another area for cost savings 

that seem like just a no-brainer to me. In 2004, the U.S. paid an 

average of $465 per person for these expenses, seven times more 

than other developed nations, as the Chairman noted. It’s unbelievable to me that every insurance company has different forms and 

processes that providers have to navigate in order to get paid. If 

you or your doctor, or your doctor’s administrative assistant, fills 

out something wrong, the insurance companies simply, sometimes, 

deny payment. Maybe that’s why they do it. 

In Minnesota, the providers and nonprofit insurance companies 

have gotten together and decided that this madness has got to end. 

They developed a common payment and billing procedure that everyone is now starting to use. This will save millions of dollars in 

Minnesota. If we require all insurance companies to use a common 

payment system, we will save billions of dollars in administrative 

costs and prevent lots of headaches for doctors, other providers, 

and for patients. 

Since we’re here in the Aging Committee, I also want to mention 

that AARP in Minnesota has been holding regular tele-townhalls to 

get accurate—accurate—information out about health reform. During these discussions, there is unanimous agreement that our 

health system needs to be reformed. But, there’s also some confusion about how we save money in Medicare Advantage without cutting benefits. 

I want to be very clear that the discussion we’re having today is 

about increasing efficiency in Medicare, and healthcare overall, not 

about cutting benefits. The more we can clarify this for folks, I 

think, the better off we’ll all be. 

Another topic I hope that will be discussed today is the importance of prevention in lowering healthcare costs. The cost of obesity 

in this country is a $147 billion dollars per year, half of which is 

direct cost to the Federal Government. This is a public health 

issue, and one that the prevention is really part of a medical system in a country, and should be considered part of healthcare, and 

not just be considered part of the culture. Obesity can lead to diabetes, heart disease, and even cancer. There’s no other country that 

is facing the chronic disease epidemic that we’re facing as a result 

of obesity. Again, this is something that can be targeted through 

public health measures, and should be considered as part of our 

healthcare system, and not divorced from it. 

5 

The current proposals to eliminate copays for preventive services 

like mammograms and colonoscopies are crucial. But, healthcare 

reform must also support community health, like the Senator— 

Senator Harkin’s Prevention and Public Health Investment Fund. 

I look forward to hearing from witnesses about how prevention fits 

into this discussion on cost containment. 

In closing, I’d like to share the words of a young woman I met 

when I was back in Minnesota in August. She’s a cancer survivor, 

worried that she won’t be able to pay for the care that she needs. 

When I go back to Minnesota, I want to be able to look her in the 

eye and say, ‘‘We’ve done everything we can in Washington to 

make health reform work for you, from ending preexisting-condition exclusions to bring down the cost of healthcare for everyone.’’ 

Her words explains—explain far more eloquently than I can why 

we have to pass health reform this year. She says, ‘‘Healthcare reform means people not having to choose between their life and 

their life savings. Healthcare reform means that no American loses 

their life because they can’t afford screenings or treatment. 

Healthcare reform means cancer patients receiving care that is 

available, adequate, and affordable, and it means getting rid of the 

fears that we are faced with every day.’’ 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you very much, Senator Franken. 

Now we would like to hear from the newest member of this committee, and our newest United States Senator from Florida, Mr. 

George LeMieux. 

STATEMENT OF SENATOR GEORGE LeMIEUX 

Senator LEMIEUX. Thank you, Mr. Chairman. Thank you. 

It’s great to be here this morning, and I look forward to working 

with you and the other colleagues here on this committee. 

With more than 3 million seniors living in Florida, the issue of 

healthcare reform is tremendously important to our State. We like 

to think that all seniors will eventually live in Florida. So, it will 

be a more—— [Laughter.] 

Senator LEMIEUX [continuing]. Important issue as time goes on. 

This issue of addressing healthcare cost is crucial to a successful 

reform effort. If we do not address rising costs, we won’t get at the 

core of the healthcare crisis. As my colleague just said, ‘‘No American should be turned away from treatment because they can’t afford a procedure.’’ 

These hearings come, as you know, at a pivotal time, as we are 

currently debating healthcare reform legislation. I support affordability and access to quality healthcare. Right now the costs are too 

high, and too many people do not have health insurance. 

I’ve heard from, and my office has heard from, a number of Floridians who are dealing with skyrocketing healthcare costs. Last 

week, I met with some cancer survivors from Florida, one of whom 

is—has a husband who’s employed, so she still has insurance, but 

is scared, if he were to lose his job, what it would mean for her; 

the other, who has lost her job and now is on COBRA and struggling to be able to provide for the healthcare, and they are making 

life decisions about not having healthcare procedures done in order 

to be able to keep some life savings for their family if they are not 

6 

able to win the fight against cancer. Those are decisions that no 

Floridian, no American, should have to make. 

But, I believe there are a number of measures that we can look 

at to control costs. I hope that the panelists will talk about them 

today. One of them is, every patient has the right to know what 

a procedure costs. Requiring transparency would allow families to 

make better decisions about which doctor they see, which 

healthcare provider they go to. We must ensure families can obtain 

information about price and quality of healthcare services. Informed decisions are better decisions. 

No one knows what these procedures cost right now. We have divided the patient from the process. We need a consumer-driven 

healthcare system to increase quality and to drive down costs. 

We also need to address fraud, waste, and abuse. We have a 

Medicare system, where escalating costs are driven, in part, to outof-control waste, fraud, and abuse. Florida, really, is ground zero 

for these problems, especially southeast Florida. There are as 

much, it’s estimated, as $60 billion wasted every year in the Medicare program because we don’t have transparency, and we don’t 

know what’s going on with this money. 

When I was the deputy attorney general in Florida, we were responsible for the Medicaid Fraud Control Unit. We were able to recover $100 million in one year in Medicaid fraud just in Florida 

alone, and Medicaid is not near the program that Medicare is. 

So, we need to learn from the private sector and other industries, 

industries like the credit card industry. The credit card industry 

handles as much money as the healthcare industry does in this 

State—in this country, and yet, they have a 0.01-percent fraud 

rate, when it’s estimated that in healthcare it might be 10, 20, or 

even 30 percent of all the dollars that we spend. Everyone, Democrat and Republican alike, can agree that we should not be wasting 

these dollars on fraud, waste, or abuse. 

I look forward to hearing from the panelists on this comparison 

between our health system and those of other countries. I, too, saw 

this ranking of 37th. I look forward to that discussion today. I don’t 

buy it. I know that we train the world’s doctors. I know that we 

create the drugs that help save the lives of people around the 

world. I know that people who have means from around the world 

choose to come to our country to have healthcare. 

So, don’t get me wrong, I know we can do better, I know that 

we can learn, I know that there are other models, and we always 

should have an open mind about it. 

So, I welcome the panelists here today. I’m the new kid on the 

block. I’ve got the temporary sign, here. But, I look forward to 

being—— [Laughter.] 

Senator LEMIEUX [continuing]. Part of this committee. As I said, 

it’s such an important issue for Florida. 

So, thank you very much, Mr. Chairman. 

The CHAIRMAN. Thank you very much, Senator LeMieux. 

Now we turn to our panel. Our first witness today will be Mark 

Pearson, who heads the Health Division at the Organisation for 

Economic Co-operation and Development, or OECD. In this role, he 

helps countries improve their health systems by providing internationally comparable data, state-of-the-art analysis, and policy 

7 

recommendations on a wide range of health issues. He is the leading healthcare expert at the OECD. 

Next, we’ll be hearing from Dr. Carolyn Bennett, who’s served as 

the Canadian Minister of State for Public Health and is now a sitting member of the Canadian Parliament. Prior to her becoming involved in politics in 1997, Dr. Bennett was a Family Physician. She 

is currently the leading spokesperson for her party on healthcare. 

Next, we’ll be hearing from Dr. Cathy Schoen, Senior Vice President at the Commonwealth Fund for Research and Evaluation. She 

has authored numerous publications on health policy issues, national and international health system performance. 

Next, we’ll be hearing from Dr. Arnold Epstein, Chairman of the 

Department of Health Policy and Management at the Harvard University School of Public Health. Dr. Epstein’s research focuses on 

quality of care and access to care. He recently chaired the OECD’s 

International Working group on Quality Indicators. 

Then we’ll be hearing from Michael Tanner. Mr. Tanner is a Senior Fellow at the Cato Institute, where he has led the health division for 16 years. Mr. Tanner conducts research on a variety of domestic policies, including healthcare reform, social welfare policy, 

and social security. 

We welcome you all here today. We’ll start out, Mr. Pearson, 

with your testimony. 

STATEMENT OF MARK PEARSON, HEAD OF HEALTH DIVISION, 

ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT, PARIS, FRANCE 

Mr. PEARSON. Thank you very much. Honorable Senators, ladies 

and gentlemen, it’s a great honor for me to be allowed to talk with 

you today. 

