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MAKING HEALTH CARE WORK FOR AMERICAN 

FAMILIES: DESIGNING A HIGH PERFORMANCE 

HEALTH SYSTEM 

HEARING 

BEFORE THE

SUBCOMMITTEE ON HEALTH 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

MARCH 10, 2009 

Serial No. 111–11 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 


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COMMITTEE ON ENERGY AND COMMERCE 

HENRY A. WAXMAN, California, Chairman 

JOHN D. DINGELL, Michigan 

Chairman Emeritus 

EDWARD J. MARKEY, Massachusetts 

RICK BOUCHER, Virginia 

FRANK PALLONE, JR., New Jersey 

BART GORDON, Tennessee 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

BART STUPAK, Michigan 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

Vice Chairman 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JANE HARMAN, California 

TOM ALLEN, Maine 

JAN SCHAKOWSKY, Illinois 

HILDA L. SOLIS, California 

CHARLES A. GONZALEZ, Texas 

JAY INSLEE, Washington 

TAMMY BALDWIN, Wisconsin 

MIKE ROSS, Arkansas 

ANTHONY D. WEINER, New York 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

CHARLIE MELANCON, Louisiana 

JOHN BARROW, Georgia 

BARON P. HILL, Indiana 

DORIS O. MATSUI, California 

DONNA M. CHRISTENSEN, Virgin Islands 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

CHRISTOPHER MURPHY, Connecticut 

ZACHARY T. SPACE, Ohio 

JERRY MCNERNEY, California 

BETTY SUTTON, Ohio 

BRUCE L. BRALEY, Iowa 

PETER WELCH, Vermont 

JOE BARTON, Texas 

Ranking Member 

RALPH M. HALL, Texas 

FRED UPTON, Michigan 

CLIFF STEARNS, Florida 

NATHAN DEAL, Georgia 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOHN B. SHADEGG, Arizona 

ROY BLUNT, Missouri 

STEVE BUYER, Indiana 

GEORGE RADANOVICH, California 

JOSEPH R. PITTS, Pennsylvania 

MARY BONO MACK, California 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE ROGERS, Michigan 

SUE WILKINS MYRICK, North Carolina 

JOHN SULLIVAN, Oklahoma 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

PHIL GINGREY, Georgia 

STEVE SCALISE, Louisiana 

PARKER GRIFFITH, Alabama 

ROBERT E. LATTA, Ohio 

(II) 


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SUBCOMMITTEE ON HEALTH

FRANK PALLONE, JR., New Jersey, Chairman 

JOHN D. DINGELL, Michigan 

BART GORDON, Tennessee 

ANNA G. ESHOO, California 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

LOIS CAPPS, California 

JANICE D. SCHAKOWSKY, Illinois 

TAMMY BALDWIN, Wisconsin 

MIKE ROSS, Arkansas 

ANTHONY D. WEINER, New York 

JIM MATHESON, Utah 

JANE HARMAN, California 

CHARLES A. GONZALEZ, Texas 

JOHN BARROW, Georgia 

DONNA M. CHRISTENSEN, Virgin Islands 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

CHRISTOPHER S. MURPHY, Connecticut 

ZACHARY T. SPACE, Ohio 

BETTY SUTTON, Ohio 

BRUCE L. BRALEY, Iowa 

NATHAN DEAL, Georgia, 

Ranking Member 

RALPH M. HALL, Texas 

BARBARA CUBIN, Wyoming 

HEATHER WILSON, New Mexico 

JOHN B. SHADEGG, Arizona 

STEVE BUYER, Indiana 

JOSEPH R. PITTS, Pennsylvania 

MARY BONO MACK, California 

MIKE FERGUSON, New Jersey 

MIKE ROGERS, Michigan 

SUE WILKINS MYRICK, North Carolina 

JOHN SULLIVAN, Oklahoma 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 


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C O N T E N T S 

Page 

Hon. Frank Pallone, Jr., a Representative in Congress from the State of 

New Jersey, opening statement .......................................................................... 1 

Hon. Nathan Deal, a Representative in Congress from the State of Georgia, 

opening statement ................................................................................................ 6 

Hon. Henry A. Waxman, a Representative in Congress from the State of 

California, opening statement ............................................................................. 7 

Hon. Joe Barton, a Representative in Congress from the State of Texas, 

opening statement ................................................................................................ 11 

Hon. John D. Dingell, a Representative in Congress from the State of Michigan, opening statement ....................................................................................... 12 

Hon. Ed Whitfield, a Representative in Congress from the Commonwealth 

of Kentucky, opening statement ......................................................................... 14 

Hon. Diana DeGette, a Representative in Congress from the State of Colorado, opening statement ...................................................................................... 14 

Hon. Michael C. Burgess, a Representative in Congress from the State of 

Texas, opening statement .................................................................................... 15 

Hon. Lois Capps, a Representative in Congress from the State of California, 

opening statement ................................................................................................ 20 

Hon. Phil Gingrey, a Representative in Congress from the State of Georgia, 

opening statement ................................................................................................ 20 

Hon. Tim Murphy, a Representative in Congress from the Commonwealth 

of Pennsylvania, opening statement ................................................................... 29 

Hon. Donna M. Christensen, a Representative in Congress from the Virgin 

Islands, opening statement ................................................................................. 30 

Hon. Marsha Blackburn, a Representative in Congress from the State of 

Tennessee, opening statement ............................................................................ 31 

Hon. Anna G. Eshoo, a Representative in Congress from the State of California, opening statement .................................................................................... 32 

Hon. John B. Shadegg, a Representative in Congress from the State of Arizona, opening statement ...................................................................................... 33 

Hon. John P. Sarbanes, a Representative in Congress from the State of 

Maryland, opening statement ............................................................................. 34 

Hon. Bruce L. Braley, a Representative in Congress from the State of Iowa, 

opening statement ................................................................................................ 35 

Hon. Mike Rogers, a Representative in Congress from the State of Michigan, 

prepared statement .............................................................................................. 43 

Hon. Janice D. Schakowsky, a Representative in Congress from the State 

of Illinois, opening statement .............................................................................. 44 

Hon. Gene Green, a Representative in Congress from the State of Texas, 

opening statement ................................................................................................ 44 

Hon. Zachary T. Space, a Representative in Congress from the State of 

Ohio, opening statement ...................................................................................... 45 

Hon. Tammy Baldwin, a Representative in Congress from the State of Wisconsin, opening statement ................................................................................... 46 

Hon. Mike Ross, a Representative in Congress from the State of Arkansas, 

opening statement ................................................................................................ 47 

Hon. Kathy Castor, a Representative in Congress from the State of Florida, 

opening statement ................................................................................................ 48 

Hon. Betty Sutton, a Representative in Congress from the State of Ohio, 

opening statement ................................................................................................ 49 

Hon. Eliot L. Engel, a Representative in Congress from the State of New 

York, opening statement ...................................................................................... 49 

Hon. Jane Harman, a Representative in Congress from the State of California, opening statement .................................................................................... 50 


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VI 

WITNESSES

Glenn Hackbarth, Chairman, Medicare Payment Advisory Commission 

(Medpac) ................................................................................................................ 51 

Prepared statement .......................................................................................... 54 

Douglas Elmendorf, Director, Congressional Budget Office ................................. 76 

Prepared statement .......................................................................................... 78 

Jack Ebeler, Vice Chair, Committee on Health Insurance Status and its 

Consequences, Institution of Medicine ............................................................... 120 

Prepared statement .......................................................................................... 122 

Alan Levine, Secretary, Louisiana Department of Health and Hospitals .......... 132 

Prepared statement .......................................................................................... 134 

M. Todd Williamson, M.D., President, Medical Association of Georgia .............. 139 

Prepared statement .......................................................................................... 141 

Atul Gawande, M.D., Associate Professor of Surgery, Harvard Medical School, 

Associate Professor, Department of Health Policy and Management, Harvard School of Public Health ............................................................................... 146 

Prepared statement .......................................................................................... 149 

SUBMITTED MATERIAL

Report brief entitled, ‘‘America’s Uninsured Crisis: Consequences for Health 

and Health Care,’’ February 2009, submitted by Ms. Schakowsky ................. 178 

Article entitled, ‘‘Getting There From Here,’’ by Atul Gawande, January 26, 

2009, submitted by Mr. Pallone .......................................................................... 184 


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MAKING HEALTH CARE WORK FOR AMERICAN FAMILIES: DESIGNING A HIGH PERFORMANCE HEALTH SYSTEM 

TUESDAY, MARCH 10, 2009 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON HEALTH, 

COMMITTEE ON ENERGY AND COMMERCE, 

Washington, DC. 

The subcommittee met, pursuant to call, at 10:07 a.m., in Room 

2123 of the Rayburn House Office Building, Hon. Frank Pallone, 

Jr. (chairman) presiding. 

Members present: Representatives Pallone, Dingell, Eshoo, 

Engel, Green, DeGette, Capps, Schakowsky, Baldwin, Ross, Matheson, Harman, Gonzalez, Barrow, Christensen, Castor, Sarbanes, 

Murphy of Connecticut, Space, Sutton, Braley, Waxman (ex officio), 

Deal, Whitfield, Shimkus, Shadegg, Blunt, Pitts, Rogers, Murphy of 

Pennsylvania, Burgess, Blackburn, Gingrey, Scalise and Barton (ex 

officio). 

Staff present: Phil Barnett, Staff Director; Karen Nelson, Deputy 

Staff Director for Health; Karen Lightfoot, Communications Director, David Rapallo, General Counsel; Steve Cha, Professional Staff 

Member; Amy Hall, Counsel; Purvee Kempf, Counsel; Tim 

Gronniger, Professional Staff Member; Jon Donenberg, Health Fellow; Bobby Clark, Senior Policy Advisor; Virgil Miller, Legislative 

Assistant; Jennifer Berenholz, Deputy Clerk; Caren Auchman, 

Communications Associate; Alli Corr, Special Assistant; Alvin 

Banks, Special Assistant; Caitlin Sanders, Staff Assistant; Brandon 

Clark, Minority Professional Staff; Marie Fishpaw, Minority Professional Staff; Clay Alspach, Counsel; and Chad Grant, Legislative 

Analyst. 

OPENING STATEMENT OF HON. FRANK PALLONE, JR. 

Mr. PALLONE. The meeting is called to order. 

I want to first thank every one for being here, particularly our 

panelists. The subcommittee today is holding the first in a series 

of hearings entitled ‘‘Making Health Care Work for American Families.’’ These hearings will help us better understand issues important to the health care reform debate such as quality, cost, coverage and prevention, and today we are focusing on how to design 

a high-performing health care system, which implies that our current system is underperforming. Indeed, as it is presently structured, the U.S. health care system is incapable of consistently providing access to quality and affordable care to every American, and 


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a large part of this failure can be attributed to our Nation’s growing uninsured population. According to a new report on the uninsured by the Institute of Medicine, who we will hear from later 

today, 47.5 million Americans, or an estimated 17.2 percent, of the 

non-elderly population went without health insurance in 2007. As 

we move forward with health care reform, we must understand 

that our failure to insure 47 million Americans has significant consequences for the health system as a whole. Our Nation’s growing 

uninsured crisis impacts us all regardless of our own insurance status. If we are to design a high-performing health care system, the 

foundation of such a system has to ensure access to quality and affordable coverage for every American. 

But the problems we face with our health care system go beyond 

coverage issues. Our health care system is woefully disorganized, 

so much so it is hard to characterize it as a system at all. There 

is virtually no coordination of care among providers. Patients are 

often handed off from provider to another. In the process, information is lost, inappropriate treatments or tests are ordered and medical errors occur. This is particularly a problem when it comes to 

patients who suffer from chronic conditions and are under the care 

of multiple providers at any given time. 

Researchers have suggested that part of the problem stems from 

the fragmented way in which we finance the delivery of health care 

services. We pay providers based on volume regardless of the quality of the care or service provided and regardless of the outcomes. 

Furthermore, there is little incentive for providers to follow up with 

a patient after they have provided treatment or to coordinate care 

among multiple providers or between different health care settings. 

What has this disorganization created? Well, the United States 

spends more on health care per person than any other industrialized nation and yet we do not enjoy better health outcomes by almost any measure, and within the United States there are vast disparities in how health care is delivered among the different communities. Clearly we are not getting the most value out of our 

health care dollars. The erratic and chaotic manner in which our 

health care system is organized can’t continue. 

We need to find a way to reorganize the health care delivery system in a way that improves quality and efficiency, thereby driving 

down costs, and there are a number of options on the table. For example, the President’s budget contains specific proposals that 

would change the way Medicare pays for and delivers health care 

including, one, reducing readmission rates at hospitals, two, providing performance-based payments for physicians that coordinate 

care for Medicare beneficiaries, and three, promoting coordinated 

care between acute and post-acute care settings through bundled 

payments. 

Now, I know we have MedPAC here today and I am happy that 

they are here because they have done work in many of these areas 

as well as other areas like the medical home model. As Chairman 

Hackbarth notes in his testimony, Medicare can be a leader in reforming the health care delivery system but changes to the way 

Medicare delivers and pays for health care will only take us so far. 

We need fundamental change to the entire health care system in 

order to achieve our goals. 


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Now, one of the best examples of change, I think, was in the economic recovery bill. As you know, there is a pot of money for health 

care information technology, and that is certainly an example of 

the systematic change we need. As more physicians are able to 

adopt and use HIT, we can facilitate greater communications 

among providers and thereby increase the coordination of care. By 

passing the Economic Recovery Act, we started the process of modernizing our health care system by investing $19 billion in HIT. 

But not everything has to be as complicated as moving our health 

care system into the electronic era. There are simple changes that 

will produce dramatic effects. For instance, I believe that by focusing more on primary care, coordinated care models and prevention 

we can achieve greater savings and efficiency within our health 

care system, and again, there are prevention and wellness measures and pots of money in the Economic Recovery Act as well. 

If we are successful in redesigning our health care system so that 

it performs better, there will be great rewards. Aside from the potential to improve health outcomes, a more efficient health care 

system that pays for quality services will help drive down costs for 

American families, businesses and the federal government, all of 

which are struggling with the escalating cost of health care. Indeed, health care reform is fiscal reform. Those of us who have 

been paying attention to the President over the last month or so, 

he constantly talks about health care reform being fiscal reform 

and the need to bring down costs if we are going to effectuate an 

economic recovery and expand coverage for all Americans. We can’t 

restore the financial health of the Nation and American families 

without tackling our broken health care system first, so let us get 

started. 

I just wanted to say that many of us on this committee attended 

the President’s health care summit last Thursday. I was tremendously impressed with the fact that almost everyone said that we 

needed health care reform now. They did not want to wait, and almost everyone said that the cost and bringing down cost was an 

important part of any change that we are going to effectuate. I 

used to be very proud of the fact that I could go around saying I 

was involved in health care policy and that we had the best health 

care system in the world. I don’t believe that anymore, and I think 

the time to act is now and so we are going to begin today. 

[The prepared statement of Mr. Pallone follows:] 


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Mr. PALLONE. I now recognize our ranking member, Mr. Deal, for 

an opening statement. 

OPENING STATEMENT OF HON. NATHAN DEAL 

Mr. DEAL. Thank you, Mr. Chairman. I want to thank you for 

holding the hearing today. I want to thank both panels of witnesses 

who are going to testify. In particular, I would like to go ahead and 

welcome in advance of his official introduction Dr. Todd 

Williamson, who is a neurologist from Georgia and is president of 

the Georgia Medical Association. He will be on panel II, and thank 

you for allowing him to testify. 

You know, when you talk about health care, you are talking 

about how to wrestle a porcupine, and the problem I think we have 

encountered is that we have known different ways to deal with this 

issue in small pieces over a long number of years and we have 

failed to come to grips with dealing with those pieces and now we 

are trying to deal with the system as a whole and talk about how 

bad the system is even though we have not taken advantage of the 

opportunities to make it better incrementally. I am always concerned about major reforms, especially of a segment of our economy 

and of societal service as large as health care. But we are now apparently on the brink for whatever reason, dereliction of duty in 

the past or whatever, of having to deal with major reform. 

Now, let me mention a couple of things that I hope in the context 

of this hearing, perhaps even more specifically in future hearings, 

I think are important to deal with. First of all, I have had a passion for the issue of price transparency. In the health care arena, 

it is one of the few areas that you just cannot know in advance of 

a service being rendered what the charge is going to be, and the 

reason is, and it indicates part of the problem we are wrestling 

with, is the reason you don’t know is because the question is always followed with a question. When you ask how much is it going 

to cost, the question becomes well, who is going to pay, and who 

pays depends on how much the cost really is, and that is something 

that you do not find in most other areas of service in our Nation. 

So price transparency is an issue and I am pleased that the chairman and the chairman of the subcommittee have both indicated a 

willingness to explore that issue in the future. 

Let me talk about a couple of other things. I think you are going 

to find that throughout all of this, the issue of medical malpractice 

reform has got to be one of those issues that we just simply cannot 

ignore. Now, it manifests itself not only in private physician and 

hospital practices but also the one that is probably the most acute 

that we tried to deal with several years ago and that is the emergency rooms with EMTALA that requires to treat everyone with no 

ability to divert without running the risk of being held accountable 

on a liability basis, you are just simply going to continue to see as 

in my local emergency room the primary reason for presentation is 

ear infections and you probably could duplicate that all across the 

country, non-emergencies being presented in the most costly environment, that is, an emergency room. But until we deal with the 

ability either to alter EMTALA, which I have no confidence that 

that will be done, or to provide some protections as we attempted 

to do several years ago for diversions to non-emergency settings in 


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an environment close to the emergency room so as to take that 

pressure off and the financial as otherwise the pressure off. I think 

we still have a problem there. 