As you’ve heard, I head up the work on health at the 

Organisation for Economic Co-operation and Development. The 

OECD grew out of the Marshall Plan. Secretary of State Marshall’s 

vision was about a flow of money to war-torn Europe to help us recover. The OECD today doesn’t do that, of course. We’re about the 

flow of information and of ideas. We don’t presume to tell countries 

what to do; instead, we help our 30 member countries, the world’s 

economically developed democracies, to learn from one another. 

This is as true in health, as it is in other areas of policy. 

We’ve worked hard over the years to collect comparable information on healthcare policies and outcomes, and our work shows, as 

you all well know, that the United States spends more on 

healthcare, relative to national income, than any other country— 

about 1 dollar in every 6. France and Germany, for example, spend 

just under 1 euro in every 9 of their national income on health. 

Japan, just 1 yen in every 12. These countries, of course, have full 

insurance coverage for their citizens. 

America’s a rich country, and rich people are willing to spend a 

lot more on healthcare than poor people. Even after allowing for 

this, America still spends up to $750 billion more than we would 

expect. 

There’s no reason to think that America’s sicker than other countries, and—other OECD countries have to cope with an older population. 

8 

So, where does all the money go? We know some things. America 

spends more on inpatient care than any other country, more on 

pharmaceuticals, and more on administration. But, the biggest difference relative to other countries is spending on outpatient care, 

particularly day surgery, where America’s spending here is about 

two and a half times as much as Canada’s, and over three times 

as much as that in France. 

So, the key question then is, Why does America spend so much 

more than other countries? Of course, there’s no simple answer, but 

there are many clues in the OECD’s databases. The total amount 

spent on health depends, of course, obviously, on the price that you 

have to pay for those services and the amount that you buy. Starting with prices, our most comprehensive data show American 

prices for healthcare about 25 percent higher than other OECD 

countries, well over 50 percent higher than in Japan. These data, 

I have to admit, are not as reliable as we would like them to be. 

As we dig deeper, we find, for example, that pharmaceuticals here 

cost maybe 40 to 50 percent higher than elsewhere, despite generic 

drugs being cheaper. 

Preliminary results of our latest work show that a range of hospital procedures cost nearly twice as much here than in 12 other 

countries. Of course, doctors in the United States are paid $25- to 

$40,000 more per year than in Canada, Germany, and the United 

Kingdom; about $60,000 per year more than in France. 

Moving on to the quantity of healthcare services provided, the 

picture’s mixed. There are not that many doctors in the United 

States. America’s see their doctors less than in most OECD’s countries. Acute hospital-care beds are few. Stays in hospital are short. 

However, once people are in the medical system, they receive far 

more diagnostic tests, that cost a lot of money, such as MRI and 

CT scans, than in any other country. There are many more 

caesareans, knee replacements, and tonsillectomies—there are four 

times as many, of these than the average—procedures that are 

driven by doctors’ judgments. 

The balance of evidence is that high American spending on 

health is mainly the result of high prices, with a greater number 

of procedures and interventions playing an important, but lesser, 

role. Other OECD countries are striving to bend the cost curve, to 

slow the seemingly inexorable growth in health spending. They regulate various healthcare prices, pharmaceuticals, doctors’ fees, payments for hospital services, or sometimes they regulate the kind 

and quantity of healthcare services available. These policies have 

kept healthcare costs well below the level in the United States 

without compromising health outcomes. 

If the United States were to take additional steps to control 

health spending, there is indeed much to be learned from international experience. 

I look forward to questions from the honorable members. Thank 

you. 

[The prepared statement of Mr. Pearson follows:] 

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The CHAIRMAN. Thank you very much, Mr. Pearson. 

Doctor Bennett. 

STATEMENT OF HON. CAROLYN BENNETT, OFFICIAL LIBERAL 

OPPOSITION CRITIC FOR HEALTH AND FORMER CANADIAN 

MINISTER OF STATE (PUBLIC HEALTH), OTTAWA, ONTARIO, 

CANADA 

Dr. BENNETT. I speak to you this morning from the perspective 

of a mother, a daughter, a doctor, the former Minister of Public 

Health, and an author of—about primary care in Canada. 

Like other observers in our country, I believe the debate here in 

the United States has become less about debate about healthcare 

than about the role of government in your lives. But, for American 

families, the real question is a simple one, Should a man go bankrupt because his child gets leukemia? Should a woman hit by a 

drunk driver have to pay more for healthcare than those lucky 

enough to escape such an injury? Is it fair to make family genetically predisposed to cancer pay greater share of their health costs, 

to deny treatment to children with asthma or diabetes because 

their parents are poor? 

As a family doctor in Canada, I almost never had to worry about 

what patients could or couldn’t afford, or what level of insurance 

they had. You have asked me to focus today on the issue of costs 

and quality in comparing our systems. As Chairman Kohl has said, 

in 2007 the United States spent 16.2 percent of its GDP on 

healthcare; Canada spent 10.6 percent. That works out to $7,421 

per American and $5,170 per Canadian. For that extra $2,200 per 

person per year, your health outcome should beat ours every time. 

But, they don’t. Your infant mortality rate is 6.9 per 1,000 births, 

compared to 5.4 in Canada. Male life expectancy is 75.2 years here, 

compared to 78 years in Canada. 

Please don’t misunderstand me, our system is far from perfect. 

It still needs constant tinkering, and we’re still struggling to realize the original goal of Canadian Medicare, which is to keep people 

well, not just patch them up once they get sick. As Senator 

Franken has said, we also are struggling to take the perverse incentives out of our system that reward quantity instead of quality. 

In a survey of the ten OECD countries, your citizens are the 

least satisfied with the care they receive. Canadians, despite their 

criticisms we have of our own system, are apparently five times as 

likely to be satisfied with the care we receive than you are. Costs, 

as you’ve pointed out, are an integral part of the differences between the U.S. system and ours. 

So, I have seven clear reasons why I think we pay less and feel 

better: 

Insurance companies. As Congressman Weiner has said, 30 percent of your cost, almost a third, go to insurance companies. Your 

patients and taxpayers have to support massive organizations, the 

insurers, that set the premiums, design packages, asses risk, review claims, decide who to reimburse and for how much. But, they 

don’t deliver healthcare. The administration, as Mr. Pearson has 

said, is much simpler in our country. Our single-payer system allows us to run the administration in our offices and our hospitals 

with much fewer staff. We don’t have to deal with multiple payers 

26 

or chase bad debts. We don’t have to charge higher fees to compensate for the unpaid-for procedures. 

As was said, the pharmaceutical prices are very different in our 

country. Although drug costs are rising in Canada, as here, we’re 

able to exercise much more control over the cost of brand-name 

drugs, as a result of our Patented Medicine Prices Review Board, 

and we also have a process for establishing the cost—its cost effectiveness of all new technologies. 

In our country, almost all physicians receive medical liability 

protection from the not-for-profit Canadian Medical Protective Association. Its not-for-profit status, combined with its educational efforts to reduce the risk profile of its members, contributes to relatively low medical malpractice costs. This both reduces overall 

system costs and encourages physicians to provide the full spectrum of medical care. 

Evidenced-based care is, again, what we are hoping to reward. 

But, from vaginal births after caesarean sections, to lumpectomy, 

to X-rays for sprained ankles, applying evidence to determine the 

appropriateness of tests and procedures translates into fewer unnecessary tests and procedures and less defensive medicine. We are 

committed to moving from the era of pure cost-containment approach of the early 1990’s into a true evidenced-based cost-effective 

care in the future. 

As was said before, prevention is extremely important, as are the 

social determinants of health. Diseases are cheaper to treat if 

they’re caught early. Since all Canadians are insured, they’re more 

likely to have pap smears, mammograms, and other early detection 

visits and tests than the U.S. patients who are not covered. 

My last point is about the longstanding specialty in Canada family medicine. Family doctors in Canada are trained to help outpatients navigate their care. We interpret the difference between 

what patients think they want and what they actually need. It’s a 

point of first contact, a trusted coach to explain the evidence and 

the choices. As Dr. Barbara Starfield has shown with her research 

here in the United States, the stronger the family medicine base 

in any healthcare system, the better the system is. 

But, don’t take my word for it. Harvard Dr. David Himmelstein 

wrote, recently in the New England Journal of Medicine, that, ‘‘A 

Canadian single-payer system would save your country $400 billion 

a year.’’ 

In conclusion, I want to leave you with the story of Barry Lamar 

Head, a Vietnam-decorated vet who married a Canadian, got sick, 

and had to remain in Canada because he could not get health insurance in the—in your country, at any price. Before he died, he 

made his Toronto friends promise that they would find a way to 

tell his story, the story of a hero who had served his country honorably, but could not afford to die there, and the excellent care that 

he received in the Canadian system. I am proud to leave you with 

a copy of his full story this morning, and also a document on myths 

versus reality on the Canadian healthcare system, that I hope you 

will read. 