Now, there are other issues and I am just going to deal with 

them in very broad, general terms. First of all, I think we have to 

remember that as we are dealing with an expansion of government 

power we never can forget about the fact that the only thing that 

keeps our country working in almost every facet of life is the issue 

of personal responsibility. When we have government assuming all 

of the responsibility, then it is very difficult to get people to do 

what they need to do for themselves, not only financially contributing to the cost of their health care but to doing the things that 

they need to do that the chairman has alluded to such as prevention, such as wellness programs, et cetera. A few other things that 

I would like to mention. I think that as we deal with the broader 

context of how to reform the delivery system, hopefully we will not 

forget the private sector. The private sector has been the primary 

mechanism for providing health insurance through the employerbased system. Obviously it has some problems. I would like to see 

us be able to take advantage of the one that has the most personal 

responsibility and that is a medical savings account where a person 

has the right to decide how they want to spend their money and 

they are directly involved but they can’t be the ones that are paying the highest price. If that is the case, then you can’t make that 

kind of system work. 

Thank you, Mr. Chairman. This is certainly the beginning, I 

hope, of a wide-ranging look at the issue of health care reform, and 

thank you for hosting this hearing today. I yield back. 

Mr. PALLONE. Thank you, Mr. Deal. 

I will recognize our chairman, Mr. Waxman, but let me just digress a minute here, if you will bear with me. There are a lot of 

people on this committee who have played major roles over the 

years in the health care debate, and if we do actually accomplish 

health care reform in a significant way this year, I think that we 

owe a lot to them, and Mr. Waxman, Mr. Dingell, others are 

amongst them, and I just wanted to say, you know, I remember 20 

years ago, because this is my 20th year, I came to this room and 

I watched Mr. Waxman and Mr. Dingell and others talk about 

health care issues and I was so impressed, that is why I wanted 

to be on this committee, and I know that is why a lot of the new 

members have started. We have a number of new members on our 

Health Subcommittee this year and they have expressed the same 

thing to me, that the main reason they came to this committee was 

because they wanted to deal with health care reform. But if and 

when we accomplish this goal this year, a lot of the credit is going 

to go to some of these people who have labored for years on this 

issue and brought out a lot of the problems and solutions that are 

necessary for health care reform and certainly our chairman is one 

of the leaders among them. So I just wanted you to know that, 

Henry. 

OPENING STATEMENT OF HON. HENRY A. WAXMAN 

Mr. WAXMAN. Thank you very much, Mr. Chairman, and when 

we accomplish the goal of enacting affordable health insurance for 


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all Americans, you will be there ranking among all the members 

who have played a significant role. This isn’t one or two, it is all 

of us working together, and I thank you for holding this hearing 

on the health reform issue. 

I think we have a unique opportunity. President Obama has 

called on Congress to work with him to enact comprehensive health 

reform this year, and to underscore this commitment, the President 

has proposed over $630 million in new revenues and program savings to help pay for reform. This marks a sea change from the last 

8 years, and as we will hear from our witnesses today, it comes 

none too soon. The status quo is simply no longer an option. The 

health of our people, the health of our economy depends on achieving affordable, high-quality, sustainable coverage for all Americans. 

The President has laid out the broad outlines of his preferred way 

to achieve this goal, and I think his approach is sensible. It builds 

on and protects the employer-based coverage that is now in place 

for most Americans. It lets those people who have coverage that 

works for them keep that coverage. It strengthens the safety net 

of our vital public programs, Medicare, Medicaid, CHIP. It gives 

people a place to go to get accessible, affordable, high-quality coverage through private plans or if they prefer through a public alternative. The choice is theirs. And it recognizes the critical importance of prevention and wellness services and the management of 

chronic diseases. I am determined to work to find the approach 

that will be broadly acceptable to the American people, to the providers that are critical to making it work, and to the Members of 

Congress who in the end have to pass it. 

This hearing begins the work of this committee in responding to 

the President’s request. As the testimony will make clear, the 

health care challenges we face are daunting and finding workable 

and enactable solutions will be extremely difficult. Mr. Chairman, 

you as chairman of the subcommittee will build on the work that 

I and Mr. Dingell and others have done over the years and you and 

the newer members of the committee will bring vitality to this effort that I think will finally get us to the goal that has been so elusive, and I look forward to working with you in this regard. 

[The prepared statement of Mr. Waxman follows:] 


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Mr. PALLONE. Thank you, Mr. Chairman. 

Next is our ranking member of the full committee, the gentleman 

from Texas, Mr. Barton. 

OPENING STATEMENT OF HON. JOE BARTON 

Mr. BARTON. Thank you, Mr. Chairman, and I want to commend 

you and full committee Chairman Waxman for the bipartisanship 

in arranging these series of hearings. This it not like the hearing 

upstairs on climate change where there is a clear ideological difference, and we have even gotten to the point of arguing over how 

many witnesses and which witness and this type of thing. In this 

subcommittee under your leadership and Mr. Waxman’s leadership, 

it has been a very cordial operating relationship, and I do sincerely 

want to commend you and Mr. Waxman for that. 

Health care is very important to everybody in America and I do 

slightly disagree with your opening statement, Mr. Chairman, 

when you said that you used to think the United States had the 

best health care system in the world but you don’t think we do anymore. I think we still do. I think our health care system is the best 

in the world. I think it is the best in terms of quality. I think it 

is the best in terms of inclusiveness. I think it is the best in terms 

of its research capability. I do think there are problems with it. I 

think that obviously Americans that don’t have health insurance 

are not able to take advantage of some of the wellness programs 

and the preventive medicine practices that are becoming more and 

more prevalent, but if somebody in America is sick today and needs 

to see a doctor or a health care practitioner, they are going to see 

them. Whether it is in an emergency room or a clinic or a private 

doctor’s office, they are going to see them, and the more serious the 

condition, the more fortunate that person is that they are in the 

United States of America. 

My sister-in-law has just undergone 6 weeks of chemotherapy 

treatment at M.D Anderson in Houston, Texas. She went home 

Sunday to recuperate. Her CAT scan and the tests that they ran 

show that the cancer that is ravaging her body is beginning to recede because of the treatment that she is receiving and hopefully 

will continue to receive after her body recuperates. I am darned 

glad that she lives in the United States of America and I am very 

glad that she lives close enough to M.D. Anderson in Houston, 

Texas, that she could take advantage of the treatment that is available there. People come from all over the world to that facility for 

that type of treatment. 

So what we are engaged here today, Mr. Chairman, is to begin 

a discussion of how we can improve our health care system, and 

I think we can do it. I do think our health care system is too expensive. I do think that there are lots of ways that we can improve 

it. I agree with you that the President’s health care meeting at the 

White House last week was very productive. I said there and I will 

say here, I agree with President Obama’s eight principles but the 

devil is in the details and that is what these hearings are going to 

accomplish. I think there is a difference between Republicans and 

Democrats. In general I think the Democrats, the majority party 

right now, want more government involvement in health care. I 

think Republicans in general would rather have the private sector 


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and the marketplace system with openness and transparency 

where doctors and patients make the decisions themselves and 

don’t have to depend on some sort of a government official or a government program but I do think the government needs to be involved and I think that somewhere in these hearings perhaps we 

can have a meeting of the minds. 

So Mr. Chairman, I am involved in the health care debate in this 

committee in a different way than I am the climate change issue. 

I think on health care we can improve the system and we can find 

a consensus and we can do something hopefully this year to make 

health care for Americans more affordable and more accessible and 

even higher quality than it is. I must say on climate change that 

I am hopeful we can convince enough people that is not something 

that we need to do, given the state of our economy. In any event, 

this is a very good hearing, you have got good witnesses, and I look 

forward to a serious discussion. 

Mr. PALLONE. Thank you. I want to thank our ranking member. 

Next is our chairman emeritus, and I cannot have enough accolades about his involvement over the years in health care reform 

and Medicare, and again, I look to him as one of the giants on this 

issue, Mr. Dingell. 

OPENING STATEMENT OF HON. JOHN D. DINGELL 

Mr. DINGELL. Mr. Chairman, I thank you for those kind words 

and I thank you for holding this hearing, which is a very important 

one, about designing a high-performance health care system. We 

have a splendid health care system in this country which doesn’t 

work. It doesn’t work because we have 47 million Americans who 

lack care and we have a lot who have substantial deficiencies in 

the amount of care available to them. We have a worse situation 

in that the problem is fixable but it has not been able to be addressed for years because of intense lobbying by the health insurance lobby and others. I remember we lost it the last time by one 

vote here and we lost it in good part because of dawdling by the 

Administration, which made a fine speech on the subject on the 

floor of the House in February and didn’t present the bill to the 

House until sometime in November by which time we had lost in 

this committee and a business roundtable by one vote. 

The health care system in this country is wonderful but it doesn’t 

work, and one of the problems about it is, that we are seeing large 

numbers of Americans die prematurely or suffer from serious 

health problems back of the lack of availability of care from this 

extraordinarily advanced system which we are blessed with. Health 

care costs are far higher in the United States than in any other advanced nation. These costs have been rising significantly faster 

than the overall economy or personal incomes for more than 40 

years, and if left unchecked will shortly create irreparable harm to 

the Nation’s health and economic system. The two curves which are 

important to us in this country, the GDP and the cost of health 

care or the percentage of health care, will cross about 2070. That 

should give us a warning. We have heard the data. Health costs 

are consuming a growing share of federal and State government 

budgets. The United States spends $2.2 trillion and more on health 

care each year, about $8,000 per person. This represents 16 percent 


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of the total economy and is expected to reach almost 20 percent, 

more than $4 trillion, by the year 2017. 

Health insurance premiums have doubled over the past 8 years, 

rising 3.7 times faster than wages in the last 8 years, and American businesses are losing business share in world competition because of the increasing cost of health care for their employees. For 

example, a General Motors car today contains about $1,600 in 

health care costs per car. General Motors is in fact not an automobile producer but a health care provider that makes automobiles 

to pay for the cost of it, and the same is true for many other U.S. 

corporations. American automakers spend more now on health care 

than steel. They only spend $750 on steel. And Starbucks spends 

more on health care than they do on coffee beans. No one can dispute the fact that we spend a great deal of money on health care. 

America enjoys the most outstanding cadre of health care professionals on the planet, the most advanced technologies, the most innovative health care institutions and the finest medical research, 

which is a model for the whole world. However, in spite of this 

great investment and the amazing talent of our health workforce, 

our health system continues to operate at low performance and 

more spending has not and does not mean better quality service 

and care available to the American people. 

Studies have shown the United States underperforms relative to 

other countries on most dimensions of health care performance. It 

has lower life expectancy and higher infant mortality, amongst 

other things, but there is plenty other things wrong if you read the 

statistics. A number of other studies have shown that many surgeries are performed without being clinically appropriate. Patients 

typically receive about half the recommended treatment and services. About 100,000 Americans die from medical errors at hospitals 

every year. Half of these cases are avoidable. One-quarter of medical spending goes to administrative and overhead costs, something 

which we must address if we are to save ourselves from a crazy 

system that is failing. 

Across the Nation, health care costs vary substantially, however, 

and higher cost areas surprisingly do not generate better health 

outcomes. Our goal of providing health care security for those 

struggling to keep the coverage they currently have while expanding coverage to the 47 million Americans currently without coverage is clearly necessary. However, we must all do what we can 

to first make our current system of health care more efficient and 

effective including care provided by public programs like Medicare 

and Medicaid, the costs of which without reform will become 

unsustainable in the near future. The current payment structure of 

these systems does not encourage coordinated care and encourage 

unnecessary treatment which in turn leads to higher costs and significant inefficiencies. 

I look forward to the testimony of our witnesses today and of continuing our discussion and action as we seek to reform our health 

care system. Mr. Chairman, this has long been a passion of mine, 

as you have noted, and also of my great father, who introduced the 

first legislation on this in 1943. I look forward to working with you 

and with Chairman Waxman and the others of my colleagues on 

both sides of the aisle to solve this terrifying problem. 


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Thank you, Mr. Chairman. 

Mr. PALLONE. Thank you, Chairman Dingell. 

Next we have the gentleman from Kentucky, Mr. Whitfield. 

OPENING STATEMENT OF HON. ED WHITFIELD 

Mr. WHITFIELD. Chairman Pallone, thank you very much for this 

hearing on making health care work for American families. 

We all hear a lot about health care reform and we know that 

there are basically two reasons that we are moving down this avenue. One, health care costs continue to escalate, health insurance 

premiums go up and then access for all of the American people, 

and I noticed that President Obama in his budget has set aside 

$634 billion for health care reform, and although his plan is quite 

sketchy, the one thing that he has talked about specifically is a federal board to set provider rates, design coverage and ultimately 

control prices in the health care market. 

I think from the philosophical point of view, health care reform 

gets down to a debate on both sides of the aisle. When we talk 

about these federal health boards, most of us, I think, think of 

Canada and Great Britain. They both have federal boards, and the 

key issue, as least from my understanding, is that in both of those 

countries while the primary health care delivery system is very 

good, they basically ration health care, and that is something that 

we really have never done in America so that if you do not need 

a certain criteria then you are not going to be eligible for a particular kind of health care procedure. That is something I think we 

have to move very carefully with as we discuss health care reform. 

A second thing, it looks like to me that—I philosophically believe 

that a federal board is not the way to go because when you talk 

about an effective health care system, I like to look at Part D of 

the prescription drug benefit under Medicare because today we 

know that the premium for that plan is less than what was originally anticipated. The cost of that plan is less than what was originally anticipated. And the reason for that in my view is that in 

every jurisdiction you had private companies coming together competing with each other offering plans and more important than the 

cost is that the senior citizens seem to be satisfied with their Part 

D prescription drug benefit. I know that not all of them are but 

generally speaking they are satisfied, and I think that is a model 

that as we talk about health care reform that we definitely need 

to explore giving patients more of an opportunity to decide for 

themselves rather than a federal board making all these decisions. 

I yield back the balance of my time. 

Mr. PALLONE. Thank you. 

Next for an opening statement is the gentlewoman from Colorado, and thank you again for your work on stem cells. 

OPENING STATEMENT OF HON. DIANA DEGETTE 

Ms. DEGETTE. Thank you very much, Mr. Chairman. It was a 

banner day yesterday. 

I want to—I was just telling Congresswoman Capps about my 

sister and I think I am going to talk about that because it is why 

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districts for many, many years and she is a stay-at-home mom. She 

home schools her kids. And they are middle-class Americans. Their 

insurance premiums working for the school district are $1,100 per 

month with copays and exclusions and everything else you can 

imagine. And about a year ago my nephew, as teenage boys will, 

was skateboarding and broke his arm at the skateboard park and 

his friend’s parents couldn’t find my sister to ask what to do. It 

was a compound fracture with the bone sticking out. So they took 

him over to the local emergency room and then her insurance company refused to pay the bill because they said they didn’t get preapproval, and that is what kind of health care system we are living 

with in this country and that is why we need to have comprehensive national health care policy and that is why, Mr. Chairman, I 

am so grateful to you and also Mr. Dingell and also the President 

for pushing this through. We have got to do something about a system where we are spending over $2 trillion a year but our health 

outcomes are abysmal. 

I just want to reference really quickly two studies that we have 

seen recently. In 2007, the Commonwealth Fund did an international health care survey where they compared the American 

health care payment and service delivery system to six other countries and found huge disparities. For example, the United States 

spends $6,697 per capita on health care services, which is more 

than double the per capital expenditures of all the other countries. 

Canada was the next highest, spending only $3,326 per capita. 

Well, you could say we have the best health outcomes in the world, 

which is what many people assume. However, this is simply not 

true if you look at the rest of the data. For example, the most recent data from the Centers for Disease Control ranks the United 

States 29th worldwide in terms of infant mortality and it also 

ranks us 31st worldwide in terms of life expectancy and 24th in 

terms of women’s health. The United States ranks 37th overall in 

the world for health outcomes, just below the Dominican Republic 

and Costa Rica and just above Slovenia. So if anybody thinks that 

we don’t need health care reform in this country, they not only 

need to look at these statistics but the statistics that average 

American families, middle-class families are dealing with every 

day. 

Thank you very much, Mr. Chairman. 

Mr. PALLONE. Thank you. 

Next is the gentleman from Texas, Dr. Burgess. 

OPENING STATEMENT OF HON. MICHAEL C. BURGESS 

Mr. BURGESS. Thank you, Mr. Chairman. I appreciate you holding this hearing as well, you know, so much of what we discuss. 

I have an opening statement that I will submit for the record. It 

is very thoughtful and well written. But let me just make a few 

comments because of what I have heard. 

We spend so much time talking about cost and coverage, and I 

do implore us to remember that health care is first and foremost 

and always about taking care of people. I also urge us not to let 

the perfect become the enemy of the good. Now, we have heard the 

President talk on Thursday of last week at the White House at the 

forum that the only thing that was not acceptable is the status quo. 


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Well, true, there are things we can make better and that we should 

strive to make better but I promise you, having spent 6 years now 

in this body, I know we can make things worse and we must be 

careful that we don’t do that. I certainly don’t want to diminish the 

contributions of any of the men and women who work in the American health care system because I know firsthand what they do day 

in and day out, a tremendous job. 

Now, just a word about 1993 and 1994. I was not here then. It 

is often talked about in health care policy circles as the failure to 

improve health care in this country but I would just simply submit, 

the health care world in the United States has not been static since 

1993 and 1994. Indeed, some of the things that came out of the 

failure of the Clinton health care plan, certainly medical savings 

account were one of the things that came out of that. The State 

Children’s Health Insurance Program was one of the things that 

came out of the failure of the Clintons’ plan, and I would argue 

that these are good things. On the issue of medical savings accounts, fast-forward to the present time with what we have seen 

in the improvements with health savings accounts. Just a personal 

story that I will share with you. In 1994 I had an adult child who 

finished college and moved back home and chose not to go to work. 

I don’t recommend that if anyone is considering that for themselves. Don’t try this at home. But I could not get an insurance policy for any price. I was willing to write a large check for that insurance policy. Fast-forward to today, and last Friday I went on the 

Internet and looked under ehealthinsurance.com, and for what 

would be a comparable situation, a 25-year-old female, and I used 

the Washington, D.C., area code, actually you could purchase an 

HMO plan through Kaiser here in D.C., $98 a month with a $20 

copay but not a high-deductible plan. In fact, there was no deductible. So there are options out there for people who find themselves 

without insurance that were not available in 1993 and 1994. So 

please let us not fool ourselves that the world has been static since 

then. 

Certainly there are examples of how we can make things worse. 

Look what we did with the health information technology in the 

stimulus bill, and I tried to offer an amendment so that we could 

use these funds in June of this year but instead it is June of 2011, 

and we have doctors’ practices all over the country that have literally listed the pen off the check and are going to wait an additional 2 years before they write that out. 

We must look at the things that are actually working today. Affordability does remain key in the equation but let us look at the 

things that work and not just focus on trying to expand the things 

that don’t. Certainly employer-sponsored insurance, the price is increasing over 7 percent a year. Medicare and Medicaid we know increase at 7.4 percent a year. Consumer-directed health plans increase at 2.2 percent a year. Shouldn’t we take a lesson from 

Safeway and Walmart and what they have been able to do with forward-leaning plans that they have implemented before we just simply provide a program essentially equivalent to Medicaid for all? 

And if we are going to do Medicaid for all, shouldn’t we also do that 

for Members of Congress? I introduced an amendment like that on 

the SCHIP bill and I got no votes in the Rules Committee for that. 


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Dr. Zerhouni has come to this committee and talked about a time 

when medical care is going to become a great deal more personalized. He said because of the human genome we are going to be a 

great deal more predictive. We can as a consequence be a great 

deal more preventive, and it is going to require us to be more 

participatory. That is the direction in which we need to be moving, 

not in a direction that is going to harm that forward progress that 

we have already made. 

Mr. Chairman, you have been generous with your time and I will 

yield back. 

[The prepared statement of Mr. Burgess follows:] 


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Mr. PALLONE. Thank you. 

Next for an opening statement is Ms. Capps. Let me mention 

that once again she is the vice chair of this subcommittee and deservedly so since she has done so much work on health care, particularly on health care professionals. 

OPENING STATEMENT OF HON. LOIS CAPPS 

Ms. CAPPS. Thank you, Mr. Chairman. I am so pleased we are 

beginning our hearings in this Congress on health reform. It is 

clearly, in my opinion, the number one issue this subcommittee 

needs to address, and as the President has articulated in his health 

summit and so many other places, our efforts at overhauling our 

Nation’s broken health system are really integral to our work in 

improving the economy. 

I am eager to hear from today’s witnesses about how we arrived 

at this point in the first place. Why does the United States—and 

we have heard a lot of documentation in the opening statements 

so far—with all of our innovation and our spending, why do we 

measure up so purely against other industrialized nations? Why do 

we have such high infant and maternal mortality rates? Why do we 

have a lower life expectancy? Why do we pay so much more but receive so much less? Our next steps, of course, are how to address 

these factors that plague our health care system. I am counting on 

a certain absolute, that in any solution we offer or pursue, we 

should bring and will bring prevention and wellness back into the 

fold as a core ideal. 

During the Bush Administration particularly, there was very little attention given to the importance of prevention in health care, 

and because of that our Nation’s public health infrastructure has 

suffered. We need a system that incentivizes primary and preventive care, not only that simply responds to chronic diseases and 

emergencies, often in the emergency room. We need a system that 

invests in our health workforce so that enough nurses, physicians 

and a myriad of other professionals are available to treat people 

and to work with them, not only that divests from medical and 

nursing education or cuts reimbursements. I am glad to see this 

issue is on the agenda for future hearings. 

In closing, I just want to underscore the urgency with which we 

must address the current crisis. It is very real today in the communities we represent and communities across this Nation in rural 

areas and in the inner cities. I very much look forward to hearing 

what our witnesses are saying today, and I yield back. 

Mr. PALLONE. Thank you, Ms. Capps. 

And next for an opening statement, another one of our health 

care professionals which we have quite a few on this subcommittee, 

the gentleman from Georgia, Mr. Gingrey. 

OPENING STATEMENT OF HON. PHIL GINGREY 

Mr. GINGREY. Mr. Chairman, I thank you and I want to thank 

of course overall committee Chairman Waxman and former Chairman Dingell, our ranking member, Joe Barton, and the ranking 

member on this health subcommittee, my colleague from Georgia, 

Congressman Nathan Deal. I also want to thank Dr. Todd 

Williamson from the great State of Georgia, who is chairman of the 


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Medical Association of Georgia, a neurologist, a practicing physician from Lawrenceville, Georgia. 

Like my colleague from Texas, Mr. Chairman, I have a statement 

too that is fantastically written and I want to just submit that for 

the record, but I actually didn’t write it, my staff wrote it, and I 

want to give them all due credit but I would like to ask unanimous 

consent to submit my written statement for the record, and I will 

just make a few off-the-cuff comments. 

I agree with the President, I agree with the Democratic majority 

and many of my Republican colleagues that we need to do something on health care in this country which I believe is the best in 

the world. At the same thing, I think that we have the best of 

times and the worst of times, and that is to say that while what 

we are doing with medical care in this country I believe is the best 

in the world, the reason the statistics are so bad as Ms. DeGette 

and others have mentioned is the fact that we have 47 million people who don’t have access to affordable coverage and we have too 

many underinsured, and as a result of that they put off getting 

needed care, going to the emergency room, going to their doctor. 

The availability is there but they don’t have the money so they 

wait until things are so bad that it is really costly and that is why 

it is the best of times and the worst of times. 

I think we need to look very closely though at what we can do 

to make sure that we improve our system. There is so much room 

for improvement. My thoughts have always been that if there is a 

real emergency to get something done by August 1 of this year, 

even when we our economy is suffering tremendously and we are 

trying to get that back on track, then maybe the money that we 

are spending, the $19 billion on having a fully integrated comprehensive electronic medical records system is a direction in which 

we need to go as well as a liability reform, which we have needed 

since California did it way back in the late 1970s. So there are 

many things, Mr. Chairman, that we can do. 

As I close my remarks, I just want to say that we don’t want to 

destroy the marketplace and we don’t want to destroy the doctorpatient relationship, which is so important if we are going to continue to get the brightest and the best young people to go into this 

wonderful profession, and I will yield back at this time, Mr. Chairman. 

[The prepared statement of Mr. Gingrey follows:] 


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Mr. PALLONE. Thank you. 

I next recognize for an opening statement the gentleman from 

Texas, Mr. Gonzalez. 

Mr. GONZALEZ. Waive opening. 

Mr. PALLONE. Thank you. 

And next, the gentleman from Pennsylvania, Mr. Murphy. 

OPENING STATEMENT OF HON. TIM MURPHY 

Mr. MURPHY of Pennsylvania. Thank you, Mr. Chairman, and 

thank you for doing another hearing on what we need to do with 

health care reform. 

I want to bring attention an aspect here which I still hope that 

someone in this federal government will deal with and that has to 

do with waste and inefficiency and its additional costs in this whole 

system here, and I do believe we have a great system of health 

care. I also believe that unfortunately sadly enough we waste a lot 

of money in this whole system and that leads to a lot of deaths. 

Let me just raise a few issues here, and here I also want to credit 

Dr. Gawande. Thank you for the great article in the New Yorker. 

I hope I am here later when you testify, but you point out a couple 

of things we need to pay attention to and that is that there is a 

lot of money and a great many lives we can save by practicing 

health care and along these lines making sure government supports the doctor-patient relationship and doesn’t get in the way. 

We look at statistics such as 90,000 to 100,000 deaths each year 

from infection and costs $50 billion to $52 billion. Programs like 

the Keystone Initiative have been able to save a lot of lives and 

save a lot of money, which helps make health care more affordable. 

Using these numbers, so far this year there has been 378,082 cases 

up to this moment of this hearing, 18,713 deaths and a cost of 

$9,452,000,000. These are unacceptable, and as long as we continue 

to talk about quality, affordable, accessible health care, we have 

got to deal with these issues of true quality. The list goes on and 

on. The underuse of appropriate medication such as generic 

antihypertensives could safe us another $3 billion a year if that 

was corrected. The underuse of medications for pediatric asthma 

could save us another $2.5 billion. One of the things that the government did in its infinite wisdom has said that the aerosol for 

asthma should no longer contain air that affects the ozone, so that 

was removed, new substances were put in that made the asthma 

medications brand name and raised the prices and I don’t know 

what that has done in terms of increasing admissions to hospitals 

since those studies have been reported. 

The overuse of medications such as antibiotics adds $8 billion to 

the cost. You also have to deal with untreated complications that 

come from mental illness that is associated with chronic illness and 

yet what is happening in situations like this, we need programs 

that do real case and disease management to look at what kind of 

complications and problems are coming from underuse of medications, overuse of medications, referrals that are not needed, treatments that are needed, but instead we are talking about cutting 

programs like Medicare Advantage without looking at what Medicare Advantage does. 


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To the extent that it works on prevention, disease management 

and wellness programs, I hope this committee reviews what can be 

done in assisting those things, but this idea of saying that what we 

ought to do is just look at universal health care without looking at 

what we are doing for health care has got to stop. Along those 

lines, Mr. Chairman, a report came out in the last couple weeks 

from the New England Health Care Institute called Waste and Inefficiency in the U.S. Health Care System, clinical care conference 

of analysis in support of systemwide improvements. This report 

says that in our $2.3 trillion health care system, we have between 

$600 and $800 billion of waste that is hurting people, that if we 

removed this it doesn’t hurt health care, it actually improves 

health care, and that certainly helps meet our goal of affordable, 

accessible, quality health care. 

Mr. Chairman, I would like to submit this to you and hope this 

is something that members of the committee would have access to 

and perhaps include this in the record. It is a review of a lot of 

studies and the kind of things we should be looking at. 

I end with this. I have known a number of people who have been 

hurt and harmed in hospitals, and we don’t usually do this but I 

am just curious. We have a good-sized audience out here. How 

many people here know of someone who went into a hospital or 

clinic and ended up getting an infection that made it worse? Raise 

your hand. I submit for the record, Mr. Chairman, there are a lot 

of lives we can be saving out here if we took efforts on this. 

I yield back. 

Mr. PALLONE. I thought that we were going to have like we did 

the other day with Mr. Buyer and you were going to get up with 

the chart and I was going to feel like I was in a classroom again. 

But thank you. 

As I mentioned, we have quite a few health professionals. Mr. 

Murphy is a psychologist and now we have our colleague from the 

Virgin Islands who is also a physician, Ms. Christensen. 

OPENING STATEMENT OF HON. DONNA M. CHRISTENSEN 

Ms. CHRISTENSEN. Thank you, Mr. Chairman, and thank you, 

Chairman Pallone and Ranking Member Deal, for bringing the subcommittee into the health care reform process early and planning 

a series of hearings that we are going to have so that we can fulfill 

our responsibility on this vital issue, and although I am not practicing medicine today, I am always going to be a physician so I 

come to this from the same perspective of Dr. Williamson and others that I have heard speak to this today. Physicians though too 

often blamed are not the cause of the problem but restoring the integrity of the physician-patient relationship can be a part of the solution and I hope it will be. I put the blame, largely it rests with 

the reimbursement system and the failure of our country to provide 

universal coverage, but fixing this country’s system of non-health 

care delivery and making it work for families will require far more 

than providing coverage. It must include addressing and ending 

our long history of unequal access to health care for racial and 

ethic minorities, for women, for families in rural areas, for gay, lesbian and transgender communities and anyone perceived as difVerDate Mar 15 2010 14:24 Mar 02, 2012 Jkt 067099 PO 00000 Frm 00036 Fmt 6633 Sfmt 6633 E:\HR\OC\A099.XXX A099

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ferent or who speaks differently or who is far enough away to be 

ignored such as those of us who live in the territories. 

I had a chance to look at some of the testimony and I just want 

to make some comments. Mr. Levine, I support increasing and expanding Medicaid but I do share some of your concerns about Medicaid because increased access has not always resulted in better 

health outcomes but I think that this is due in part to assumptions 

that discriminate against women, against people of color and the 

poor, and that is why aggressively moving to increase providers of 

diverse backgrounds at all levels of our health care system has to 

be a part of designing a high-performance health care system. 

Mr. Hackbarth, the commission has a heavy responsibility because so many important policy decisions rely on your recommendations and I hope that you will be able to assure me that 

the territories will receive equity in those recommendations. 

Dr. Gawande, I have really been impressed with not only your 

testimony but what I have heard and read from you in the past. 

I am concerned, though, that you don’t reference the issue of disproportionate burden of disease borne by people of color and rural 

Americans in your testimony or address the elimination of health 

disparities in your recommendations. 

Director Elmendorf, you are part of our Congressional family and 

I look forward to working with you, especially because I think we 

have a little work to do to convince you on the savings that really 

will be realized from universal coverage and prevention, so I look 

forward to that. 

And lastly, Mr. Ebeler, I thank you for all of the work that the 

IOM has done on the issue of the uninsured. The institute has 

clearly shown that this is not just a problem of those who are unfortunate as not to have coverage but it is a problem that increases 

the cost and undermines care for everyone. All of the 

vulnerabilities you list speak directly to health disparities which 

must be an essential focus as we work on health care reform if it 

is to be successful. 

So I look forward to all of the oral testimony and the dialog that 

will follow and I thank all of you for being here this morning. 

Mr. PALLONE. Thank you. 

Next is the gentlewoman from Tennessee, Ms. Blackburn. 

OPENING STATEMENT OF HON. MARSHA BLACKBURN 

Ms. BLACKBURN. Thank you, Mr. Chairman. I thank you for the 

hearing, and I along with my colleagues am looking forward to a 

discussion of how we reform the health care system and what route 

we are going to travel here. There are some who would like to see 

it move toward a government-run entity, and coming from Tennessee, where we have had the TennCare experience and many 

would argue that the TennCare delivery system is probably the 

most broken health care delivery system in the Nation and that it 

is evidence or should be evidence to us that a government-run system will encourage cost overruns, mismanagement, inadequate 

service, rationing or elimination or diminishment of care in certain 

areas of the State and also it has become evident from the 

TennCare experience that the estimated savings or the projected 


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savings, the expected savings were not evident because of increased 

usage and the other problems that I previously mentioned. 

Rather than encouraging expansion of inefficient and ineffective 

government bureaucracy for a health care delivery system, I feel 

that we should be putting our time and energy focusing on how to 

foster competition, how we would actually reduce cost and provide 

choices for patients and consumers. I do believe in consumer-driven 

health care, which empowers patients to make the best choices for 

their individual needs and to do that with a physician and also as 

they are choosing an insurance product that best suits them, and 

the medical savings accounts were mentioned earlier by Dr. Burgess and the impact that they have had. Transformation to consumer-driven health care and putting our focus there would create 

consumer demand for information on prices, on quality. It would 

also shift us toward greater transparency, which other of my colleagues have mentioned is a need that we have for the health care 

delivery system. Our constituents are telling us they would like to 

have access to information about quality, about outcomes, testing 

procedures so that they can be an informed consumer. Mr. Deal 

had mentioned the need for medical liability reform. I associate 

myself with his remarks there. 

I welcome our witnesses today. We look forward to a robust debate and for continuing the hearings, Mr. Chairman, that you will 

continue to have on this issue, and I yield back. 

Mr. PALLONE. Thank you, Ms. Blackburn. 

Next is the gentlewoman from California, Ms. Eshoo. 

OPENING STATEMENT OF HON. ANNA G. ESHOO 

Ms. ESHOO. Thank you, Mr. Chairman, for holding this important hearing. We know it is important just looking at the first 

panel, the director of CBO and the chairman of MedPAC, and of 

course, to be followed by the other witnesses. 

I think that this is really the easy part is having the hearings, 

but the hearings are really the foundation for what we will come 

to do and that is to reform our Nation’s health care system. I have 

been on this subcommittee for—this is my, I believe, 15th year, and 

what I have seen over the years are stops and starts. We have gone 

body part by body part to try and improve different parts of the 

system, have been successful in doing some of them. We have, I 

think, the world’s finest doctors. I think we have the most innovative medical centers. We have progressed in leaps and bounds in 

bi technology and the life science technologies but our means of delivering care to patients is really inefficient and it is costly and it 

is often really counterproductive to maintaining good health, and 

this is now not only an issue for every American, and the American 

people are ahead of us on this, this is front and center an economic 

issue. The costs of our health care system in the country are just 

absolutely killing us. We have increased it at a rate that has doubled that of inflation and that really should take everyone’s breath 

away. 