Thanks very, very much. I look forward to your questions. 

[The prepared statement of Dr. Bennett follows:] 

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The CHAIRMAN. Thank you very much, Dr. Bennett. 

Dr. Schoen. 

STATEMENT OF CATHY SCHOEN, SENIOR VICE PRESIDENT 

FOR RESEARCH AND EVALUATION, THE COMMONWEALTH 

FUND, NEW YORK, NY 

Ms. SCHOEN. Thank you, Mr. Chairman and members of the committee, for the invitation to testify. 

As the United States confronts the urgent need for Federal action to expand access and slow the increase in costs, we might well 

ask, How is it that other countries insure everyone, get outcomes 

that often rival or even exceed the United States, yet spend far less 

than we do? 

We stand out, when we look at other countries, for our failure 

to cover everyone, our complex, inefficient insurance system, our 

fragmented healthcare system, with very weak primary care, lack 

of information that’s an essential for markets to work, and incentives to increase volume, irrespective of quality. 

I want to focus right in on the strategies we see other countries 

using. They all do it differently. They’ve adopted it to their own institutions and policies. But, there’re some core themes and strategies where we stand out in comparison to them. 

First, when we look at the payment systems in these other countries, it’s clear, as we just heard from the OECD testimony, that 

the U.S. spends more. We’re notable for paying higher prices, including very high prices for more specialized care and for incentives to do more, irrespective of value. 

Unlike other countries with multiple payers—and there are several: Switzerland, Germany and the Netherlands—we lack a mechanism to coordinate those payers so they have a consistent set of 

price signals and they all move in the same direction. We lack a 

mechanism for group purchasing power, particularly in monopolized markets. Instead, U.S. private insurers often act as 

pricetakers to maintain networks, and they simply pass through 

higher prices, with a markup for marketing administrative costs 

and margins. 

As a result, the U.S. tends to pay much higher prices for devices 

and specialized services, such as prescription drugs. A McKinsey 

study estimates that we pay, on average, about 50 percent more for 

brand-name drugs, and buy more expensive mix, which results in 

$90 billion in excess cost, compared to what other countries do. 

Second, we have a very weak primary care system. Overall, we 

stand out for having an insurance system that does not promote 

continuity, and does not promote choice of primary care providers. 

Many countries encourage all their patients to identify a medical 

home, which is their main source of care, helps coordinate, stays 

with the patient for a lifetime, unless they move away. They’ve set 

up after-hour cooperatives; you don’t have to go to the emergency 

room. You can talk to a doctor. Doctors are rewarded for talking 

to patients, including on the phone. Fundamentally, their insurance systems have a value-based benefit design which rewards effective, efficient care. They lower cost-sharing if they know a drug 

works very well, even if it’s a high-priced drug. They want people 

to enforce chronic-care management. 

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Recent—other countries recently have adopted incentives particularly targeted at primary care, to strengthen it as all face rising 

rates of chronic disease. I’ve provided a range of examples in my 

testimony. These include direct payments for nonvisits, for talking 

to patients, for team-based care, for putting patients in a team 

with nurses. 

Third, we have an information deficit. We lack an HIT system 

that cuts across and binds everyone together. Many other countries 

have even smaller practices than the United States—onsies and 

twosies—but they’ve said, ‘‘Let’s integrate a flow of information,’’ 

and they’ve done it with standardized information systems so that 

we see nearly all primary care practice having a system, and 

they’re building that up so they can exchange information. Their 

national governments were supportive of making it possible for everyone to start to communicate with each other. 

Fourth, we lack comparative information and transparency. As 

we just heard from Canada, but there are multiple other countries, 

there is assessment going on to provide physicians and hospitals 

and clinicians with independent sources of information on what 

works well for which patients, but there’s also an effort to track 

performance. I believe Dr. Epstein will talk about some of this, but 

I can talk more later. In Germany, there’s benchmarking, with 

multiple indicators of hospital performance, and feedback systems, 

where higher-performing hospitals talk with less-—lower-performing hospitals in a dialog to bring everyone up. There’s transparency on public websites that is meant to encourage choice. But, 

also, people learn from each other when they can see someone else 

doing well. 

As was mentioned, we have a very expensive insurance system 

with high administrative costs. We often look just at the part that’s 

inside the insurance system. This is due to marketing, underwriting, churning, a variety of benefit designs. But, we’ve also imposed very high costs on our primary care doctors and our hospitals. You can see administrative staff in our practices that just 

don’t exist in other countries. Instead, the people in the practice 

are delivering care. 

To close, we have much to learn from shared strategies, and 

there are core strategies that really do span very different countries. They each do it in different way. Insurance for everyone provides a foundation for payment and system reforms. It’s not just 

coverage, but it’s also a foundation. 

The way they buy care is as a group. They use group purchasing 

power, coordinated incentives focused on value. There is information system and system reforms that are really trying to guide 

markets. Markets don’t work well if you don’t know the price and 

you don’t know what works well for which people. They’re building 

that up. There’s leadership to bring all of this together, including 

in multipayer systems, to bring the payers back together. 

We have an opportunity for major change in the United States, 

and we can look at the variations, and have the benefit of saying, 

‘‘This works relatively better, relatively worse,’’ as we all seek to 

move forward. 

Thank you. 

[The prepared statement of Ms. Schoen follows:] 

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The CHAIRMAN. Thank you very much, Dr. Schoen. 

Dr. Epstein. 

STATEMENT OF ARNOLD EPSTEIN, CHAIR, DEPARTMENT OF 

HEALTH POLICY AND MANAGEMENT, HARVARD SCHOOL OF 

PUBLIC HEALTH, BOSTON, MA 

Dr. EPSTEIN. Good morning, Mr. Chairman, distinguished committee members. I speak to you this morning as someone who has 

studied quality of care and related issues for well more than two 

decades, as someone who’s a primary care practitioner today with 

an ongoing clinical practice, as someone who has chaired the OECD 

panel comparing international quality indicators, and as someone 

who, in a former administration, worked in the Executive Branch 

with policy responsibility for quality of care. 

At the end of the day, I want to make three simple points. First, 

that we have, in the last few years, developed increased ability to 

measure quality of care; and, while not comprehensive or perfect, 

we can now start to talk about how to gauge quality of care across 

different regions within our country, and across countries. 

Second, the overwhelming amount of the evidence—and I’ll 

present a good deal of it very specifically to you—suggests that, in 

some cases, the U.S. has the best quality in the world; in some 

case, we’re at the bottom of the heap; and often, we’re right in the 

middle. 

Third, juxtaposing with the data you’ve already heard about on 

costs, is that these figures raise important concerns about value. 

Let me start by just trying to puncture two important myths: 

The first myth is one that probably everyone in this room shares. 

If I was to ask all of you, ‘‘Is your doctor average or better than 

average?’’ almost all of you would say your doctor is average or better than average. Even though statistically, that’s just not plausible. 

The other myth we share is the often-repeated refrain that care 

in the United States is the best in the world. I’m going to show you 

some data which suggests that that may not be the case. 

Starting in 2001, I chaired a group for a few years, that was 

dedicated to comparing quality of care internationally. The OECD 

has continued that work, covering representatives of approximately 

30 countries across the world to compare measures of quality of 

care. The measures are not comprehensive, but they are broad and 

cover important aspects of care and prevalent clinical conditions. 

As I’ve said, the bulk of those data show very variable quality of 

care. The measures are scientifically valid and have been based on 

data that are comparable across countries or as much so as possible. 

Let me start—and I hope you have a set of displays from me— 

exhibit number 1 really identifies—and I won’t, in interest of time, 

call them out one by one—23 different measures that cover care for 

chronic conditions, acute exacerbations, mental health disorders, 

cancer care, and communicable disorders. What you should take 

away is that there are a broad range of quality measures that we 

can now examine. 

On exhibit number 2, I’ve listed asthma admission rates across 

different countries in the world. Asthma is a chronic condition with 

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a lot of morbidity. We now have treatments that can effectively 

treat the inflammation, and bronchial spasm that accompanies 

asthma. So, among quality experts, the belief is that, high rates of 

hospitalization for asthma are a sign of inadequate access to care 

and inadequate quality of care. The United States is, deplorably, 

number 1 in the world, with the highest rates of hospital admission 

for asthma. 

Exhibit number 3 displays diabetic lower-extremity amputation 

rates. Glycemic control is associated with vascular side effects from 

diabetes. WHO reports suggest that up to 80 percent of diabetic 

lower-extremity amputations can be prevented. If you look at the 

rates across countries, again the United States is No. 1 in the 

world. 