So obviously we need to reform, but I am very mindful that this 

isn’t called the health care industry for nothing. There are tens or 

maybe hundreds of thousands of players and stakeholders so we 

have a ways to go, but as the President said, in good times we 


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didn’t do it, in recession we didn’t do it, after wars we didn’t do it; 

now is the time to do it. I don’t think we can afford to keep going 

this way, and I think the Congress will work its will. I think that 

there are going to be a lot of very good ideas placed on the table. 

Some will be somewhat startling because they will take down some 

of the old systems and bring about new ones. I am open to all of 

those ideas, and I think that it is important for all of us to do that, 

and I don’t think this is going to be done just by one party. We are 

going to really have to work together to get this done for the American people. I look forward to it, and maybe this will be—I have 

confidence, I am not going to say ‘‘maybe’’ that in my 15th year on 

the committee that we will get this done, so I welcome all the experts. We need the best ideas from the brightest and the best in 

our country, and I think that America is up for this. In fact, I think 

it is a demand of the American people that we do so, and when we 

do, I think that the rest of the world will watch and learn from us 

because what America does is always a great lesson for the rest of 

the world. 

So thank you, Mr. Chairman, for the kickoff on this and I look 

forward to the rest of it. 

Mr. PALLONE. Thank you. 

The gentleman from Arizona, Mr. Shadegg. 

OPENING STATEMENT OF HON. JOHN B. SHADEGG 

Mr. SHADEGG. Thank you, Mr. Chairman, and I want to thank 

you for holding this hearing. 

I want to jump off on the title, ‘‘Making Health Care Work for 

American Families’’ is the first part of the title and I think that 

is essential. I think this Congress can no longer tolerate the problems with the current system and therefore it must be reformed. 

The second half of the title is ‘‘Designing a High-Performance 

Health Care System,’’ and I believe we can do that but I believe 

we have to do that by beginning with an analysis of what is wrong 

with the current system. As the gentlelady just mentioned, one of 

the things that is wrong with the current system is that costs have 

spun out of control. It is not exactly difficult to figure out why costs 

have spun out of control. We do not have a system in America that 

rewards the efficient delivery of health care. We have a system 

that rewards the inefficient system of health care. What we have 

is a third-party control system where your employer picks out your 

health care plan and your health care plan picks out your doctor. 

I suggested to a colleague this morning, that would make about as 

much sense as if he said to me, OK, for the rest of my life you, 

John, will pick out my homes, pick out my cars, pick out my suits 

and pick out my shoes and pick out everything else, pick out the 

food I eat and I will give those decisions to you. I suggested if he 

gave those decisions to me and I tried my best to make him happy, 

I wouldn’t make him happy. We have created a system in health 

care in America where we have divorced the consumer of the 

health good from the person paying or selecting that good. Right 

now that system is a third-party control system where the employers pick the health care plan for their employees. Employees don’t 

pick their own health care plan and we have biased the system to 

say the only economic system that works is employer care, and oh, 


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by the way, if your employer doesn’t provide you care, we are going 

to encourage you to buy care but we are going to punish you by 

saying that under the tax code you have to pay a third more for 

that health care than your employer does if he buys it. So we have 

rewarded a system that gives the decision to somebody other than 

you to select your health care and then we wonder why Americans 

aren’t fit, why they don’t eat right, why they don’t control their 

blood pressure, why they don’t control their cholesterol. I think if 

we look at the flaws in the current system that it is easy to understand where we should go. We should not go to another third-party 

control. It seems to me it makes no sense to take third-party control by employers and plans and give that third-party control to the 

government. I got a flash. If I said to the government, you buy my 

cars in the future, you buy my house in the future, you buy my 

suits and my shirts and you pick out the food I eat, the government 

wouldn’t do any better job at making those decisions for me than 

my employer is, so what is the option? The option is in fact universal health care. This country has decided that nobody should go 

without health care, that we can give every single American health 

care and at the same time preserve choice. How do you do that? 

Well, you let the people that have the financial means to buy their 

own health care and you give them a tax credit to do that and you 

say go buy your own health care, but for every other American you 

say to them, we are going to give you a stipend, we are going to 

give you a chunk of money and you go make choices about your 

own health care, you buy a plan that meets you. Now, what about 

some person who doesn’t respond and doesn’t take up that plan? 

We put them in a pool and we say to them, if you need health care 

and you show up at a doctor’s office, we are going to give you the 

health care. That way we preserve choice, we preserve consumers’ 

ability to make their own individual choices about health care. 

That will both bring down cost and bring up quality, and it is a 

system we can implement and will cover every single American. I 

hope when we begin to design a system for health care in America, 

we look at the President’s eight points. I think every single of those 

fits with what I have just described and I believe we can do it and 

we can do it for every single American, and I thank the gentleman 

and yield back the time I don’t have. 

Mr. PALLONE. Thank you. 

The gentleman from Maryland, Mr. Sarbanes. 

OPENING STATEMENT OF HON. JOHN P. SARBANES 

Mr. SARBANES. Thank you very much, Mr. Chairman, and I want 

to congratulate you on now launching this discussion on health 

care reform, much needed, and I am looking forward to the various 

panels that we see. If and when, as Congresswoman Schakowsky 

said, we achieve health care reform, it will only be partly because 

of the arrival of some of the newer members in recent years. It will 

be mostly because of the incredible work that you and others, 

Chairman Waxman, Chairman Dingell and other distinguished 

members of this committee have performed for so many years. It 

is a great committee with a great challenge before it. 

The broken health care system that we are all alluding to is one 

that really has two sets of victims. I had the privilege of working 


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for almost 18 years as a lawyer with hospitals and physicians and 

clinics and nurses and other providers, and I say ‘‘privilege’’ because I have never witnessed the level of professionalism that I 

have when it comes to people that work so hard in our health care 

industry every day on the provider say, and they are one of the victims. They are one of the sets of victims here in this broken health 

care system because they are carrying it on their back right now. 

The other set of victims of course are patients and the consumers 

of health care, and, you know, most Americans don’t really have 

any idea what the perfect design or even close to good design of our 

health care system will be. But for millions of Americans who are 

uninsured and underinsured, what they do know is that they get 

up every morning and they can’t breathe. They are burdened by a 

corrosive anxiety that eats away at their self-dignity and eats away 

at the stability of their families, and that is why we have got to 

get this done and I look forward to the hearings that are coming 

forward and I look forward to getting health care reform done in 

a timely fashion. 

I yield back. Thank you. 

Mr. PALLONE. Thank you. 

The gentleman from Pennsylvania, Mr. Pitts. 

Mr. PITTS. I will waive. 

Mr. PALLONE. The gentleman waives. The gentleman from Ohio, 

Mr. Braley. 

Mr. BRALEY. I was confused by the reference to Ohio but I will 

be glad to—— 

Mr. PALLONE. Did I say Ohio? I meant Iowa. I apologize. 

OPENING STATEMENT OF HON. BRUCE L. BRALEY 

Mr. BRALEY. Thank you, Mr. Chairman, and thank you for holding this important hearing. I am looking forward like many of the 

other members of the panel to helping the subcommittee address 

health care reform over the coming months, but as we look at ways 

to design a high-performance health care system, I want to draw 

everyone’s attention to two issues that directly impact the overall 

performance of this system: one, geographic inequity in Medicare 

reimbursement, and two, the considerable variation in health care 

quality across this country. 

The current system that we have in place has built-in inequities 

that result in a lack of access to care for residents in many rural 

states like Iowa. An example of this can be found in the Geographic 

Practice Cost Indices, or GPCIs. These antiquated figures ensure 

that some parts of the country receive drastically lower Medicare 

reimbursement rates than other parts and have led to a tremendous shortage of health care providers in certain parts of the country, and in an attempt to achieve some leveling of geographic inequity in physician reimbursements, the Medicare Modernization 

Act of 2003 established a temporary floor of 1.0 for the work GPCI, 

which helps level the playing field for physicians in Iowa and other 

rural States. Congress has had to extend this floor repeatedly yet 

the floor on the work GPCI still does not go far enough. Despite 

the well-documented efficiencies of Iowa’s health care system, Iowa 

health care providers still lose millions of dollars because they 

choose to care for Medicare patients. Last Congress I introduced 


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the Medicare Equity and Accessibility Act, which addresses the 

GPCI problems. I will continue fighting for a permanent work 

GPCI floor as well as a practice expense GPCI floor, but frankly, 

this is only a Band-Aid for a broader problem. While Iowa’s access 

to care ranks low, the State’s quality of care consistently ranks 

right at the top. Iowa physicians, hospitals and health care personnel are unrivaled and are a primary reason why Iowa consistently ranks in the top 10 healthiest States. Unfortunately, the way 

our current health reimbursement system is set up, it is not based 

on the quality of care provided but instead incentivizes quantity of 

care, which results in considerable variation in quality around the 

country. 

I hope this committee takes a serious look at proposals to 

incentivize quality and efficiency such as value-based purchasing 

models. This fundamental shift in our reimbursement system 

would lead to a tremendous improvement in the quality of American health care. Instead of a business model that encourages physicians and hospitals to get patients in and out as quickly as possible, we would have a system that encourages them to make sure 

the patient is healthy. That is what really matters. By including 

efficiency measure and value-based payment programs, we can 

keep costs down for our patients in our federal payment programs. 

By aligning incentives across hospitals, programs and physicians, 

we could achieve greater interoperability, and by encouraging care 

coordination such as through the medical home concept, we can 

further deliver better and more efficient health care. 

So I want to thank you, Mr. Chairman, for tackling the important issue of health care reform and I want to thank all the witnesses for spending time with us today. 

[The prepared statement of Mr. Braley follows:] 


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Mr. PALLONE. I thank the gentleman from Iowa. 

Next is the gentleman from Michigan, Mr. Rogers. 

Mr. ROGERS. Mr. Chairman, I will submit my statement for the 

record in lieu of questioning time. 

[The prepared statement of Mr. Rogers follows:] 


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Mr. PALLONE. Thank you. 

Next is the gentlewoman from Illinois, Ms. Schakowsky. 

OPENING STATEMENT OF HON. JANICE D. SCHAKOWSKY 

Ms. SCHAKOWSKY. Thank you, Mr. Chairman. In some ways I 

think I have been waiting for this hearing all of my adult life. As 

my goal as a public official, I will die a happy woman if it says on 

my tombstone or urn or whatever they do with me, that she helped 

bring health care to all Americans, and I think this is the first of 

a process that I hope moves rather speedily. The President has targeted actually signing the bill after the August recess so we have 

a lot of work to do. 

I think it is a total embarrassment that the United States of 

America, the wealthiest country in the world, does not provide 

health care to all of its people like every other country in the industrialized world. It is a moral issue, it is an economic issue, and 

one that may be controversial here in this body but actually outside 

of this room and in the country most Americans are ready for 

change, they are ready for big change and they see an important 

role for government in that change. Anyone who thinks that we 

have good access to health care doesn’t live in the real world. In 

my State alone, 1.8 million people have no health care but that is 

just the beginning, the tip of the iceberg. The number of people 

who are uninsured, over half of Americans say that they have delayed health care or foregone health care because they can’t afford 

it. As people lose their jobs, 650 people every day in Illinois right 

now are losing their jobs, 14,000 people are losing their health insurance every single day, this is a crisis that cannot wait to be 

solved. 

So I want to make one other point. There has been a lot said 

about having a public health insurance option, the choice which 73 

percent of Americans say they would rather have a choice of a public option or a private option. If their private plan works for them, 

fine. But I would say it is the private health insurance industry 

that has some explaining to do. Medicare is one of the—people 

come into my office and say I can’t wait until I am 65 years old, 

I am sick right now and I am looking forward to my 65th birthday 

so that I can actually get the health care that I need, and persons 

with disabilities and seniors have been lifted out of poverty because 

of the successful social insurance program along with Social Security. The Commonwealth Fund did a study and found that designing a health care system that covered everyone including a public 

health insurance option over 11 years would take $3 trillion to do 

that. In 2008, private market health insurance premiums rose by 

5 percent to nearly $12,700 for a family of four, $4,700 for individual coverage, and so private insurance is increasingly out of the 

reach of Americans, and so what the President has proposed is to 

have this option of the public health insurance program or private. 

I think that ought to be a centerpiece of any plan that we adopt, 

and I yield back. Thank you. 

Mr. PALLONE. The gentleman from Texas, Mr. Green. 


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OPENING STATEMENT OF HON. GENE GREEN 

Mr. GREEN. Thank you, Mr. Chairman, and I appreciate the 

time. Following my colleague from Illinois, I know your current 

Senator was concerned about what was going to be on his tombstone. I want to, like my colleague from Illinois though, having 

moved to the Energy and Commerce Committee in 1997, this is one 

of the most important hearings I think we can have because it is 

a start on what we are going to do in this Congress to change how 

health care is provided to our country. 

I come from the State of Texas, where we have the highest percentage of uninsured in the country and have the highest number 

of uninsured in the country. There are a lot of reasons for that, and 

I am glad the President also in his budget released a couple weeks 

ago is planning to take action on health care. I also like the principles he laid out for us last Thursday instead of sending down a 

large piece of legislation to try to dot all the i’s and cross the t’s, 

that is Congress’s job is to draft legislation. Give us the goals and 

we will do everything we can to get to it. 

Again, this is our first hearing. We currently have 47 million 

people uninsured in our country, and overall health care is consuming an ever-increasing amount of our resources. Health care expenditures are now 16 percent of the GDP with the rate going to 

maybe 2017. Unfortunately, we are paying more for the cost of 

health care but seem to be receiving less and fewer people have access to quality and affordable health care. The current economic 

times make it even harder for individuals that are uninsured simply because their companies can’t afford health premiums so their 

employees can’t afford to pay their percentage of the premium. 

We recently passed the American Reinvestment and Recovery 

Act, which I strongly supported and extended COBRA subsidies for 

these individuals that lost their jobs, which is wonderful for those 

who had insurance before they lost their jobs. Unfortunately, in a 

blue-collar district like I represent, most individuals never had access to health care in the first place because they are in low-wage 

jobs. Too many individuals in our country are unemployed or uninsured and all too often end up in the emergency room with very 

costly medical issues that could have been prevented with access 

to primary and preventative care. We can’t continue to shore up a 

health care system with short-term fixes instead of long-term solutions. We also cannot continue down the path with costly health 

care and more uninsured. 

I am glad we are taking our first step in addressing the health 

care crisis, and I welcome our witnesses today to be the leadoff witnesses. I have a saying in Houston. We have one of the greatest 

medical centers in the world, the Texas Medical Center. On a clear 

day in Houston, we can see the medical center but most folks in 

my area can’t get to it because they lack health care unless it is 

through our public hospital system. 

And with that, Mr. Chairman, I yield back my time. 

Mr. PALLONE. Thank you. 

The gentleman from Ohio, Mr. Space. 


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OPENING STATEMENT OF HON. ZACHARY T. SPACE 

Mr. SPACE. Thank you, Mr. Chairman. I look forward to working 

with you as we begin this comprehensive debate on how we deliver 

health care in America. 

I think as we move forward, many of my colleagues have raised 

very important and legitimate issues. The health IT program, coordinated care, preventative measures, rewarding positive lifestyles, punishing negative lifestyles, but one element that I am 

hoping we won’t forget about is the importance of cure, curing disease. There has not been a significant breakthrough on a cure in 

this country since polio was cured, and cures are within our grasp 

and not only do we have a moral obligation to alleviate or mitigate 

human suffering, cures end up being a very economically effective 

way of handling the health care crisis. In 2007 this Nation spent 

$178 billion on one disease, diabetes. That is more money than we 

spent in Iraq. With a small percentage of those monies that were 

spent in that one year and that are spent every year at an increasing rate, we could cure the disease within 5 to 10 years either naturally or artificially, providing every type 1 diabetic with a closedloop artificial pancreas, mitigating and eliminating the expenditure 

of trillions of dollars over the next 30 years. That is one disease. 

Imagine what we could do if we invested in a cure for cancer, for 

heart disease, for liver failure, even for things like autism. We are, 

Mr. Chairman, I think, remiss in failing to address cures with an 

aggressive posture, and I am hopeful that that will be a part of this 

debate as we move forward. In the end, I think we all share a common goal and that is providing affordable access to quality health 

care. I don’t care how we get there but we have to get there. 

I yield back. 

Mr. PALLONE. Thank you. 

The gentlewoman from Wisconsin, Ms. Baldwin. 

OPENING STATEMENT OF HON. TAMMY BALDWIN 

Ms. BALDWIN. Thank you, Mr. Chairman. 

Addressing our health care crisis is the issue that brought me to 

public service in the first place so I do want to truly thank you, 

Mr. Chairman, for holding this hearing and getting us started on 

this enormous task that is before us, and I want to thank all of our 

witnesses in advance because your expertise is going to be invaluable to us in the process. 

In a report released last week on the series of health care communities’ discussions held around the country, the Department of 

Health and Human Services found that more than anything else, 

Americans want a system that is fair. No matter what your circumstance or background, the American health care system should 

perform well for you too. To that end, I will address briefly the 

three major issues that we all know so well: access, quality and 

cost. 

As we will hear today, being shut out of the system is deadly. 

Uninsured adults are 25 percent more likely to die prematurely 

than insured adults, and if they have a serious chronic condition, 

the situation is worse, and every day more and more people are 

falling into the ranks of the uninsured. Erosion of employer-based 


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coverage and the challenges of the individual market demand our 

immediate attention. 

A high-performance health care system by definition must also 

deliver quality care, and I strongly believe that providers can use 

performance measurements to drive quality improvements. A leader in this respect is a hospital in my own district, the University 

of Wisconsin Hospital on Clinics. They have led the way in several 

nationwide efforts to benchmark performance. They consistently 

rank among the top five academic medical centers in the country 

according to five key metrics: mortality, effectiveness of care, safety, equity and patient centeredness. These efforts at public reporting and the sharing of best practices demand excellence from our 

health care system. 

Lastly, I want to quickly address the issue of cost. We are operating under an assumption today that at first glance seems implausible, that we can pay less for our health care and get more from 

it, and yet the data is clear. Our current system is wildly inefficient. Some of the highest cost regions produce poor patient outcomes. Some of our lower cost regions produce some of the highest 

outcomes. 

I would like to personally thank our witnesses on our first panel 

today for your invaluable assistance in helping us to solve this 

problem. MedPAC has recommended significant restructuring of 

the payment system, suggesting that we pay for care that spans 

across provider groups and types and time in order to hold providers accountable. For me, health reform is an endeavor that is 

both intellectual and emotional. As a Member of Congress, I know 

that we must control the unsustainable spending in our health care 

system. As a representative of the men, women and children in the 

Second District of Wisconsin, I know we must fix our broken system so it can reach and serve everyone. 

Again, thank you to our witnesses today for being here and, Mr. 

Chairman, for beginning our work in earnest. 

Mr. PALLONE. Thank you. 

The gentleman from Arkansas, Mr. Ross. 

OPENING STATEMENT OF HON. MIKE ROSS 

Mr. ROSS. Thank you, Mr. Chairman, and like Dr. Burgess and 

some of the others, I had a prepared statement that I will submit 

for the record but most of what I said in that has already been 

said, but I would like to speak for a moment from experience and 

from a rural perspective, if I may. 

I served for 10 years on the State health committee in Arkansas 

in the State Senate and that is where I learned that any real reform had to happen at a national level and it inspired me to run 

for Congress and to seek this committee and seek this subcommittee. It is the rural perspective I took to the health care summit at the White House last week in our breakout session. My experience as a pharmacy owner, someone married to a pharmacist 

and being from a small town, I can tell you I have seen too many 

people walk through the doors of that pharmacy that could not afford a $30, $40 or $50 medication, and living in a small town, I 

would learn when they were in the hospital a week later running 

up a much higher bill, if you will. 


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We have got to make health care affordable and accessible and 

available for everyone. My hometown is much like my district. I 

represent 150 towns, and half my constituents don’t live in any of 

them. They live down this gravel road or that gravel road, and it 

is important that those folks have access to health care too. My 

hometown is a good representation of my district. It is 3,600 people 

when I am home and two traffic lights. Just a few years ago we 

had six doctors, five pharmacies and a hospital. Today we have got 

three doctors, two are over the age of 60, two pharmacies and no 

hospital. The nearest hospital is in Hope, Arkansas, 16 miles away, 

and now it is struggling to keep its doors open. If it closes, we will 

be 40 miles from the nearest hospital. 

The leadership of the hospital in Hot Springs, Arkansas, the 

largest town in my district, wanted to meet with me recently and 

they wanted to tell me how Hot Springs cannot attract doctors. It 

has got a high retirement-age population, a lot of sick folks, it is 

on a lake, and it is in a national park. By Arkansas standards, it 

is a prime place to live, and if we can’t attract doctors there, what 

about these other 149 towns that are much smaller and much more 

rural? So I would ask that rural health care be an important part 

of any reform, and I can’t help but think, Mr. Chairman, back to 

the days of Oren Harris. His portrait is right here. He comes from 

my district. He chaired this committee. He began chairing this 

committee 5 years before I was born and he was trying to reform 

health care then, and that was 53 years ago, and I hope that we 

can get it done and get it done right this time. 

With that, Mr. Chairman, I pledge to work with you. Please keep 

rural health care an important part of any reform debate. Thank 

you, and I yield back the balance of my time. 

Mr. PALLONE. Thank you. 

The gentlewoman from Florida, Ms. Castor. 

OPENING STATEMENT OF HON. KATHY CASTOR 

Ms. CASTOR. Thank you, Chairman Pallone, for this first in a series of hearings to reform health care in America and make it more 

affordable for businesses and families. Together with President 

Obama, we have already hit the ground running to improve the 

health care of Americans with the enactment of the landmark children’s health bill, the SCHIP. The American Recovery and Reinvestment Act also provides much-needed assistance in COBRA payments for folks who have lost their jobs and aid to States for Medicaid. We are not going to let our families fall through the safety 

net. 

Now our larger challenge is to confront health care reform and 

I believe we can tackle it with commitment and determination to 

develop quality, affordable health care options for Americans. In 

my home State of Florida, where we have the second highest rate 

of uninsured, families and businesses have been clamoring for access to affordable health care well in advance of the economic 

downturn and the rise in unemployment and home foreclosures. In 

Florida, it is estimated that more than six working-age Floridians 

die each day due to a lack of health insurance. The inability to afford basic health care poses a major threat not only to the wellbeing of families but to our economy as a whole. Nearly half of 


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home foreclosures in 2006 were caused at least in part by financial 

issues stemming from a medical problem. As President Obama 

noted just last week, the cost of health care now causes a bankruptcy in America every 30 seconds. 

Now, there will be many outstanding ideas and I look forward to 

hearing from our witnesses. I believe particular focus and attention 

must be paid to the primary care system and preventative medicine, also to the health care professions, especially this very arbitrary cap on physician resident slots that penalize States that have 

high growth and high population, nursing shortages, Medicare reform. With everyone’s help and my colleagues’ expertise, I am confident that we will reduce health care costs for families and businesses and hopefully our national budget. The time to act is now. 

I yield back my time. 

Mr. PALLONE. Thank you. 

The gentlewoman from Ohio, Ms. Sutton. 

OPENING STATEMENT OF HON. BETTY SUTTON 

Ms. SUTTON. Thank you, Mr. Chairman, for holding the first of 

many important hearings on health care reform. 

Health care reform is a critical component to our economic recovery and our Nation’s competitiveness. As health care costs rise, neither employers nor employees can afford them, and if one loses 

their job, the situation is even more daunting. 

I would like to begin today talking about a family in my district, 

the Lee family. Mr. Lee has always had health insurance through 

his job but when his company laid him off last year, he and his 

family lost coverage. Mrs. Lee tried to get coverage through her job 

but she didn’t qualify because she was a part-time employee. Now, 

having a family with medical problems ranging from diabetes to 

degenerative joint disease and being without health insurance has 

created a very, very difficult problem for the Lees, and unfortunately, Mr. Chairman, this is a situation that is familiar to far too 

many Americans. The Lee family is certainly not alone. In Ohio, 

there are over 1.2 million people without health insurance, and Mr. 

Chairman, this causes an amazing outcome. According to Families 

USA, two Ohioans die each day because they lack health care coverage. I want to say that again. In Ohio, two Ohioans die each day 

because they lack health care coverage. 

Many Americans have to forego health care in order to put food 

on the table or keep a roof over their head. That is unacceptable. 

Our health care system must be reformed, and as a member of this 

subcommittee, I look forward to working with my colleagues and 

the American people to make it happen finally, and I look forward 

to hearing from our panelists today about this important issue and 

their insight into how we might go about making this become a reality. 

I thank you, and I yield back the balance of my time. 

Mr. PALLONE. Thank you. 

The gentleman from New York, Mr. Engel. 

OPENING STATEMENT OF HON. ELIOT L. ENGEL 

Mr. ENGEL. Well, thank you for holding, Mr. Chairman, this 

hearing today on making health care work for American families. 


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It is clear to so many of us that our health care system is broken. 

For years we have been talking about the 47 million and growing 

uninsured Americans and 25 million underinsured Americans, and 

it is apparent that some people have come to accept this tragedy 

as a fact of life, that some people are fortunate to have health coverage and some people, millions and millions of people aren’t, so 

too bad for them. In truth, it has often been said, everybody does 

better when everybody does better. We can do better. The status 

quo is no longer acceptable. 

In the first 2 months of the Obama Administration, we made significant strides toward improving our current health care system. 

Our reauthorization of the State Children’s Health Insurance Program provided health care coverage for 11 million children, preserving coverage for the roughly 7 million children already covered 

by SCHIP and extending coverage to 4.1 million uninsured children 

who are eligible for but not enrolled in SCHIP and Medicaid. We 

made a solid investment in modernizing our health care system in 

the stimulus by making key investments in health information 

technology. Wide-scale adoption and implementation of health information technology will be a fundamental part of any true health 

reform bill. The $19 billion designed for HIT will eventually enable 

our health care system to save billions of dollars, reduce medical 

errors and improve quality of care. Many of the measures included 

in the stimulus ranging from extra Medicaid funding for States to 

subsidizing COBRA insurance for unemployed workers will help to 

stop the bleeding during this terrible recession. 

Long term, though our health care delivery system requires a 

comprehensive implementation of sustainable reforms in order to 

succeed. The President is off to the right start with this commitment to health reform. His $630 billion down payment towards 

health reform coupled with the Administration’s eight principles 

will guide Congress in our joint efforts to revamp our health care 

system. With the United States paying more than $2 trillion a year 

for health care, we should ensure that we are getting what we are 

paying for, a world-class health care system for our Nation’s hardworking citizens, and yet it is clear that our payment systems are 

flawed. As MedPAC has noted in its testimony today, Medicare’s 

fee-for-service payment system rewards more complex care without 

regard to the value of this care. Bizarrely, for those with multiple 

ailments, coordination among providers is not encouraged financially by Medicare where clearly coordinated care would result in 

improved health conditions. 

Mr. Chairman, thank you again for holding this hearing. You 

have a really been a champion in pushing these reforms and I commend you for it. I look forward to the work ahead of us this spring 

and summer on reforming and designing a quality health care system, and I yield back the balance of my time. 

Mr. PALLONE. Thank you. 

The gentlewoman from California, Ms. Harman. 

OPENING STATEMENT OF HON. JANE HARMAN 

Ms. HARMAN. Thank you, Mr. Chairman. I am very pleased to be 

a new member on this subcommittee though not new to these 

issues. 


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I am the sister and daughter of physicians and I recall very well 

a half century ago how my father handled his general practice of 

medicine. He was the neighborhood physician. He made house calls 

most evenings. He served three generations of patients in a small 

group practice in Culver City, California, during the time he practiced medicine. I was very proud of what he did and now I look 

back on it and it seems an Ozzie and Harriet alternate reality. 

We can’t go back there, Mr. Chairman, and we surely have to 

grapple with the problems described by so many of our colleagues 

this morning, but I must commend you for the panels in this opening hearing today and I especially want to mention Doug Elmendorf and congratulate him in his new role as director of CBO. He 

has been a valuable asset to many of us as we have tried to grapple 

with budget issues, and what I think he brings to this is obviously 

an understanding of the cost piece of health care but also great 

compassion for the need to extend coverage to as many as possible 

in our country. 

So I commend you for this hearing and I commend our witnesses 

and count me in on all plots to make a huge down payment on solving this problem this year. I yield back. 

Mr. PALLONE. Thank you. 

I believe that concludes our opening statements and so we will 

now turn to our witnesses. First of all, let me welcome the first 

panel and the two gentlemen and let me introduce you. On my left 

is Glenn Hackbarth, who is the chairman of the Medicare Payment 

Advisory Commission, or MedPAC, and to his right is Douglas Elmendorf, who is director of the Congressional Budget Office. We 

are really looking forward to your testimony. I have kind of looked 

at some of the written testimony and you deal very effectively with 

new ways of doing things and the whole cost efficiencies, which are 

so important to us. 

We will start with Mr. Hackbarth. 

STATEMENTS OF GLENN HACKBARTH, CHAIRMAN, MEDICARE 

PAYMENT ADVISORY COMMISSION (MEDPAC); AND DOUGLAS 

ELMENDORF, DIRECTOR, CONGRESSIONAL BUDGET OFFICE 

STATEMENT OF GLENN HACKBARTH 

Mr. HACKBARTH. Thank you, Mr. Chairman and Ranking Member Deal. I appreciate the opportunity. Many of my comments in 

my opening statement will echo themes that have already been 

heard. 

Let me begin with a brief definition of health reform, at least in 

my mind. Health reform equals expanded coverage plus lower cost 

growth while maintaining or even improving quality of care. 

MedPAC’s focus, as you well know, is on the latter set of issues, 

in particular using payment policy to improve the efficiency and 

the effectiveness of the care provided to Medicare beneficiaries. In 

some quarters, this has been labeled moving the system toward 

high performance. Let me start by emphasizing that the U.S. 

health care system has tremendous resources in the professionals 

who serve in that system. I have been fortunate in my career to 

work with talented physicians and advanced practice nurses and 

psychologists and other professionals and I know what talent and 


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commitment they bring to their work. The problem we have is that 

Medicare’s payment systems and those of most private insurers reward more care, more-complex care without regard to the value of 

that care to the patients. But equally important is that Medicare’s 

payment systems enable what we have referred to as siloed practice whereby individual clinicians and organizations act independently of one another, even while caring for the same patient. Too 

often efforts at coordination and integration of care are sporadic, 

and where they occur their testimony to the commitment of individual professionals. They are not inherent in the system itself. 

The result is the care is all too frequently fragmented, duplicative 

and gap filled, and on occasion even conflicting as is the case sometimes with adverse drug interactions. Care of this sort isn’t just expensive, it is dangerous, and it is dangerous in particular for patients with multiple complex illnesses, which is a common problem, 

as you well know, in the Medicare population. 

In the last several years MedPAC has recommended a series of 

changes in Medicare payment policy that we believe would help 

move health care to a higher level of performance, and let me just 

quickly mention some of those recommendations. First is increased 

payment for primary care services and perhaps a different method 

of paying for primary care services as is embodied in the idea of 

a medical home. Research demonstrates conclusively, in my view, 

that a strong primary care system is the foundation of a high-performance health system. In the United States at this point, our primary care system is weak and rapidly deteriorating. The second 

recommendation has been that we begin providing confidential episode-based feedback to physicians about their practice so that they 

can better understand how their practice compares to their peers, 

both in their local area and in their specialty. Third, we have recommended authorization of what we refer to as gain sharing between physicians and hospitals. The goal here it to encourage collaboration between physicians and hospitals both in reducing cost 

and in improving quality of care. Next we have recommended reduced payments for hospitals experiencing unusually high levels of 

potentially avoidable readmissions. About 18 percent of all Medicare admissions are followed by a readmission within 30 days at 

a cost of about $15 billion per year. A sixth recommendation is a 

pilot of what we have referred to as bundling whereby payment for 

a hospital and physician service provided during an admission 

would be combined into a single payment and perhaps combined 

with payment for post-acute services as well. Next, we have proposed reforms in the Medicare Advantage program so that participating private plans are engaged in promoting high performance in 

health care instead of offering plans that mimic traditional Medicare except at a higher cost. And last, we have urged public investment in comparative effectiveness research, which the Congress 

has already acted on in the Economic Recovery Act. 

This week at our MedPAC meeting we will also be considering 

the potential for what we have referred to as accountable care organizations, organizations that assume clinical and financial responsibility for a defined population of patients. We will be trying 

to figure out methods to pay such organizations that could reward 

efficiency and reduce cost for the Medicare program. 


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Let me close with two quick cautions about the challenge ahead 

of us. First of all, changing payment systems and especially trying 

to do so quickly requires a lot of resources and I am very concerned, the Commission is very concerned about the level of resources that CMS has to pursue this agenda. A second caution is 

that while striving for payment reform, as important as it is, as 

vital as it is, we must also apply steady, indeed perhaps increasing 

pressure on unit prices under Medicare’s existing payment systems. 

Thank you very much, Mr. Chairman, and I look forward to the 

discussion. 

[The prepared statement of Mr. Hackbarth follows:] 


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Mr. PALLONE. Thank you, Chairman Hackbarth. 

Director Elmendorf. 

STATEMENT OF DOUGLAS ELMENDORF 

Mr. ELMENDORF. Thank you, Chairman Pallone, Ranking Member Deal, members of the subcommittee. I appreciate the invitation 

to talk with you today about the challenges and opportunities that 

Congress faces in trying to make the health care system more efficient so that it can continue to improve Americans’ health but at 

lower cost. 

Policymakers could seek to improve efficiency by changing the 

way that public programs pay for health care services or by encouraging such changes in private health care plans. In both sectors, 

these changes could in turn exert a strong influence on the delivery 

of care. To assist the Congress in its deliberations on this topic, 

CBO released last December a report titled Budget Options for 

Health Care. Drawing on this report, my testimony makes three 

key points. 

First, a substantial share of spending on health care contributes 

little, if anything, to the overall health of the Nation. Second, reducing unnecessary spending without also affecting services that do 

improve health is challenging but many analysts will concur with 

the importance of providing stronger incentives to control costs and 

generating and disseminating more information about the effectiveness of care. Third, despite broad support among analysts for moving in these directions, there is substantial uncertainty about the 

effects of many specific policies and many policies might not yield 

substantial budget savings or reductions in national health spending within a 10-year window. 

Let me discuss these points briefly in turn. First, as you know, 

spending on health care has grown much faster than the overall 

economy for decades. This imposes an increasing burden on the 

federal government for which the principal driver of the 

unsustainable budget outlook is growth in per capita health costs, 

not aging. It also imposes an increasing burden on the private sector where the growth of health spending has contributed to slower 

growth in wages because workers must give up other forms of compensation to offset the rising costs of health insurance. When confronted with these costs, ever more firms and families drop their 

health insurance coverage. Concerns about the level and growth of 

health care spending might be less prominent if that spending was 

producing commensurately good and improving health. Unfortunately, substantial evidence, detailed in my written testimony, suggests that more spending does not always mean better care. 