Exhibit number 4, shows in-hospital case fatality rates after 

acute myocardial infarction. We know that aspirin therapy, betablocker therapy, thrombolysis, and coronary revascularization can 

all be very helpful therapies for someone with an acute myocardial 

infarction. So, there’s a lot we can do to bring down mortality rates. 

The United States rate, in the middle of the pack, is 5.1 percent, 

far higher than Iceland’s 2.4 percent, far better than Korea’s 8.1 

percent, 13th out of 20. 

If you go to Exhibits number 5 and number 6, these are for 

breast cancer, the most common malignancy for females in our 

country. One out of nine women in our country has breast cancer. 

It is certainly a plague. Exhibit 5, shows mammography rates. 

There is hard evidence that mammography allows us to diagnose 

breast cancer earlier before it’s spread, when it’s more treatable, 

when we will have better outcomes. The United States rate is 72 

percent, far less than the Netherland’s, at 89, although we’re better 

than many other countries. 

Exhibit number 6, shows breast cancer 5-year relative survival 

rates, and the United States is far and away the best, an instance 

where in—we’re really leading the pack and doing well, and we 

think other countries can learn from us. 

Finally, to conclude, exhibit 7 and 8 are two vaccination rates; 

the first, for Hepatitis B, a vaccination that we think is very important 95-percent efficacy, highly cost effective. Our rate is 92 percent, trailing a whole host of other countries. 

On the last page, exhibit number 8, shows data on influenza vaccination timely vaccination can overt tremendous morbidity and 

mortality for the elderly. It can also reduce work loss among the 

working population. Our rate, again, 65 percent, is far less than optimal. 

I’ve put those exhibits, and labored through those, so you can get 

a sense of the hard data, and the variability of it. But, I think the 

takeaways here are very clear: We can, now measure quality of 

care—not perfectly, but better than even before; there is a lot of 

variability in quality, internationally, and there is strong evidence 

that we’re just not, far and away, consistently the best in the 

world, taken together these data raise very important questions 

about how we spend our money and the value we obtain for it. 

In the interest of time, I’ll stop there. If there are further questions, I will be happy to field them. 

Thank you for the opportunity to address the committee. 

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[The prepared statement of Dr. Epstein follows:] 


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The CHAIRMAN. Thank you very much, Dr. Epstein. 

Mr. Tanner. 

STATEMENT OF MICHAEL TANNER, SENIOR FELLOW, CATO 

INSTITUTE, WASHINGTON, DC 

Mr. TANNER. Thank you, Mr. Chairman, Senator Corker, members of the committee. 

I’ve been studying healthcare for over 20 years, including 16 

years with the Cato Institute, author of a number of books on the 

issue, and a number of studies, including those looking at 

healthcare in other countries. 

I’d like to say, to start, that, in examining how other countries 

handle the tradeoff between controlling costs and preserving quality, it is very important to remember that each country’s system is 

a product of its unique conditions, history, politics, and national 

character. These systems range from the managed-competition approach of the Netherlands and Switzerland to the more rigid single-payer systems of Great Britain, Canada, Norway, and others, 

with great many variations in between. 

Some of these countries have a true single-payer system, prohibiting private insurance and even restricting the ability of patients 

to spend their own money on healthcare. Others are multipayer 

systems, with private, competing insurers in varying degrees of 

government subsidy and regulation. Some countries base their systems around employment, while others have completely divorced 

work and insurance. Some require consumers to share a significant 

part of healthcare costs through high deductibles or high copayments, others subsidize virtually first-dollar coverage. Some allow 

unfettered choice of physicians, others allow a choice of primary 

care physicians, but require referrals for specialists. Still others restrict even the choice of primary care physician. 

Even so, I believe it’s possible to draw some important lessons 

and some important comparisons. First, when it comes to 

healthcare quality, on various measures the United States actually 

fares quite well, despite many of the criticisms we’ve heard. Measures such as life expectancy and infant mortality are actually very 

poor measures of a country’s healthcare system and the quality 

thereof. Much better is to look at outcomes for specific diseases and 

whether your—what your survival rates are if you actually get 

sick. Here, the United States fares very well. 

Recently, the British medical journal, The Lancet, looked at 5- 

year survival rates for cancer, to cite just one example. For both 

men and women, the United States was not only No. 1, in terms 

of survival rates, but it was far superior to most of the other countries that we are compared with. 

Second, while the United States clearly spends far more than 

other countries when it comes to healthcare, healthcare—the rising 

healthcare spending is not a uniquely American phenomenon. Both 

as a percentage of GDP and per capita, healthcare costs are rising 

in many other countries. To cite just one example, in 2004, the year 

in which I was conducting a survey, healthcare spending in OECD 

countries rose at about 5.55 percent, and the U.S. was about 6.21 

percent. We’re higher, but theirs is still rising significantly, putting 

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significant strains on their budgets, leading to increased debt and 

tax increases or benefit cuts. 

Third, universal health insurance does not necessarily mean universal access to care. In practice, many countries promise universal 

coverage, but ration care or have extremely long waits for treatment. Some countries with ostensibly universal systems actually 

fall far short of true universal coverage. Even the best tend to leave 

a small remnant, 1 or 2 percent, of the population as uninsured. 

Fourth, those countries that have single-payer systems, or systems heavily weighted toward government control, are the most 

likely to face waiting lists, rationing, and restrictions on the choice 

of physician or other barriers to care, while those countries with 

national healthcare systems that work better, such as France, the 

Netherlands, and Switzerland, are successful to the degree that 

they incorporate market mechanisms such as competition, cost consciousness, cost sharing, market prices, and consumer choice. 

Finally, while no country with universal coverage is contemplating abandoning a universal system, the broad and growing 

trend across countries with national healthcare systems is to move 

away from centralized government control and to introduce more 

market-oriented features. As Richard Saltman and Josep Figueras 

of the World Health Organization put it, to quote, ‘‘The presumption of public primacy is being reassessed.’’ 

Alan Jacobs, of Harvard—I’m sure, a colleague of yours—has— 

points out that, ‘‘While there are significant differences in goals, 

content, and strategies, there is a general convergence toward market practices among European nations when it comes to 

healthcare.’’ Thus, even as we are talking about moving in a more 

European direction, toward more government control of our 

healthcare in this country, many European systems are debating 

how to add more U.S.-like market-oriented features into theirs. 

Mr. Chairman, members of the committee, I believe that there is 

a great deal we can learn from the successes of other countries in 

controlling costs and improving quality, but probably even more 

that we can learn from their failures. We should bear those in 

mind, as well. 

Thank you. I look forward to the committee’s questions. 

[The prepared statement of Mr. Tanner follows:] 

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The CHAIRMAN. Thank you very much, Mr. Tanner. 

We’ll now begin our questioning with 5-minute rounds. 

My first question is to the whole panel. Where OECD countries 

have chosen to use private insurance companies to administer 

healthcare benefits, the insurance companies, unlike most of the 

United States insurance companies, are nonprofit. Does this distinction have an effect on the cost of healthcare or barriers to access to healthcare for the United States? 

Mr. Pearson. 

Mr. PEARSON. I would expect that it would have some effect. I 

don’t think it’s the most important feature in health systems, about 

whether we’re talking about profits or nonprofits. I think what 

really matters are the incentives and the fees that are paid for the 

services by the insurance companies. So—— 

Thank you. 

The CHAIRMAN. What do you think, Dr. Bennett? 

Dr. BENNETT. We used to have an insurance that was run by the 

physicians, before we had—— 

The CHAIRMAN. Your mic. 

Dr. BENNETT [continuing]. Medicare that—it was a—sorry—it 

was a—the physicians themselves came together to develop a system such that they wouldn’t have to worry about whether people 

could pay or not. I think profit gets in the way, where we’re what 

many Americans have described to me as denial-based care, 

that—where the sick people are cutoff if there is a desire for profit 

in the insurance, so that you watch, if—the majority of people don’t 

need healthcare—80 percent—20 percent are the high users. If you 

can get rid of those people, because of preexisting conditions or because they’ve gotten sick and now changed jobs, you are going to 

take—that is an incentive, if you are responsible to a board of directors that wants you to have profit. 

I must say that—to Mr. LeMieux, that my parents used to love 

going to Florida, every year for 40 years, but when my mother got 

cancer and my father had arrhythmia, they could never—they 

could not any longer find insurance that would cover them at all, 

so they stopped coming to Florida. That’s bad for you. 

The CHAIRMAN. Dr. Schoen. 

Ms. SCHOEN. I think, when you look closely at other countries 

that do rely on private insurers—in fact, the Netherlands and the 

Swiss systems use those carriers—you find several things that dramatically lower overhead costs. One, the benefits are very standardized; you can really compare plans. They go out of their way to 

avoid churning, so you can stay with a plan for as long as you want 

to stay. Marketing costs are extremely low, because there are public websites, where I can get on and compare. There’s accountability for the type of insurance market behaviors that we’ve just 

heard about. Those are prohibited, any sort of risk rating or turning down, and they’re doing risk adjustment. They’re very aggressively trying to get the carriers focusing on quality and value. 