The second main point is that many analysts would concur with 

the importance of providing stronger incentives to control costs and 

of generating and disseminating more information about the effectiveness of care. Many analysts would agree that payment systems 

should move away from a fee-for-service design and should instead 

provide stronger incentives to reward value. These incentives could 

be created in a variety of ways including fixed payments per patient, bonuses based on performance or penalties for substandard 

care. However, the precise effects of these policies are highly uncertain. Many analysts would also agree that the current tax exclusion 


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for employment-based health insurance which exempts most payments for such insurance from both income and payroll taxes 

dampens incentives for cost control because it is open ended. Those 

incentives could be changed by restructuring the tax exclusion in 

ways that would encourage workers to join plans with higher costsharing requirements and tighter management of benefits. Moreover, many analysts would agree that more information is needed 

about which treatments work best for which patients and about 

what quality of care different doctors, hospitals and other providers 

deliver. But absent stronger incentives to improve value and efficiency, effective information alone will generally be limited. 

Third, many steps that analysts would recommend might not 

yield substantial budget savings or reductions in national health 

spending within a 10-year window. There are a number of reasons 

for this, again, further details in my written testimony, but briefly, 

in some cases, savings materialize slowly because initiative is 

phased in. In other cases initiatives that generate savings such as 

prevention efforts or disease management have costs to implement. 

In some cases the federal budget does not capture the reductions 

in national health spending. In other cases, new structures for 

health care delivery improve health but do not provide incentives 

to reduce costs. And in yet other cases, limited evidence about the 

effects on efficiency is available. 

Let me conclude with two general observations. One is that given 

the central role of medical technology and the growth of health 

spending, slowing spending over the long term will probably require decreasing the pace of adopting new treatments and procedures or limiting the breadth of their application. Such changes 

need not involve explicit rationing but could occur as a result of 

market mechanisms or policy changes that affect the incentives to 

develop and adopt more costly treatments. 

The other observation concerns the urgency of health care reform. In contrast with the situation in the economy and financial 

markets, our system for delivering and paying for health care is 

not fundamentally different this year from last year. However, very 

few analysts think that the relatively gradual pace of change in 

health care is an argument for deferring reform. On the contrary, 

our current health system evolved over years and decades, and the 

changes needed to substantially improve efficiency will take years 

and decades to come fully to fruition. Nearly all analysts think 

those changes should begin soon. 

Thank you. 

[The prepared statement of Mr. Elmendorf follows:] 


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Mr. PALLONE. Thank you. 

So we are going to have questions now from the members, 5 minutes, in some cases more, I think, if the members passed on their 

opening. 

I wanted to start with Mr. Elmendorf because of the issue of primary care. Many experts such as Dartmouth researchers maintain 

that a lack of access to high-quality primary care contributes to inefficient care and geographic variations around the Nation and 

they say that if we invest more in primary care to improve quality 

and lower cost, you know, that that would be one of the main efficiencies that we could achieve. And I have to say that when you 

listened to President Obama at the summit last Thursday, he 

stressed, you know, this whole idea of health inflation and that 

somehow we have to curb the growth in cost. I think Karen Ignani 

from the health insurance trade group or whatever actually at my 

breakout session talked about, you know, curbing the growth of the 

inflation, if you will, and I have to give you a person experience. 

A couple of my staff people in my office in New Jersey have Cadillac health insurance, Blue Cross, whatever, and have had a problem getting a primary care doctor and on two occasions because 

they couldn’t get a primary care doctor ended up going to an emergency room for something that really wasn’t necessary to go to the 

emergency room. We keep talking about people who have no insurance that go to the emergency room. Well, what about a Congressional staff person who has insurance and can’t get a primary care 

doctor and goes to an emergency room? 

So my question is, with regard to primary care and particularly 

within the Medicare program, I mean, you mentioned this patientcentered medical home as an option but talk a little bit more about 

what you see in terms of enhancing primary care and how important that is to the overall system in terms of cost efficiencies and 

trying to make a better quality system. 

Mr. ELMENDORF. Mr. Chairman, many analysts have worried for 

some time that our system does not reward primary care physicians the same way that it rewards physicians in specialties, and 

if you look across the country and compare medical centers that 

seem to be delivering very efficient medical care in the sense of low 

cost but medical care of high quality, those medical centers tend to 

have higher relative numbers of primary care physicians to specialists, and I think that sort of evidences the basis of some of 

MedPAC’s recommendations in this area. 

The options that CBO looks at, we looked at a number of them, 

regarding ways to empower or reward primary care physicians, one 

is a proposal for establishing medical homes in which all Medicare 

recipients are assigned to primary care physicians and those physicians then oversee the way in which those patients receive care 

from other providers. The crucial issue for—and I think many analysts would agree that sort of focus on primary care physicians 

would lead to greater coordination of care, fewer duplicative tests 

and better health. Whether it leads to cost reductions depends in 

our judgment crucially on the incentives that those primary care 

physicians receive. So one approach to this is to provide those incentives to primary care physicians by rewarding them for reductions in spending while maintaining high quality and the effectiveVerDate Mar 15 2010 14:24 Mar 02, 2012 Jkt 067099 PO 00000 Frm 00100 Fmt 6633 Sfmt 6633 E:\HR\OC\A099.XXX A099

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ness of those sorts of provisions, so we look at some other provisions. There are other ways in addition to medical homes in which 

primary care physicians can be empowered to make decisions and 

to coordinate care but again it is crucial if one wants to reduce federal outlays that they have incentives focused on not just recommending a whole range of additional services that aren’t necessary. 

Mr. PALLONE. OK. I want to get a second question in but I appreciate that. You know, I want to ask Mr. Hackbarth this. Mr. Elmendorf talked about how you might limit the pace of new procedures not through rationing but through some other means. You 

know, the President, I commend him. He has been so honest about 

everything in terms of budgeting. You know, he came up with this 

$600 billion reserve fund. He said look, that is only going to pay 

for half the cost of covering everyone. Within that he said, you 

know, half of it can be done through cost efficiencies, the other half 

you are going to need a new source of funding. All these things are 

very controversial but he doesn’t hesitate to bring them up, to his 

credit. But, you know, when you talk about these cost efficiencies 

which MedPAC is really the key, you know, as you know, you came 

out with your report I guess a week or so ago and, I mean, every 

time it comes out the phone rings endlessly in my office because 

they see you as like their ultimate bad guys that want to cut back 

on all the providers and on the imaging and everything else. 

So the question is, how realistic is this? Can we really pay for 

all these things through cost efficiencies? I mean, are we really 

going to be able to pay for a quarter of the cost of expanded coverage through these cost efficiencies? Can we pay for even more 

than that? Because the President’s reserve is only half. Can you 

move towards what Mr. Elmendorf said and actually limit new procedures without having an uproar and without—I mean, I am not 

asking you to—I know you are not a politician but I just wanted 

you to comment on that, if you could. It is endlessly obviously 

but—— 

Mr. HACKBARTH. Yes. Well, let me break it into two parts, first 

addressing the issue of new technology, how it is introduced to the 

system, how it diffuses. In terms of slowing the rate of increase and 

long-term health care costs, that is going to be a principal focus of 

our efforts, and that is why we strongly supported the idea of a 

large-scale public investment in comparative effectiveness information. We don’t think that that necessarily means that you have to 

have a single entity making rationing decisions. Indeed, what we 

have advocated is creating more information so that individual 

physicians and their patients, private health plans, public health 

plans and others can more thoroughly evaluate the choices that 

need to be made, and we have advocated that the choices continue 

to be made on a decentralized basis, not in one federal bureaucracy, but we can’t make sufficient progress on this technology issue 

without far better information than we have had in the past. The 

private market has not and will not produce that information so 

public investment is very welcome in that. 

Having set aside the technology issue for a second, there are very 

large inefficiencies in the delivery of care, many of them, most of 

them rooted in how we pay for care. Realistically though, as you 

say, Mr. Chairman, when you change those payment systems, you 


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are doing two things. One, you are redistributing income across different types of providers, sometimes geographically. In addition to 

that, you are bumping up against really entrenched ways of behaving, you know, cultures that exist within these organizations, and 

we need to be realistic about how quickly those things will change. 

They will not change overnight. But to me, what that does is emphasize how important it is we start today and not delay these 

things further and further into the future. The decisions will be 

controversial. You are going to need to make those decisions. We 

will provide you the best information and analysis we can to support you in that effort. 

Mr. PALLONE. Thank you. 

Mr. Deal. 

Mr. DEAL. Thank you. 

As I listen to opening statements and your testimony, two words 

come to mind, and I want to focus on those two words. Much of 

what you just responded to in the chairman’s questions you will respond I am sure the same to mine but maybe you want to elaborate 

further. The two words are cost and results. Now, they are not always equated with each other. In fact, we know the statistics. First 

of all, cost, and I think we all recognize that much of the escalation 

in the cost has been related to new procedures, new treatments, 

new pharmaceuticals, and Mr. Elmendorf, a partial quote from 

your testimony about two weeks to the Senate Finance Committee, 

you said, ‘‘Reducing or slowing spending over the long term would 

probably require decreasing the pace of adopting new treatments 

and procedures or limiting the breadth of their application.’’ 

Now, I have two questions. My first question is, are there ways 

to encourage doctors and patients to take into account the cost 

when making a treatment decision without requiring third parties 

such as the insurance company or other people including Congress 

to make those decisions for them? So that is the question on cost. 

The second question relates to results. Now, comparative effectiveness is a term that has sent shock waves through the medical delivery community, as you are aware. Now, when I think of cost 

comparative effectiveness, I think it can be defined as either the 

mode of treatment which is generally most effective, which is, I 

think, the equivalent of a protocol or best practices, but it can also 

be interpreted as a limitation of treatment, which is where the 

scary part of rationing comes in. And in that regard, my second 

question is, what steps can we take to ensure comparative competitive effectiveness research helps improve patient and provider decision making while avoiding the blunt centralized access restrictions? My two questions. 

Mr. ELMENDORF. On your first question, Congressman, there are 

several steps that can be taken to increase incentives for providers 

and patients to focus on value, on getting results, not just on 

spending money. One, as I mentioned in my testimony, is changing 

the tax exclusion for health insurance so as not to be open ended 

so that we don’t provide essentially a federal subsidy at fairly high 

rates for people to get ever more expensive policies. Changing that 

would induce people and firms to be more cautious in the policies 

that they bought, to hunt harder for bargains, and that in turn 

would induce the providers to be more careful in the money that 


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they spent. We could provide incentives for Medicare beneficiaries 

to choose more carefully additional treatments by increasing the 

cost-sharing rates. Of course, those policies have consequences as 

well. More generally, the Medicare program reimburses providers 

in certain ways and CBO reviewed a number of potions in its volume of ways to encourage providers to economize on spending 

while maintaining quality, and that includes the way we pay for 

post-acute care after hospitalization. It includes the way we reimburse doctors, very importantly, because they tend to be paid now 

on a fee-for-service basis, not on a more bundled basis. 

On comparative effectiveness, more information is absolutely crucial. There is a very large share of medical care delivered in this 

country where many analysts think there is very little evidence 

about what works and what doesn’t and the largest variation in 

spending across geographic regions is in the aspects of care where 

there is the least consensus among medical professionals about 

what is the appropriate treatment so that providing that information can then provide understanding about what is useful and not, 

can try to reduce these disparities, but I think it is absolutely crucial to really get the effectiveness of this sort of research to provide 

incentives for using it, and that comes up against your concern 

which is well, who is saying that you can’t get a certain treatment. 

And I think the answer here is not to—don’t rule out certain treatments. What it does is change the incentives so that doing another 

treatment is not a financial winner, it is more of a neutral proposition for providers who would then recommend services only if 

they really are necessary and not otherwise but the incentives have 

to go with the information to get the maximum effect. 

Mr. HACKBARTH. If I could, I would like to focus on the cost-sharing piece of your question. I addressed the technology piece in my 

earlier comment. Having patients understand the cost of alternatives can be a part of the solution but it has to be structured 

very carefully. One of the areas where we think it can be particularly helpful is in Medicare Advantage where we give incentives, 

rewards to patients who enroll in more-efficient, high-performance 

private health plans. That could be a step in the right direction. 

Our chief concern about Medicare Advantage as currently structured is that we are rewarding Medicare beneficiaries for enrolling 

in private plans that simply mimic Medicare except at a much 

higher cost. So we think with restructuring, Medicare Advantage 

could be a significant contributor. 

As far as cost sharing at the point of service is concerned, when 

care is actually being delivered, of course that could be very problematic for very low-income Medicare beneficiaries who don’t have 

much income and could impede access to care, and there is a body 

of research showing that in fact if you have cost sharing for some 

types of services, you can end up with worse results and higher 

costs. An example of that is drugs for diabetics. You don’t want to 

impede access by having them share in the cost. 

A third point there is that well-structured cost sharing with protections for low-income people that doesn’t discourage really needed 

things like drugs can be OK but for the really sick patients, they 

are going to exceed cost-sharing limits and the real money in our 

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plicated and have very high bills so cost sharing isn’t going to solve 

that problem, we need other tools to address the issue. 

Mr. PALLONE. Ms. DeGette. 

Ms. DEGETTE. Thank you, Mr. Chairman. 

I want to explore two sort of issues as we start to think about 

how we are going to fund health care reform. The first is an issue 

that I have been thinking about for quite a long time, which is that 

under the current system the way the CBO funds health care is 

just simply by estimating how much it will cost to treat diseases 

and then paying for that, and a concept I have been working on, 

I am calling it the prevention dividend. That is just what I am calling it. The concept would be that we would try to figure out—and 

I have actually spent quite a bit of time talking to Peter Orszag 

about this. We would try to figure out if there are certain treatments or efforts that can prevent disease that we don’t necessarily 

fund now because we can’t afford it and shift the way that we fund 

health care in this country. I will give you one example. When we 

did the Medicare Part D benefit in this committee a few years ago, 

I went to then-Chairman Barton and I said Joe, I think we should 

fund smoking cessation programs for senior citizens in this bill, 

and he said I think it is a great idea, Diana, but we can’t do it because I have got a $50 billion price tag and I can’t go beyond that. 

So I thought well, that is swell. We are not going to give them the 

patch but we are going to give them treatment for their heart disease, lung cancer and emphysema. 

Mr. Elmendorf, I am wondering what you think of a concept like 

that and how trying to structure a payment program for some kind 

of health care reform could take advantage of prevention. 

Mr. ELMENDORF. Congresswoman, if you propose policy to enhance prevention for single or a range of possible diseases, then we 

would certainly try to take account of the effects of that policy on 

the subsequent prevalence of those diseases and the costs of treating them and the estimates. I think there are a few general points 

to make. One is that some researchers have looked at a range of 

possible preventive measures. Some seem to be very cost-effective 

and are not done enough. Others do not look particularly cost-effective much like the range of results people see for different sorts of 

health treatments in which some things are not done enough and 

others are done probably too much. So I think it depends. The effects on the future disease and the cost of that disease depends importantly on the particular preventive service or strategy you have 

in mind. 

The related second point is that when one engages in preventive 

services, there are certainly some number of people who won’t suffer very health-damaging and costly problems later but one is providing a lot of additional services to a very large number of people, 

many of whom would not have had that cost later. So part of the 

reason that preventive actions end up being less cost-saving than 

one might think is because one is providing them to a lot of people 

at a small cost per person to be sure but—— 

Ms. DEGETTE. But some of them do—I mean, in line with what 

the President said yesterday, I think all of this should be based on 

science rather than just our gut feeling and so that would be part 

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tudinal studies or some evidence that would show in fact that by 

giving a dividend to these prevention efforts you would either, A, 

improve people’s health, or B, prevent longer term disease. It is not 

just about preventing long-term diseases, it is also about improving 

quality of life. 

Mr. ELMENDORF. Yes. 

Ms. DEGETTE. Mr. Hackbarth, I see you nodding your head. I am 

wondering if you can comment on this as well. 

Mr. HACKBARTH. Yes, I very much like the idea of it being 

science based because I agree with Mr. Elmendorf that you will 

have cases where prevention can improve quality but it may not reduce cost and then you have cases where it would reduce cost a little bit but not as much as the investment. So you need to have a 

very focused effort driven by science. 

Ms. DEGETTE. And you have to decide your criteria because is 

your sole criterion saving money or do you have the additional criterion of improving quality of life. I completely agree, but would 

you think that would be an appropriate consideration, prevention 

as we develop—— 

Mr. HACKBARTH. Oh, absolutely, guided by science as you have 

described. 

Ms. DEGETTE. Thank you very much. 

Mr. PALLONE. Thank you. 

Mr. Burgess. 

Mr. BURGESS. Thank you, Mr. Chairman. 

Glenn, always good to see you and glad you are back here in 

front of our committee. It seems like old times. Let me just concentrate on a few things that you listed in your list of where we 

can see savings. I was really encouraged by the physician group 

practice demonstration project at CMS and I hope that has not died 

a natural death with the change in helm, but really that seemed 

to be—you look at the 20 percent of the people that account for 80 

percent of the costs and that really seemed to follow the old Willie 

Sutton’s law: you rob the bank because that is where the money 

is. That is where the money is in the Medicare system. I am concerned and I think I heard both of you talk about increasing dollars 

to primary care physicians, a good thing, but any time—since we 

are in a purely transactional environment, any time we increase 

dollars to one, we are probably taking it from somewhere else. Is 

that a fair assumption, that this would be a redistribution across 

providers? 

Mr. HACKBARTH. That has been MedPAC’s recommendation, yes, 

that it be a budget-neutral change, and the reason that we have 

taken that approach is that as you know, total expenditures on 

physician services have been growing quite rapidly. As that has 

been happening, there has also been a shift in the distribution of 

dollars away from primary care services towards more subspecialty 

services and imaging and the like, so there has been a shift that 

we think needs to be addressed in the name of enhancing our primary care system. We don’t think the problem is too few dollars 

in the pool, just how they are distributed. 

Mr. BURGESS. And along that line, and of course, we always hear 

that removing the cost to administer drugs and imaging would be 


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some way to provide perhaps more equanimity in that situation. Is 

that possible to do that in the current structure? 

Mr. HACKBARTH. Are you talking about under the SGR, how the 

SGR is calculated? 

Mr. BURGESS. Yes. 

Mr. HACKBARTH. We have not really looked at the issues, not 

taken a position on the issue of whether drugs ought to be included. We think that those are more issues of budget baselines 

than they are of health policy. 

Mr. BURGESS. Let me ask you a question on—because you had 

talked about readmission, and that is one of the things that makes 

me enthusiastic about the process but also frightens me at the 

same time because of some of the things I have seen us do in the 

past that tend to be heavy-handed. Now, under the physician group 

practice demonstration project, a patient is hospitalized for decompensation of congestive heart failure. If they are given as they 

leave the hospital the appointment to see their primary care physician within 5 days, the risk of readmission really plummets, and 

if they are simply given the instructions to see their primary care 

doctor within 2 weeks as opposed to actually having an appointment made, the readmission rate is significant and those readmissions are terribly costly readmissions. So that seems to me to be 

a good thing. But if we simply say that we want you to take care 

of everything that might happen, or this is the way it might be interpreted by the hospitals and the physicians, we want you to take 

care of everything that might happen within the next 30 days because we are not going to pay you anymore, this hospitalization is 

going to be it. Are we perhaps going to tend to drive utilization in 

a way that we hadn’t intended? 

Mr. HACKBARTH. Well, we too, like the physician group practice 

model, that is what we refer to as accountable care organizations, 

and the ideal approach is to have aggregations of clinicians and 

providers with a broad target and then give them freedom to allocate resources in the name of both improving quality and reducing 

cost, just as you described it. The challenge that we face in Medicare is that not everybody is prepared for that format. Not all physicians are part of large group practices or even involved in, you 

know, a hospital IPA-type format as is used in Connecticut in the 

demo. And so we need tools to apply in situations where the group 

practice model doesn’t fit. 

Mr. BURGESS. Correct, and that is why of course it was important to do it as a demonstration project and I understand from the 

10 institutions that participated, there was probably one that was 

not actually institutionalized as an IPA. It was more of a group 

without walls and organized through the hospital structure. But at 

the same time, these were groups that were then allowed to, gain 

sharing is perhaps not the right word but if they met a certain 

threshold, they certainly were rewarded for meeting that threshold 

and that incentive to drive behavior. You don’t want to pay doctors 

not to see patients because that it what we will do, we will not see 

patients, and then you get into the problem of his staff not being 

able to find a primary care doctor. That was the whole problem 

with the staff model HMO and a fully capitated environment. We 

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Why struggle? You close the doors and take the phone off the hook. 

That is the way to make money in that environment. Doctors are 

not stupid. We will do that if that is what you pay us to do. We 

have to be paid based on productivity as a general rule. 

Mr. HACKBARTH. So our goal, which I think aligns with yours, is 

to find ways to align physicians and hospitals and other providers 

to do the right thing, which is what they want to do, better quality 

at a lower cost. Our payment systems get in the way. So what we 

are trying to do is put some pressure on some places like readmissions, open some doors for people to go through with new opportunities like gain sharing and bundling of hospital with post-acute 

services and say collaboratively physicians, hospitals work together, reduce the cost, improve the quality and share in the benefits with the Medicare program. 

Mr. BURGESS. I think the group practice model is on the right 

track and I think sharing in the savings that occurs is on the right 

track. We will save bundling for another day because I am not sure 

I am ready to go there yet. Doctors and hospitals and insurance 

companies do not trust each other at the present time. 

Thank you, Mr. Chairman. 

Mr. PALLONE. The gentlewoman from the Virgin Islands, Ms. 

Christensen. 

Ms. CHRISTENSEN. Thank you, Mr. Chairman. 

I will begin with Director Elmendorf as well, and I am going to 

follow up, try to follow up on Congresswoman DeGette’s question. 

I was reading in Congress Daily today that there is a coalition of 

high-profile organizations on the Hill arguing that requiring offsets 

within a 10-year budget window does not look at the full picture 

and it becomes a barrier to doing things that we are going to have 

to do if we are going to reform health care as well as eliminate 

health care disparities. Because you don’t see the benefits, you 

don’t see the savings inside of that 10-year window necessarily. It 

takes a longer period of time. So what can we expect from CBO? 

Will this continue to be a barrier? Can we go outside of that 10- 

year window and budget for the savings that would be realized 

both to fix the broken system that we have, to eliminate the health 

care disparities so that we won’t be behind every industrialized nation and some developing ones for health status? 

Mr. ELMENDORF. So Congresswoman, CBO will continue to provide detailed estimates of the effects of health reform proposals 

over the 10-year window. We will try where the evidence allows to 

offer our qualitative judgment about the effects of certain reforms 

on spending beyond that. I understand your concern that there can 

be larger savings down the road that aren’t captured. Unfortunately, we don’t have the evidence or the modeling capacity to play 

out a whole set of specific reforms and how they are going to matter 10, 20, 30 years down the road. As I said in my remarks, many 

analysts agree on the general directions of policy but there is much 

less consensus about whether the particular approach should be 

bundling, should be accountable care organizations, should be penalties for readmission rates and things like that, and that is the 

limits of the evidence as it currently exists. 

Ms. CHRISTENSEN. We look forward to continuing this conversation and seeing if we can find a way to address the costs that will 


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have to be—the money that will have to be invested to get to where 

we need to be. 

Mr. Hackbarth, we all know that Medicare plays a key role in 

our health care system and there are several very strong aspects 

of the system but there are still some areas that need work. We 

found that reimbursement rates within a city vary by zip code, for 

example, and we know that some of the proposed changes to Medicare like those to Medicare Advantage and some of the ESRD reimbursement provisions sometimes have a negative impact on some 

populations, largely African-Americans and other communities of 

color. So we make changes to programs, is MedPAC taking this 

into consideration and looking for ways to reassure us or to assure 

us that we are not inadvertently cutting access to needed services 

to some populations? 

Mr. HACKBARTH. That is an area of increasing focus for us. For 

a number of years now, 3 or 4 years at least, we have been looking 

in particular at ESRD, the dialysis program, because that is so important to African-Americans as well as others, and looking for any 

indication that changes in that system have eroded repeated access 

for African-Americans. In addition, we will be looking at the issue 

of access to kidney transplants where there are some disparities in 

terms of access. So this is going to be a focus of ours. We have also 

tried to look more broadly at differences in access to physicians and 

satisfaction with access to physicians. We found some issues. 

Ms. CHRISTENSEN. So you are looking at it. The bundling does 

bother me, and I believe as a physician and having been a medical 

director that information will change behavior. You are going to 

make the information public. Hospitals are not going to want to 

have a negative report given to the public. And I believe also that 

once hospitals are better reimbursed, which they would be when 

everyone is covered, they will be able to provide the better services, 

so why a bundling pilot? It is going to put doctors and hospitals 

in competition, you know, in ways that—I just don’t see why you 

think that would work. 

Mr. HACKBARTH. Well, our goal is the opposite, not to put them 

in competition—— 

Ms. CHRISTENSEN. Or why it is needed. 

Mr. HACKBARTH [continuing].—But to put them in collaboration 

with one another. In the current system where they are paid separately, there is often competition, and as Dr. Burgess indicated, unfortunately some places, some open conflict and hostility. We think 

that they need to be engaged working together collaboratively to 

improve care, and we think bundling could be a step in that direction. 

Ms. CHRISTENSEN. I agree, but I think—that they need to work 

collaboratively. I just think there are other ways to do it. Thank 

you. 

Mr. PALLONE. Mr. Gingrey. 

Mr. GINGREY. Mr. Chairman, thank you. 

Chairman Hackbarth, you had mentioned in your testimony, 

your written testimony on page 7, regarding payment system bias 

and the fact that many physicians who are subspecialists who do 

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I know we have one sitting here in the audience from my State of 

Georgia, Dr. John Antalis, a former president of the Medical Association of Georgia, who is a primary care physician, and, you know, 

I think about him. I think about my colleague, Donna Christensen, 

who is also a family doctor. Do you feel like this patient bias system may be a factor contributing to the various physician and 

nursing shortages we are seeing across the country, and what 

would you recommend that we do about that possibly in regard to 

payment incentives? 

Mr. HACKBARTH. Well, first of all, I want to emphasize that physicians are responding to the system that we created and the incentives that we create speak volumes about what kind of activities we 

value, and over a period of years that means more subspecialization, more high-end imaging and the like. So I am not blaming 

them for what they are doing. They are responding to a system 

that we created. 

In the interest of a high-performance system, though, we need to 

redirect those signals that we are sending, and as I said earlier, 

we do think that payment deficiencies is one reason for the growing 

problems that we have in primary care. It is not the only reason 

by any stretch but we think it is a very important reason, and so 

we need to go about changing that and we have made a series of 

recommendations about how to change primary care payment. 

Mr. GINGREY. Well, certainly, Chairman, that makes sense to 

me, and as a practicing physician for 26 years, as an OB/GYN specialist, I concur that we need to do something about that, to increase the number of primary care physicians and opportunities for 

medical homes as we have talked about for all of our Medicare recipients. 

Director Elmendorf, let me shift to you for just a second. You 

talked about in your testimony in response to some of my colleagues’ questions in regard to 10-year window and that, you know, 

a lot of times you can’t really measure or see the savings that are 

going to occur from various and sundry things that we have done, 

and it made me think about Medicare Advantage or Medicare Plus 

Choice, and the fact that we are on the verge if we follow the President, well, indeed in the economic stimulus package and what he 

plans for health care to create that reserve account so we can do 

all of this reform of health care to take, I think it is $178 billion 

out of the hide of Medicare Advantage. Now, I don’t know whether 

Medicare Advantage is working the way Congress originally intended for it to work but certainly it was my understanding that 

the 10 million people that have signed up for Medicare Advantage 

are getting more than just episodic care. You know, they are not 

just going when their head hurts or their tummy hurts or whatever. They are getting a good annual physical, they are getting a 

call back from a nurse practitioner to make sure they are taking 

their medication, and clearly that is going to cost a little bit more. 

Now, I am not sure it is worth 15 percent more and I know that 

is a concern of Congress, but it is worth more in that you are investing in something and you are investing, I would think, that in 

the long run, in the final analysis that at the end of life, let us say, 

we don’t spend beaucoodles of money on those who have been 

under Medicare Advantage because they are healthier, they have 


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taken care of themselves and the doctors have taken care of them 

in a better way. We can’t capture that. We can’t score that dynamically, unfortunately. But I think at the end of their lives when you 

look at it and compare the cost of fee for service versus something 

like Medicare Advantage, there may be a tremendous savings, and 

we are on the verge of gutting that. Would you like to respond to 

that in the few seconds that I have got left? 

Mr. ELMENDORF. I think you were right that the patients in 

Medicare Advantage who are under the care of managed care organization are receiving more-integrated, more-coordinated care than 

they might otherwise. Not all patients in Medicare Advantage are 

being seen by HMOs, though, for example. There have been patients under Medicare Advantage who are going through private 

fee-for-service plans and Congress has taken action to reduce the 

number of people in that category, and that is the point that Mr. 

Hackbarth has made before about the importance of not just paying more for patients to receive essentially the same kind of care 

in Medicare Advantage, because some have been in that category. 

The others who are receiving this more-integrated care, I think 

there are some advantages to that. I think most analysts though 

would be concerned about the point that you alluded to which is 

that the reimbursement rates have risen relative to costs over time 

and those patients are now receiving a variety of additional benefits that are of some value to them but are costing taxpayers more 

per patient than would be the case in the traditional Medicare program. 

Mr. GINGREY. Thank you. 

Mr. Chairman, thank you for your patience in letting us go a little bit over. Thank you. 

Mr. PALLONE. Thank you. 

Mr. Sarbanes. 

Mr. SARBANES. Thank you, Mr. Chairman. Thank you all for 

being here. 

I wanted to pick up on this discussion of the primary care providers again because to me, in many respects, that is sort of the 

elephant in the room. In other words, I have seen some statistics 

that say that if we were able to provide coverage for all those who 

don’t currently have it, that in order to meet the demand that represents, we need another 60,000 primary care physicians. That is 

not even talking about nurses and other primary care professionals. So that is potentially a new train wreck that is coming. We 

talk a lot, and much of the debate and much of the focus is over 

the coverage side of this discussion. Is it going to be hybrid publicprivate, is it going to be Medicare for all, is it going to be single 

payer, is it going to be employer based, et cetera. But if we make 

the assumption for the moment that we will achieve universal coverage, then the question of who is going to provide that care becomes critical, and there is a kind of chicken-and-egg dimension to 

this so if you could speak to that just a little bit more and maybe 

comment on the notion of having the design of the insurance be 

driven by the kind of providers that we are trying to bring, you 

know, if we build it, then will come kind of concept. Because I can 

make the argument that we should choose the insurance model 

based on which providers—I am going to talk through this. We 


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should pick the insurance model based on wanting to get more primary care providers so what will incentive them to do that. You 

can wait until that stops. 

Mr. PALLONE. I am sorry. I don’t know exactly what is going on. 

Hold on. Does somebody have their phone on? I think it is over. All 

right. We will continue. 

Mr. ELMENDORF. On your first point, Mr. Sarbanes, that if we 

move towards universal coverage we may increase the demands on 

an already weak primary care system, I think that may well be 

true. Dr. Gawande can maybe talk about Massachusetts where 

anecdotally, at least, I have heard that that become something of 

an issue. We think there are several responses appropriate within 

Medicare, and if you want, I can talk in detail about those but in 

general there are ways of increasing the payment for primary care 

and changing the method of payment so that primary care practices can afford the infrastructure that allows them to provide appropriate coordination of care. Realistically, no matter what we do 

in the payment side, even if we did all of these things tomorrow, 

the increase in the primary care physicians is going to occur slowly 

over a period of years, and that is going to be a real challenge for 

us. I think practically speaking, what we are going to have to do 

is expand our use of some non-physician clinicians, advanced-practice nurses, for example, so that we can provide basic primary care 

to a broader population. I used to be the CEO of Harvard Vanguard Medical Associates in Boston, a very large group practice, 

that made extensive use of advanced-practice nurses to improve access to primary care, and I think as a national health care system 

we are going to need to do more of that to deal with this issue as 

well. 

Mr. SARBANES. I think one way to approach this health care reform is to figure out what elements of everybody’s proposal are in 

common and that is where the final design will be in terms of critical components, and I haven’t heard any proposal with regard to 

coverage or provider or anything else that doesn’t include the notion that we need more focus on primary care. So because it is 

going to take so long to get the pipeline going, we probably need 

to bet now that that need is going to be there regardless of what 

we design and get going on it. 

Mr. HACKBARTH. Absolutely. There is a real urgency to move 

quickly on that front. 

Mr. SARBANES. Thank you. 

Mr. PALLONE. Thank you. 

The gentleman from Illinois, Mr. Shimkus. 

Mr. SHIMKUS. Thank you, Mr. Chairman. 

I want to congratulate my colleague, Mr. Sarbanes, too. I think 

that was a great line of questioning, something I hadn’t considered, 

so I thought it was good. I think if we adequately compensate and 

then I would say protect physicians. I come from a big litigious 

State and medical liability issues really drive people out and my 

family practitioner, who delivered my three boys, no longer delivers 

babies because of—and we have talked about that but in comprehensive reform, especially if the government takes a larger role 

in our community health clinics, there is liability protection there, 

I mean, the programs that are funded and so that—some people 


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aren’t going to want to debate this but it is a way to incentivize 

people to be in these professions, to give them some security. We 

still want people to get a redress for their grievances, especially if 

they are harmed, but that has got to be, I would think, a very— 

and I didn’t think about that until the line of questioning, so I do 

appreciate that. 

I would also—in an opening statement, my colleague from California listed the things, well, why don’t we do this, why don’t we 

do that. I would ask the question, why do people from industrialized nations that have national health care, why do they come 

here for catastrophic care? Or I would ask another question. Why 

are all the major medical advances around the world, whether it 

is in devices or pharmaceuticals, why is that done here for the most 

part? There is something that is still going right in this country 

that is helpful to health and lifestyle and longevity that we just 

want to be careful that we don’t disregard. 