When we asked the Swiss people how it is the Swiss private insurance run for 5 percent overhead, the Germans run for 5 percent, 

the Netherlands do, and ours average 15 percent, they said, ‘‘No 

one would tolerate more than 5 percent in Switzerland.’’ I mean, 

‘‘What are you talking about?’’ So, the margins are extremely low, 

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there’s a large amount of public transparency that’s going on, and 

the competition is around quality, so you can’t really have a big 

margin, even if you’re for-profit. So, these systems have sort of 

done nonprofit or for-profit, but the way they compete with each 

other forces that overhead down. 

The CHAIRMAN. Thank you. 

Dr. Epstein. 

Dr. EPSTEIN. I will say something, if I’m permitted, about national data on this question we are all aware of potential concerns 

about for-profit medicine prior studies have examined use of highcost procedures among elderly persons in the Medicare population 

who are in Medicare Advantage plans both on for-profit plans and 

not-for-profit plans. They show no evidence of skimping in the forprofit sector. But that is just evidence from our country. 

The CHAIRMAN. Mr. Tanner? 

Mr. TANNER. Yeah, likewise, looking at the evidence largely in 

our country, about 40 percent of insurers are actually nonprofits in 

this country, and there’s no significant evidence that I’ve seen, in 

terms of difference in cost between the for-profits and nonprofits, 

or in the quality that they produce. 

I would also just note that insurance company profits are not 

particularly high as a percentage of healthcare costs. If you look at 

the actual profit margin that insurers make, they range from about 

3 percent in the—for HMOs, to about 5 and a half percent under 

fee-for-service plans, which is relatively modest by most corporate 

standards. So, they’re—it’s not insurance company profits that are 

really driving healthcare costs in this country. 

The CHAIRMAN. All right. 

Senator CORKER. 

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

Thank each of you for your testimony. I’m not going to pursue 

the OECD comparisons, because I don’t think that really helps 

much, and—it’s interesting to look at, but the characteristics of 

the—countries are so different, I’m not sure it’s useful as far as 

helping us look inward and figure out what we need to do. I think 

Mr. Tanner’s done a good job of sort of teasing some of that out. 

What I do want to focus on, though, are some of those things 

that, within our own country, create issues. Again, I really do appreciate all of the testimony. I read all of it early this morning. 

Dr. Bennett, one of the things that has troubled me greatly about 

our system is the fact that we pay more for pharmaceuticals and 

devices than other countries. Yet, it—it’s not really our country so 

much that’s the problem, it’s the—sort of the parasitic relationship 

that Canada and France and other countries have toward us; 

meaning that you set prices, and, unfortunately, all the innovation, 

all the technology breakthroughs, just about, take place in our 

country, and we have to pay for it. So, you’re living off of us. What 

you use typically is older, but—I just had a meeting—I’ve met with 

our former Trade Representative; I met, this morning, with 

PhRMA to, you know, if you will, put a stick in their eye over this. 

But, I will say that you benefit from us, and we pay for that. I resent that, and I want to figure out a way of solving that. I wonder 

if there’s a way that—if you have any ideas in that regard. 

102 

Dr. BENNETT. Well, Senator, I think—with due respect. These 

are multinational corporations and that—when we don’t treat our 

pharmaceuticals companies properly, they invest somewhere else, 

and they take their—— 

Senator CORKER. They invest here. 

Dr. BENNETT [continuing]. Research dollars somewhere else. 

Senator CORKER. That’s right. That’s right. 

Dr. BENNETT. So, it is a global issue, and that whether it’s Switzerland or whether it’s the United States or whether it’s Canada, 

we’re all in this together. We want the breakthrough drugs, we 

want—and, frankly, in our country, our generics are way too expensive—— 

Senator CORKER. Ours are less. 

Dr. BENNETT [continuing]. Yours are less. So, you know, I think 

it’s a matter of us learning from one another as to how this works. 

But, we want the research, we want—we need drug companies to 

be making more. I mean, in my country, quite often they say, 

‘‘We’re now spending more on drugs than we are on doctors.’’ 

You’re going, ‘‘Well, maybe that’s a good thing,’’ that—you know, 

that my father is now on a drug that previously would have required a pacemaker. So, it is a shared—— 

Senator CORKER. I think—— 

Dr. BENNETT [continuing]. But, I think that we are, I think, very 

in favor of our price controls. In some of our things, like even bulk 

buying, you know, on pandemic preparedness, we have got a good 

price because we’ve decided to buy, as a country, enough vaccine 

for the whole country. Therefore, we are self-sufficient as we come 

forward looking at the pandemic. 

Senator CORKER. I think my goal would be, over time, to—for us 

not to pay more than you, because you set prices and cause us to 

pay more, when we’re doing all the innovation. So, I hope that we 

can figure out, on a world basis—have you—and I want to move 

on to another question. 

Dr. BENNETT. Well, I just want to say, please don’t think that 

you can import cheap drugs from Canada. It’d last us about 36 

days. 

Senator CORKER. No, no, no. That’s a—— 

Dr. BENNETT. OK. 

Senator CORKER [continuing]. That’s a silly way of dealing with 

it, but a way to at least get it started, because, in essence, the Canadian government and its citizens are taking advantage of our 

citizens by virtue of setting prices that are lower than competitive 

prices. 

Dr. BENNETT. No, I think it’s the drug companies, sir. 

Senator CORKER. Well—— 

Dr. BENNETT [continuing]. They’re multinational. It’s nothing 

about the—— 

Senator CORKER. Yeah. 

Dr. BENNETT [continuing]. United States of America. 

Senator CORKER. Yeah. All right. Well, thank you for that. I 

think that’s something we all need to work together on and even 

it out across the world, so that our citizens are paying less. 

Dr. Schoen, I appreciated the contributions you made about the 

frailties in our system. I agree with most of those, as far as the inVerDate Nov 24 2008 13:12 Apr 07, 2010 Jkt 000000 PO 00000 Frm 00106 Fmt 6633 Sfmt 6633 H:\DOCS\54885.TXT SAG PsN: JOYCE
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centives go. I noticed that one of the things you alluded to was 

capitation or some hybrid thereof, where we have capitation plus, 

maybe, incentives. 

I came into a situation after a capitation program had been put 

in place in Tennessee. It was called, TennCare. I came in about a 

year later. What I saw in that—and that was interesting to me, by 

the way; you pay so much per member, per month, to keep people 

healthy—what I saw happening, though, was something very different. By the way, a lot of these providers were nonprofits, I might 

add. But, in essence, what they were doing is denying care. I mean, 

in essence, what you had was the private sector, through capitation—you might get paid a $110 per member, per month, or whatever the number was—$6 of that was supposed to go to prevention. 

Never happened. In essence, what happened was, there was a denying of care that took place so that there was a profit margin. So, 

I agree that we pay for activities here, and that’s problematic, 

cause there’s a lot of self-referral, and we inflate costs. On the 

other hand, I don’t know yet what the solution is, and I’m wondering if you might shed some light on that. 

Dr. SCHOEN. I think, when you look at what other countries have 

been doing, one of the things that’s interesting is how much variation there is on payment methods, both from what they did two 

years ago and what they’re doing now. The U.S. is, in fact, the only 

one that does full capitation, like you’ve just described, where the 

whole risk is underneath one risk-bearing entity. 

What other countries have started to do is what many of our 

very innovative care systems are doing is saying, ‘‘If you have a 

heart attack, let’s give you a global fee that covers all of your treatment, including—we’re going to be at risk that we did it right the 

first time so you don’t have a readmission.’’ Geisinger is doing that, 

with a proven care—around very specific episodes of care, and the 

bundled care for that, with a high-quality promise. We see Germany experimenting with that, moving from more tightly budgeted 

hospitals to something like our DRGs, and expanding. 

What other countries are doing with primary care is paying doctors in a mixed way. They’re paying them an average amount per 

month to help them support teams, support nurses, support afterhours-care systems, so when you call up, someone answers or 

comes to see you, has time to talk to you; you don’t have to have 

a visit; but, they’re also paying a fee for service to make sure you 

respond to patients. They’re paying more for after-hours care. So, 

it’s a blended capitation fee-for-service that’s trying very much to 

push a very responsive—patient responsive system. 

Increasingly, in countries like the Netherlands, they’re saying, 

‘‘How can those primary care doctors in the community also work 

with the hospital, have transition-care nurses, that, as I leave the 

hospital, someone’s there to take care of me, and someone know 

what’s happening? ’’ So, there’s a very interesting mix of how do we 

get a more integrated care system, when it’s fragmented, and using 

the payment systems to move with the quest to value. 

Every single one of these initiatives has an accountability feature, where an outcome is being measured to make sure that there 

is not a shirking. But, what you see is a very responsive system. 

Visits rates are higher in a lot of these other countries. What’s 

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starting to be wonderful is, in the Netherlands, you don’t have to 

go to the doctor’s office, you can get a visit by an e-mail. The physician can fill a prescription for you, if that’s a better way of getting 

it. You can contact through multiple sites. We’re seeing this in the 

U.S., some experiments. The difference is, the other countries take 

it nationwide. 

The CHAIRMAN. Thank you. 

Senator CORKER. My time is up, I apologize. 

The CHAIRMAN. Senator Franken. 

Senator FRANKEN. Thank you, Mr. Chairman. 

So many things I want to ask about. Mr. Tanner, how many people have gone bankrupt in the last 10 years in Switzerland because 

of a medical crisis? 

Mr. TANNER. I don’t have a number, but I would assume it’s relatively few. 

Senator FRANKEN. I believe it’s zero. 

Mr. TANNER. That’s quite possible. 

Senator FRANKEN. How many in Germany? 

Mr. TANNER. I assume you’re going to say zero, as well. I don’t 

have bankruptcy numbers on any of the European countries. 

Senator FRANKEN. You don’t. 

Mr. TANNER. No. 

Senator FRANKEN. You’ve been studying this for 20 years. 

Mr. TANNER. But, I have not looked at the bankruptcy numbers 

in those countries. 

Senator FRANKEN. OK. Thank you, sir. 

Mr. TANNER. I will say—— 

Senator FRANKEN. No. 

Mr. Pearson, your testimony mentions high administration costs 

as a primary reason that our healthcare spending is so high. 

What’s included in these administrative costs? 

Mr. PEARSON. Yeah, there’s international standards that we 

agree what is included and what isn’t included. So, the OECD definition is actually more narrow than the one that you usually use 

in the United States. It concentrates very much on the payment 

systems and the reimbursement systems and misses out some of 

the things that you would use in your national definition, which is 

why, when we do the international comparisons, you see a smaller 

number in the—when we look at the OECD, what the United 

States spending on administration than you’re used to seeing. So, 

on our figures it’s about, if I remember rightly, 7 percent of your 

total health spending. I think you’re used to seeing a much larger 

number. But, relatively, it is still by far and away the highest in 

the OECD, together with some of the multipayer—multipayer systems are also similarly expensive. 

Senator FRANKEN. Ms. Schoen, we were talking, before, about 

nonprofits—insurance. Minnesota is covered all—it’s all nonprofit. 

We—for every dollar, in Minnesota, that goes to health insurance, 

91 cents comes back in healthcare. There’s a thing called ‘‘medicalloss ratio,’’ that—our medical-loss ratio is 91. For private individual 

plans in this country, it’s 60. 

VOICE. 70. 

Senator FRANKEN. Can we pay for healthcare if we bring up that 

number from 60 to 90? 

105 

Ms. SCHOEN. If you—I’ve included a chart in my testimony, figure 26, the McKinsey study, that compared our excessive costs. 

We’re looking at those kinds of medical-loss ratios, as well as transaction costs. They estimate that the excess is in the neighborhood 

of $90 billion per year. It’s a lot of money. Those high medical-loss 

ratios that you mentioned, particularly in the small group and individual market, you’re actually even on the low side. When Maine 

opened up its books, it found one that’s only paying 40 cents out 

in claims. 

Senator FRANKEN. OK. 

Ms. SCHOEN. The highest, particularly in the individual and 

small group market. Other—every other country—and we can see 

it in our large group—when you bring group risk back together, the 

running of the health plan, the overhead comes way down, and 

when you simplify. It’s critical we do both. 

Senator FRANKEN. Let me continue, cause I don’t have that much 

time. Some estimates—continue with you, Ms. Schoen—show that 

we can save billions by streamlining the claims process so clinicians waste less time on paperwork and redundancies. Do you 

think there’d be a benefit in this country having a unified system 

for billing and payments in healthcare? 

Ms. SCHOEN. Absolutely. 

Senator FRANKEN. If we were to create a streamlined system for 

all payers, would the Medicare administration structure for billing 

and payment be a good option to buildupon? Just to be clear, I’m 

talking about Medicare’s administrative system, not Medicare’s 

payment schedule. 

Ms. SCHOEN. Well, it’s—as I think you know, Medicare uses private carriers to pay claims. So, I think any effort that would say, 

‘‘Let’s have our claims form use common codes, let’s start to make 

it electronic’’—I often hold up my insurance card and say ‘‘It’s plastic, but we Xerox it; in Germany, they swipe it.’’ It’s electronic. It 

just—we know what you’re going to pay. If we could move toward 

that, we remove layers in the physician’s office, in the hospital office, as well as the insurance companies. 

All I’ve talked about so far is the overhead in insurance. So, yes, 

I think we don’t even—we can’t even foresee how many layers are 

there that don’t need to be there. 

Senator FRANKEN. Right. 

Dr. Tanner, are you aware of—I—in your written testimony, you 

talked about 7,000 patients coming from abroad to Mayo. Are you 

aware that there are 750,000 Americans who traveled abroad for 

medical care in 2007? 

Mr. TANNER. Yes, I am. 

Senator FRANKEN. That they went to places like Mexico and 

India because they found less expensive healthcare in those countries? 

Mr. TANNER. Yeah, the primary destinations are India and Thailand, but—— 

Senator FRANKEN. Do you find anything wrong with that—— 

Mr. TANNER. No, they are not getting—— 

Senator FRANKEN [continuing]. Picture? 

Mr. TANNER [continuing]. The quality of care that Indians and 

Thais get in their country. They are getting a specialized care 

106 

that’s available for tourists who pay with U.S. dollars in those 

countries. It is not the quality—— 

Senator FRANKEN. Why are they leaving the—— 

Mr. TANNER.—the overall quality of care. 

Senator FRANKEN. ‘‘Why are they leaving the United States?’’ is 

the question, but I’ve run out of time. 

Thank you. 

The CHAIRMAN. Thank you so much. 

Senator LeMieux. 

Senator LEMIEUX. Thank you, again, for all the folks on the 

panel. It’s been very educational this morning. 

I want to ask two sort of open-ended questions, and hopefully 

there will be enough time for everyone to respond. 

My first question is, is, What do other countries do to try to prevent fraud, waste, and abuse? What procedures do they have in 

place? We obviously have a huge problem with that in our Medicare system and our Medicaid system in this country. So, I would 

love to hear what other countries are doing to address those issues. 

I’ll start with Mr. Pearson. 

Mr. PEARSON. I’m afraid I’m going to plead ignorance here. I actually have no knowledge of this area of policy. 

Senator LEMIEUX. Dr. Bennett. 

Dr. BENNETT. We now have a—— 

Senator LEMIEUX. Microphone, please. 

Dr. BENNETT [continuing]. Now have a photo ID card that actually has begun to eliminate the fraud that was happening. I am 

sorry to say that some of the fraud was not in—that the health 

clinics very close to the American border, there were a lot of Americans who had Ontario health cards and were coming up to St. 

Catherine’s to actually get their—the license plates in those parking lots was filled with Americans. So, we ended up having to 

change our health card in Ontario to one with a photo on it, and 

we’ve begun to get there. 

But, I think that having primary care, having a family doctor 

who actually can coach somebody through the system, I think actually—and—— 

Senator LEMIEUX. What about—if I can interrupt—— 

Dr. BENNETT. Yeah. 

Senator LEMIEUX [continuing]. Because I don’t have much time— 

how about provider fraud? Do you require a background check for 

your healthcare providers or do extensive checks? We don’t do that 

in this country. I was wondering what you might do in Canada. 

Dr. BENNETT. Well, in our College of Physicians and Surgeons 

in—each of the provinces and territory does do a background check 

for the physicians before they even try and move provinces or come 

in. They’re very serious, in terms of prosecuting any sort of billing 

fraud. It is very seriously dealt with. 

Senator LEMIEUX. OK. 

Ms. Schoen. 

Ms. SCHOEN. I can’t speak in depth about it, but, when you look 

abroad, what you often find is systems that—- where the specialists 

are paid on salary. They work with a hospital, that there’s a lot 

less of a fee-for-service incentive to just bill for things that you 

didn’t do. There’s less ownership of labs. The labs are more freeVerDate Nov 24 2008 13:12 Apr 07, 2010 Jkt 000000 PO 00000 Frm 00110 Fmt 6633 Sfmt 6633 H:\DOCS\54885.TXT SAG PsN: JOYCE
107 

standing. They’re in a nonprofit facility, so there’s less that I could 

take something by prescribing you extra. 

So, some of the oddities of the way we have—in ownership arrangements, just do not exist in the same way. The physicians’ offices look quite different. Again, if you pay primary care doctors, 

and have a very strong primary care system, where they’re accountable for patients with registries, some of the fee-for-service 

‘‘just doing more’’ goes away and there’s a much higher emphasis 

on prevention and keeping people healthy. 

Senator LEMIEUX. Dr. Epstein? 

Dr. EPSTEIN. Senator, it’s a great question, but I can’t enlighten 

us further. 

Senator LEMIEUX. OK. 

VOICE. Yeah, I also can’t go into great depth, but I will suggest 

that the level of fraud in various countries often has as much to 

do with sort of national character and history as it does with the 

actual system. 

Even in those systems that have sort of rigid payment systems 

so the doctors are sort of secondary corruption that goes on— 

Greece, for example—there’s often doctors who refuse to treat patients during the day while they’re on salary, and they take what’s 

called ‘‘informal payments’’ to treat patients at night, off the books. 

A large portion of that goes on, as well. 

Senator LEMIEUX. Thank you very much. The last question I 

have—and I think it’s a question that you’ll like answering, which 

is, you know, we’re trying to do a lot of things with healthcare in 

this country, but what would be the first thing that you would do? 

What’s the lowest hanging piece of fruit to reduce cost and increase 

the quality of care? 

Mr. Pearson. 

Mr. PEARSON. You’re right, I love that question. Moving away 

from fee-for-service payments to episodic payments. 

Senator LEMIEUX. Dr. Bennett. 

Dr. BENNETT. Well, I think having everybody covered, and then 

have a coordinator for the system. But, I did want to talk about 

the fee-for-service versus—the vets used to get paid for the downer 

cow and going out and looking after them one at a time. Now vets 

are being paid for herd health. They get paid if they are able to 

keep the herd healthy. I think that if we could look to a system 

where doctors were awarded for keeping people well, that—in 

terms of what Senator Franken had said, in terms of the—that 

they get rid of the perverse incentives for churning patients 

through more and more tests and actually reward them for keeping 

people well—do they have their immunizations? Did they get their 

mammogram? It is a system that is about health outcomes, not volume piecework. 

Senator LEMIEUX. Thank you. 

Ms. Schoen. 

Ms. SCHOEN. You’ve asked for one, but I have to give you two. 

Senator LEMIEUX. OK. 

Ms. SCHOEN. I think, unless we bring our insurance system back 

together, we can’t pay in a way that’s rational, and then we need 

to be starting to pay with a focus on value. We have pricing system 

that’s unbelievable, when you look at it right now. You can’t ask 

108 

what the price is. It’s behind a veil of secrecy. So, we really need 

to do the insurance side, bring everyone in, and start to focus on 

paying differently and using our group purchasing power. 

Senator LEMIEUX. Dr. Epstein. 

Dr. EPSTEIN. I’m going to say something which is similar to Ms. 

Schoen. The usual shibboleths are primary prevention, the medical 

home, public reporting, paying for results, comparative effectiveness, information technology. I think they’re all going to be helpful, 

but none will provide dramatic relief. If we’re going to really make 

progress, we’re going to have to move towards more highly integrated care. In the best of all worlds, we’d have certain parts of the 

population for whom they would find it compatible in fully 

capitated systems, and in other instances, we would use intermediate approaches such as bundling and accountable-care organizations and the like. But, I think we have to move in that direction. 

Senator LEMIEUX. Mr. Tanner. 

Mr. TANNER. I think what we need to do is have more competition within the healthcare industry, and more consumer involvement within the healthcare industry. The lowest hanging fruit 

would simply be to allow people to buy insurance across State 

lines. People should not be a captive of the insurance cartels within 

their State, nor should they be captive of the regulatory regimes 

within their State. 

In the longer term, we need to move away from an employerbased healthcare system to one where individual consumers have 

healthcare, so that you don’t lose your insurance when you lose 

your job and so that you can get insurance in a long, lifetime contract, where you can buy it when you’re young and healthy, and 

keep it the long term, which means you need to change the tax incentives in the current tax code. 

Senator LEMIEUX. Thank you very much. 

Thank you, Mr. Chairman. 

The CHAIRMAN. We have a—time for just one more round, two 

minutes a Senator. I’d like to give one minute to Dr. Bennett and 

one minute to Mr. Pearson. 

Dr. Bennett, we hear, and we’ve heard today, about lines and rationing and people apparently not very happy with their healthcare 

in Canada. You said people in Canada are as much as five times 

more pleased with their healthcare as we are. I’ll give you one 

minute to answer that. 

Then, Mr. Pearson, regulation. I think you indicated that countries that are doing a good job in controlling costs have a good deal 

of government regulation, perhaps to an extent that we do not have 

here. One minute. 

Dr. Bennett would you speak first? 

Dr. BENNETT. I think that we are doing better on the wait-times 

end, but, you know, as I was coming yesterday, one of my former 

colleagues said to me—his father’s a very wealthy man, but had a 

heart attack and, within one hour, was on the table getting a stent 

operated on in extraordinary way that—in terms of a truly integrated system. 

So, in our system, if you’re sick, you do very well. The ‘‘worried 

well,’’ we have, sometimes, more trouble with. But, there’s no one 

109 

in our country who is dying because they don’t have health insurance. I think the Harvard study, from two weeks ago, that had 

45,000 people a year dying in the United States of America because 

they don’t have healthcare, is, again, where we need to focus. 

The CHAIRMAN. Thank you. 

Mr. PEARSON. Mr. PEARSON. Yes, thank you. I will focus on, if you like, the 

multipayer systems, the systems most similar to the United States. 

It’s not much point in me talking about the regulation in national 

health service systems. You’re never going to be having one of 

those. 

Within those multipayer systems, they could use a lot more regulation than happens in the United States. There’s ex-post-risk adjustment to make sure that the competing providers compete on 

the grounds of price and quality. They don’t try and get a better 

mix of people. 

So, in other words, what I think the regulations are doing is that 

they’re trying to channel the competition in a way that’s more productive for society. They’re trying to channel the competition into, 

Can we make sure that we get prices down? So, they also regulate 

on making sure that the information is made available to insurees. 

They regulate, maybe, on where—what sort of pharmaceutical 

prices can be charged. So, again, there’s no, kind of, cost-gouging 

going on within the system. 

So, what they’re trying to do is to make sure—they are regulating, but they’re regulating to try and make sure the competition 

works, rather than people just trying to find a way around competition in order to maximize their profits. 

The CHAIRMAN. Thank you. 

Senator CORKER. Senator CORKER. Thank you, Mr. Chairman, and again, all of 

you, for your testimony. 

Dr. Epstein, I—my guess is—you talked, in your testimony, 

about racial minorities having difficulties getting the care they 

need. I assume that’s a pretty major indictment of the Medicaid 

system itself. I saw you and Dr. Tanner sort of agreeing with each 

other on many of the competition, the notions that the nickels and 

the competition that ought to occur. 

I’d like for you, in the short time I have, to address two things. 

You mentioned the integrated system that we need to have. I think 

most of us agree with that. One of the things I don’t like at all 

about the debate we’re having right now is, you know, it’s like a 

100 folks sitting around the table, changing that, where, in essence, it’s tough sledding. We need to figure out a—I agree that 

that needs to happen. It’s tough work. It’s hard to do it in a piece 

of legislation. But, working through Medicare and—not Medicaid so 

much—but, doing pilots and seeing what works and spreading it 

out probably is the best way to do it. Over an entire Presidential 

term, we could probably do a lot of damage. 

But, I’m wondering if you might—in a good way—and what we’re 

doing now, probably the other way—but, could you address that, 

and also the fact that, in your testimony, you mentioned that, 

under our system today, people really don’t have any skin in the 

game, they don’t really have any money out, and so, therefore, its— 

110 

the cost to them, they’re not aware—it seems like, to me, that 

would be the same in the single-payer system, too. I wonder if you 

might educate us there a little bit. 

Dr. EPSTEIN. I think you’re asking a couple of different questions, 

and I’ll try and do my best to address them both. 

I didn’t address the latter, which is the issues that Mr. Tanner 

talked about, which is particular individual incentives and how 

they play out and where that goes. 

In terms of integration, it is my sense—and I say this, not only 

as someone who’s studied health policy, but as a primary care provider—that integration is really key for providing better care. We 

see that in the appalling number of readmissions we have, because 

we don’t get transitions to ambulatory care right or have proper incentives to keep patients out of the hospital. I think we need to 

align those incentives over time. 

We also need to do it in a way that is attractive, to patients who 

don’t want to be constrained fully. So, I really want to pick up on 

the—— 

Senator CORKER. So, how do we make that happen in—you know, 

with the legislative process we have that—so much of what we do 

in the public sector affects the private sector—how do we actually 

do that? You know, we have great universities and Mayo Clinics 

and Vanderbilt and places like that, that talk about this all the 

time, but they can’t make it happen. How do we do that? 

Dr. EPSTEIN. Sure. Delivery-system change is going to be even 

harder and more difficult to accomplish than changing coverage. 

Delivery system is very difficult to change. I believe the current 

bills have funding and provisions for a series of what I would hope 

will be more rapid-fire-than-before demonstrations, which will lead 

to incremental knowledge and guide us as we think about strategies, like bundling, and creating organizations that are accountable 

for a broader range of services. We need to empower and incent 

hospitals, not only to do their job with inpatient care, but to do 

their job in transitioning patients to ambulatory care, they need to 

work with other providers to ensure that patients don’t just cycle 

back and forth to the ambulatory-care and hospital setting. The 

exact details of that have got to be worked out. 

But, what you can do at the Federal level is invest money in it 

and give notice that you see the future being, not the perpetuation 

of entropic fee-for-service going on and on, but, in fact, changing 

the payment system and incentives so that we move towards more 

integrated care. 

Senator CORKER. Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you very much, Senator Corker. 

Senator FRANKEN. 

Senator FRANKEN. Yeah. Haven’t we had—haven’t we seen what 

works? Mr. Epstein—Dr. Epstein, haven’t we seen what works? 

Doesn’t Mayo work? Doesn’t Cleveland Clinic work? Doesn’t 

Geisinger work? Haven’t we seen that? 

Dr. EPSTEIN. I don’t know that we have the model that we can 

bring to scale and transport comfortably across America and say, 

‘‘We’ve got it. 

111 

Senator FRANKEN. Yeah, but—but, I mean, do we need more pilot 

programs, or do we need to do what we’re doing in this legislation, 

to try to encourage a quality and value versus fee for service, say? 

Dr. EPSTEIN. I think, if I read the legislation correctly, that there 

is money in there for starting pilot programs, demonstrations, and 

evaluations of a host of different ideas that will be brought to scale. 

You know, the history of medical innovation is that you get a few 

zealots who can produce a model that seems effective either in providing better quality or lower cost, but it is hard to tease out the 

unique contextual factors that have allowed them to succeed. When 

you try and recapitulate the model elsewhere, it often doesn’t work. 

But that’s what needs to happen here. 

Senator FRANKEN. But, aren’t there things in common in these 

places that seem to deliver quality healthcare for a lower cost? 

Aren’t there things in common? For example, let’s talk about your 

primary care physician. What’s the ratio of primary care physicians/specialists in this country? 

Dr. EPSTEIN. Right now? 

Senator FRANKEN. Yeah. 

Dr. EPSTEIN. About 0.35, depending on what you call a primary 

care doctor. About 35 percent. 

Senator FRANKEN. What would it be in Europe? 

Dr. EPSTEIN. It’s variable quite a bit in Europe. The prevailing 

wisdom is that is close to 0.5. In fact, if you look across multiple 

different countries, it’s really quite variable. 

Senator FRANKEN. So, we need more primary care physicians, 

wouldn’t you say? 

Dr. EPSTEIN. I think that. It’s becoming vogue to believe that we 

do. But we’ve got a payment system that doesn’t favor that, as you 

well know. 

Senator FRANKEN. Right. Part of the health bill is for workforces 

to try to steer people into that, incentivize them to go into it, is it 

not? 

Dr. EPSTEIN. It’s less in the health bills and more in the popular 

dogma. What’s in the health bills is the notion of a medical home, 

which we hope will move us towards greater emphasis on primary 

care—I think we could do much more. 

Senator FRANKEN. OK. My time’s run out. I have so many more 

questions, but, thank you, to all our witnesses. 

Thank you. 

The CHAIRMAN. Thank you so much, Senator Franken. 

Senator LEMIEUX. 

Senator LEMIEUX. I want to talk about the medical malpractice 

issue. There was a—Dr. Bennett, in your comments of the ways 

that—seven clear reasons why you pay less and feel better in Canada, No. 4 was malpractice insurance, and you mentioned that in 

your remarks. 

We have a situation, in this country, where our doctors are paying exorbitant amounts for medical malpractice insurance. My wife, 

Meike, and I are expecting our fourth child. We live in Tallahassee, 

FL, which is not a big town. I went to do the sonogram with her, 

with the OB–GYN, and he told me that he’s paying $120,000 a 

year in Tallahassee, FL, for medical malpractice insurance. There’s 

ten OB–GYNs in a practice together, so a million-two for medical 

112 

malpractice. I wanted to get a sense of what you’re doing in your 

country, that you outline, and then maybe hear from other folks on 

the panel of what we need to do to reform this problem so that we 

can drive costs down. 

Dr. BENNETT. I, at the time, delivered about 150 babies a year, 

as a family physician, and my malpractice insurance was about 

$10,000. It was reimbursed by the province. It—so, I paid nothing. 

So, it is—what the Canadian Medical Protective Association has 

done is the two phases. One is to keep the premiums down—and 

it’s an association and a board of physicians who manage it; but 

also do huge education on risk. Anybody who slightly got into trouble gets sort of taken to school and told how to reduce their risk 

in those. Also, our court system, that the jury system may decide 

whether somebody is guilty or not, but it is only the judge that 

makes the award. So, our tort system is very different, and so, the 

payouts are lower. 

But, I think that, again, nobody wants misadventure, and I think 

that we are—you know, we need to reduce the problems in our system. Yet, 100,000 people a year die because of medical misadventure in this country; 10,000 in ours. We’ve got to get that down. 

I think that, if I was allowed one more thing to say, the IT system, that—because of what Don Berwick says, in terms of our—our 

system is forgetful. We forget about allergies, we forget about many 

things that a really good IT system, like you put in place for your 

Veterans Administration, that turned the worst healthcare system 

to the best in less than 10 years—that we’ve got to have 

people—make it easier that they don’t make a mistake, in the first 

place. If you’ve got a system that—- where you can push a button 

and get somebody’s record, and can remember the patient, and— 

truly patient-centered care. 

The CHAIRMAN. Thank you, Senator LeMieux. 

Thank you so much for being here today. You’ve shed a lot of 

light on a very important topic in the United States today, as you 

know. So, we appreciate your being here. 

I—that’s it, we’re done. 

[Whereupon, at 12:33 p.m., the hearing was adjourned.] 

(113) 

A P P E N D I X 

PREPARED STATEMENT OF SENATOR ROBERT P. CASEY, JR. 

I would like to thank Chairman Kohl for scheduling this important hearing and 

welcome our new ranking member, Senator Corker to his new position. This hearing 

will examine how certain systems have kept the costs of health care low while keeping quality high. Right now we are in the midst of deciding how best to reform the 

health care system in this country and one of the most important questions we confront is how we can lower costs while increasing quality. To some this idea may 

seem contradictory, but it does not have to be. 

There are a number of models that we can examine when considering health care 

reform, and I would like to share a successful example from Pennsylvania. The 

Geisinger Health System stands out because of its commitment to quality and innovative care. Though the context for Geisinger’s success is unique, surely the measures this hospital has taken to reduce patients’ costs while increasing the quality 

of their care can be an example for the rest of the country. Geisinger is a comprehensive, integrated and physician driven health care network of 45 community 

sites across Pennsylvania with physicians who practice in more than 75 specialties 

and sub-specialties. 

The focus of this network is quality patient care. Geisinger uses a system of quality metrics called Quality Measure Scores. Patients and consumers have access to 

these metrics on Geisinger’s website. We know that the measure of the quality of 

one patient’s care is unique to that patient, so Geisinger also allows its patients to 

score the hospital and allows potential patients to compare these scores to other institutions across the state and the nation. 

Geisinger also measures the level of patient satisfaction through an independent 

researcher, and they make the outcome and performance data of every procedure 

and course of treatment available online, once again so that patients can know and 

evaluate their options. Through an innovative program called ProvenCare, Geisinger 

was able to compile the data within the electronic medical records of consenting patients to compare what combinations of treatment work best for future patients with 

similar conditions. Through their research with the ProvenCare program, the average total length of stay at Geisinger fell 0.5 days and the thirty-day readmission 

rate for the hospital fell 44 percent. 

Ultimately, the success of this hospital can be summarized by two points. First, 

patients who are more informed about their care options are better able to participate in their own care. Second, doctors with a better knowledge of what combination 

of procedures has worked in the past are better able to streamline the treatment 

options they provide to their patients. As the Geisinger system has demonstrated, 

patients pay less because they’re not receiving extraneous treatments, they stay in 

the hospital for less time and they return to the hospital less often. We can learn 

from this hospital, and I think that as we advance in the health care reform process 

we must consider examining what is working in Pennsylvania so that we can make 

the best possible policy decisions. 

Again, Mr. Chairman, I thank you for organizing this important hearing. I look 

forward to working with you and the rest of our colleagues on these important 

issues as we continue to debate health care reform. 

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