To that point, I think the thing that I fear most is a one-payer 

system, and the OMB Director Orszag talked about no one is talking about using cost information to deny needed care to beneficiaries and that patients need to be protected from being denied 

what they need. This comparative effectiveness debate that we 

have now entered into raises, maybe not intentionally but raises 

that concern that we are going to use cost, and I will let you answer. I will just tell you the story that I used. I was at a local university talking to nurse anesthetists, and it was a pretty big group 

and we were talking about a competitive model versus a one-payer 

system and they were asking about it. Readily upfront, I am highly 

biased in opposition to a one-payer government-run system and I 

am a market-driven individual, so I wasn’t trying to deceive them 

so I said here is an example and I talked about some of the industrialized nations having formularies and if you don’t fit that formula, you get denied care. And then I get a hand raised in the 

back of the room. I used New Zealand as an example. And the lady 

stood up and she said I am from New Zealand, and I thought I am 

either right or I am busted. And she told me that her father had 

to wait for kidney stone surgery for 8 months. Now, for those of you 

who have had kidney stones knows that that was a terribly long 

wait. I guess my question would be, do you share these concerns 

as we move in this direction on a debate on a national policy? 

Mr. ELMENDORF. So Congressman, I think many analysts worry 

that our current system provides no reason for many providers and 

patients to think about whether extra treatments are cost-effective 

or not. It is also quite fair to worry as you do that we could device 

a national health system in which costs would become the predominant criterion for what is provided or not. And that is why I think 

many analysts suggest moving in the direction of learning what 

works and providing incentives to take that knowledge seriously, 

but I think few analysts suggest that we should move to a system 

where one person in Washington decides who gets what, and one 

thing we will discover in future comparative effectiveness research, 

as has been discovered in past research of this sort, is that some 

procedures are very good for some patients and not very helpful for 

others. 


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Mr. SHIMKUS. Can I follow up? And I don’t want to cut you off 

but I want to—I am going to ask this of the second panel, defensive 

medicine and liability protection, will that be part of the cost-effectiveness analysis? 

Mr. ELMENDORF. I think the consensus of researchers is that defensive medicine is a factor but not a particularly large factor in 

the decisions of providers. 

Mr. SHIMKUS. But do you think we will see that in this cost-effectiveness analysis? Will that be considered? I mean, we won’t know 

until we get the stats, and if this is an issue of trying to figure out 

the cost, you would think that that would be part of the variables. 

Mr. ELMENDORF. So I think the most direct connection is that 

currently if one is facing a patient with a particular problem and 

there is very little evidence about what to do, then there can be 

reason for the provider to do the most that can be done and that 

can be expensive, whereas if there were clear evidence on what 

worked and what didn’t, that would help providers avoid having to 

prescribe everything to protect themselves. So in that sense I think 

having the knowledge can reduce the amount of defensive medicine 

that is practiced, apart from the liability issues that you have 

raised as well. 

Mr. PALLONE. Thank you. 

Mr. SHIMKUS. The chairman is going to let me—— 

Mr. PALLONE. You wanted Mr. Hackbarth to answer the same 

question? 

Mr. SHIMKUS. Yes. 

Mr. HACKBARTH. I was going to pick up where Mr. Elmendorf left 

off. Ideally what we do is develop scientifically based, evidencebased standards of practice based on the best available evidence. 

It seems to me that if you have that information, then it can provide some comfort and protection to physicians that practice in accordance with that guideline, that standard of practice. When we 

are information starved, as we are so often now, the response is 

well, do more. More is synonymous with better because we don’t 

have sufficient evidence to show otherwise. That is the refuge. We 

need to create another refuge, if you will, so more isn’t always the 

response to uncertainty. 

Mr. PALLONE. Thank you. 

Ms. Schakowsky. 

Ms. SCHAKOWSKY. Thank you, Mr. Chairman. 

You know, we just heard an anecdotal story about somebody who 

had to wait for kidney stone surgery, which my husband having 

had them, that certainly is a problem. But you know what? There 

is also millions of people insured as well as uninsured who wait a 

lifetime for the care that they need in this country because we do 

ration health care, and by and large that ration card is a dollar 

bill. You can shake your head but—— 

Mr. SHIMKUS. If the gentlelady would yield, everyone who needs 

care gets it because when they go into the emergency room, the 

hospital has to serve them. 

Mr. PALLONE. The gentlewoman I assume has yielded to the gentleman? 

Ms. SCHAKOWSKY. No, I am going to take back my time because 

the myth that everyone in this country receives the care they need 


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has got to be dismissed because that is not true. Over half of Americans, I said in my opening statement, the data shows actually 

have gone without or postponed health care because they can’t afford it. That is just a scientific fact. We have looked at the American people and that is just true. 

But here is my question. First of all, I wanted to ask Mr. 

Hackbarth, you talked about the percent of readmissions in hospitals. What was that percentage? 

Mr. HACKBARTH. About 18 percent of Medicare admissions are 

followed by a readmission within 30 days. 

Ms. SCHAKOWSKY. OK. I just wanted to have that. I wanted to 

get back to this model. You know, we do have a single-payer health 

care system in Medicare right now for elderly people and again, I 

had said before, that this is a widely accepted and much liked and 

it still has holes on it, and I wanted to ask about what are those 

holes. We have heard Medicare Part D lauded as something that 

has worked so well but certainly in my office, we get people all the 

time confused over those many, many options. Senator Durbin and 

I and others in the House have introduced legislation that would 

create a public pharmaceutical option under Medicare. I wanted to 

get comments from both of you on whether or not—and that that 

option would be able to negotiate with Medicare for—with the 

pharmaceutical companies for lower prices, hopefully to fill the 

donut hole. I wanted to get your opinion on that. 

Mr. ELMENDORF. So referring to drugs specifically, CBO’s judgment is that the private providers of the drug benefit do negotiate 

for low prices. They negotiate with the threat of moving drugs off 

of their formularies or charging higher prices for their use and that 

there is no reason to expect that a public program would do better 

unless it were prepared to be tougher in not covering certain drugs. 

If it were tougher in writing its formulary, then it could avoid— 

then it might negotiate for lower benefits, but that would be the 

crucial—lower drug costs, that would be the crucial factor. 

More generally in health care reform, when people talk about 

public plans competing with private plans, I think designing a system in which a public plan could compete on a level playing field 

is extremely difficult. It raises issues of what the providers are 

paid. It also raises issues of selection, of patients across plans and 

how sick they are. It is issues about how the financial risk is dealt 

with. 

Ms. SCHAKOWSKY. Are you saying whether a public plan could 

compete with a private plan? Who would be disadvantaged? Which 

would be disadvantaged? 

Mr. ELMENDORF. I am saying that if the objective is to have them 

complete on a level playing field—— 

Ms. SCHAKOWSKY. Well, I know. Who would be disadvantaged? 

For whom would it not be level? 

Mr. ELMENDORF. Well, under current payment rates, then a public plan would be less expensive because—than the private plan, 

the reasoning from the Medicare example, where the government 

does push down reimbursement rates. That would be a benefit for 

the public plan. The issue is, it depends on how you design the system. So there are risks associated with running health plans. If the 

public plan didn’t have to insure itself against that risk, it was just 


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the taxpayers holding the bag, then that would be an advantage for 

a public plan relative to private plans that have to charge enough 

to cover that risk. It depends on how it is designed. If public plans 

ended up with sicker patients than private plans because perhaps 

they managed benefits less tightly, that would be a disadvantage 

to public plans relative to private plans. So it is a set of parameters 

that you and your colleagues will pick that would affect whether 

a public plan is advantaged or disadvantaged. 

Ms. SCHAKOWSKY. Does it matter that the CEO of Cigna in 2007, for example, made $22.7 million, a cool $23 million more than the 

President of the United States in a year, and the kinds of overhead 

costs that private plans have as opposed to Medicare, for example? 

Mr. ELMENDORF. Yes. So administrative costs are including the 

costs of paying executives are another fact that I forgot to mention. 

Medicare does have lower administrative costs—— 

Ms. SCHAKOWSKY. For profits for shareholders. 

Mr. ELMENDORF [continuing.]—And large employer returns. That 

is right. But remember, the profits for shareholders, part of that 

covers the risks that I have just discussed. It covers the cost of the 

capital that goes into managing these plans. So some of that—that 

is why I said, it depends importantly on—— 

Ms. SCHAKOWSKY. How is it—my time is running out. How is it 

that the United States of America pays 40 percent more than the 

closest country for health care, causing the President of the United 

States to say I think in response to something that Mr. Pallone 

said, are you saying that there is not enough money in the system 

currently to cover everyone. Are you saying there is not enough 

money in the system right now to cover everyone? 

Mr. ELMENDORF. Oh, no. I didn’t say anything like that. What 

I said in my testimony, and is the position of CBO, is that covering 

everyone would be expensive, that there is also a lot of dollars 

spent in the health care system for which we are getting a little 

or no improvement in health, but that rooting out those dollars 

without also reducing some services that do improve health is challenging, and we talked and I think most people agree about the importance of information, the importance of incentives to use that information, but exactly how to do that and how to do that in the 

short run is not so clear. Again, the direction is clear but how effective that can be, whether that can save enough money to cover the 

increase in health care that would be delivered to the currently uninsured is much more difficult. 

Mr. PALLONE. I am going to take 30 seconds here as the chairman. What the President actually said in response to my question 

at the summit, and I think, you know, it hasn’t been laid out here, 

is that, you know, you can have a lot of cost efficiencies and that 

can contribute to expanding coverage but he said that you do need 

a lot of up front. In other words, those savings may occur as the 

reforms kick into place but initially you are going to need a new 

source of revenue up front because a lot of things that we are talking about have large costs up front and then the savings come 

later. So, I mean, that is one aspect of this that we have to think 

about. But I want to thank the gentlewoman. 

Mr. Rogers. 

Mr. ROGERS. Thank you, Mr. Chairman. 


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Thank you both for being here today. You said some things made 

me scratch my head a little bit and I think we are kind of dancing 

around some pretty important issues here because we don’t want 

to use the words that we know inflame the fears of most Americans, and that is rationing. And I have to tell you that as a Michigander, you know, we can see directly the impact of a governmentcontrolled system for health care in Canada, and as one Canadian 

told me, that if you break your leg in Canada you have the best 

health care ever. If you get sick, it is the worst in the world. And 

I think what they are talking about is sustaining that system of 

health care is very difficult, and I find it interesting that there is 

a great number of our surgeons who do cash business with Canadians on weekends for hips and knees because the system in Canada just rations care for elderly, and elderly starting in their 60s. 

And you said, Mr. Elmendorf, a couple of things that I found interesting. You talked about in this government-run plan that they 

would hunt for bargains and do those kinds of things and you said 

and in order to work they would limit what coverage they had and 

then later in answering questions you said in order for this to work 

there had to be some limitation for maximum effect on costs. And 

then I want to go back to something you said in your testimony. 

You were talking about the comparative effectiveness language 

would ultimately have to change the behavior of doctors and patients, and if they are basing that on information available in a 

doctor’s decision between a doctor and a patient, I am for it. That 

is a great idea. But later you say bringing about those changes 

would probably require action by public and private insurers to incorporate the results in their coverage and payment policies. You 

are quite clearly advocating for rationing care through what is covered, and here is my concern. Eighty-five percent of Americans 

have coverage. We often talk about the 15 percent. And it seems 

odd to me that we are going to say because we have this 15 percent 

that we should figure out a way to get access to health care, we 

are going to start rationing care for the other 85 percent who enjoy 

some pretty good health care in the United States. And maybe you 

can help me untwine that in both your oral comments and your 

written testimony. 

Mr. ELMENDORF. So first let me be clear. I am not advocating for 

anything. CBO does not make policy recommendations. So nothing 

in the testimony or in my answers to questions says that Congress 

should proceed certain ways on policies. What my testimony does 

say and which I stand by is that more information by itself is not 

going to have as large an effect on—just providing information will 

not have as large an effect on practice patterns and on costs as creating incentives for providers and patients to make use of that information. And I think that is consistent in what is written here 

and the answers I have given to questions. 

Mr. ROGERS. OK, but it says you require action to incorporate 

the results of coverage. So when you say incentives, are you saying 

they should build that into the coverage, meaning they should restrict certain—— 

Mr. ELMENDORF. I am not saying they should. I am saying that 

the rising costs of health care, which are linked to the increasing 

utilization of expensive services, that that rate of increase would be 


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changed more if private insurers or public insurance plans created 

incentives for providers to take account of information about what 

was and was not most effective, and some of that information will 

be able to get counted anyway but not as much if there are financial incentives. 

Mr. ROGERS. I think we are still talking around it but you say 

that you are not advocating, even though I would say ‘‘probably require’’ sends a pretty clear message where you are going there. But 

in the other countries, and we have seen it in the U.K., breast cancer, kidney cancer, Alzheimer’s and hip and knee replacements 

happen to be a big one. I think in the U.K. they just had one as 

young as 62 was denied care and coverage for a knee replacement. 

How do we avoid that? I mean, I think if we were going to be honest with Americans, we have to tell them, hey, this is what is coming because the only way we can fix the 15 percent problem is, we 

are going to take it away from the 85 percent who have coverage. 

I just think we are smarter, better, more innovative than that. I 

think there is a way to do that. But how do you stop that from happening, given your testimony today? 

Mr. ELMENDORF. So let me just be clear one more time. The testimony says to reduce health spending, results of comparative effectiveness would have to be used in certain ways. Bringing about 

these changes would probably require—again, it is not a statement 

of CBO’s preferences. It is the chain of logic of what would be required to affect the path of health spending. 

I think the crucial point that many of us have made here today 

is that a large share of U.S. health spending does not seem to be 

improving health. You can look at—and one particular piece of evidence for this is the geographic variation in spending under Medicare that does not appear to be correlated with quality of care, as 

judged by the measures that are available. That holds open the 

possibility, I think the very important possibility, that more evidence of what works and incentives to use it could squeeze out that 

money. It is a lot of money, by some estimates $700 billion a year. 

As I noted before, doing that without affecting care that does improve health is not an easy task to accomplish, even if analysts 

generally agree on some other plausible directions. So I think that 

holds open the possibility that we can reduce care that is not very 

useful and save a lot of money through doing that. 

Mr. ROGERS. That I understand. I just—I think your words sometimes—you were kind of parsing around what you are trying to say 

and you are trying to say in order for it to work, you have to limit 

coverage in the future under government-run plans. I get it. As a 

matter of fact, you also said that under a government plan, they 

would push down reimbursement. Well, if you have ever had a 

meeting with a medical provider in the last month and a half, and 

I am sure you have, they can’t get the reimbursement they need 

today, and it is having this inverse impact on private insurance 

companies trying to be asked to hold the burden of the government-run plan that pushes it down. So you are going to destroy 

competition in the market. I don’t know how you think that works. 

And I don’t know about my colleagues, we are getting calls in my 

office, people are in a panic because in cancer care reimbursement, 

where I think that you all have completely missed the boat, they 


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are calling and saying they are not taking any new patients under 

Medicare because the reimbursement rates are wrong and they lose 

money. So to start out the premise that the government is going 

to push down reimbursement rates as a way to control costs and 

somehow a private plan is going to survive, it defies the logic of 

what is going to work in the marketplace. How do you reconcile 

that? 

Mr. ELMENDORF. Again, I am not advocating pushing down reimbursement rates. What I am saying is that under the current Medicare system, Medicare pays less to providers than private payers 

pay. A number of options that we have considered, a number of 

MedPAC has recommended in fact, but we don’t make recommendations, a number of those options that have been discussed 

would reduce payment rates. In fact, under current law, as you 

know, physician payment rates under Medicare will drop very, very 

sharply this year. The evidence suggests that the shifting of costs 

to the private sector is not as acute as one might worry, that in 

fact the private insurance companies negotiate with the providers 

and achieve the rates of reimbursement that they can. To the extent that Medicare and even more so Medicaid pays less to doctors 

and to hospitals, that is taken out mostly in some combination of 

reduced quality or reduced amenities for those hospitals and doctors. I am not clear how much of that, though, as I said, spills over 

to the private sector. 

Mr. ROGERS. I appreciate it. 

And just as a follow-up to Mr. Hackbarth, if we had had a government-run prescription plan under Part D, what would it have 

done to the competitive plans in Part D, in your estimation? 

Mr. HACKBARTH. Well, MedPAC has never looked at that issue 

specifically. Of course, we have spent a lot of time looking at Medicare Advantage, which is a system where we have a public plan 

and private plans competing with one another, and there, far from 

the playing field being tilted in favor of the public plan, it has been 

tilted significantly in favor of the private plans. So in one realworld experience we have with this idea, the fears that well, the 

public plan gets favorable treatment has in fact not been the case. 

Having said that, you know, I am a strong believer that we need 

both strong public plans and private plans in our health care system. I have worked in both. I worked in what was then HCFA, obviously deeply involved in Medicare issues now. In my prior lives 

I have worked at premier HMOs. So I understand a bit about both. 

I think they bring distinctive strengths, different strengths, complementary strengths. On the one hand, Medicare is a public plan, 

as noted earlier, has low administrative costs, in part because of 

scale, in part it doesn’t incur marketing expense and profit as discussed earlier. In addition to that, because of its size, it is able to 

command low prices. On the other hand, private plans have some 

advantages as well. They are more flexible than a government plan 

can ever be. It is easy for a private plan to change how it pays providers to better regard the sort of behavior that we have been talking about today. It is a cumbersome process for Medicare to make 

those changes. It involves legislation and regulation writing in 

CMS and the like. So private plans have more flexibility there. In 

addition, private plans have the opportunity to try to identify a seVerDate Mar 15 2010 14:24 Mar 02, 2012 Jkt 067099 PO 00000 Frm 00118 Fmt 6633 Sfmt 6633 E:\HR\OC\A099.XXX A099

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lect group of particularly efficient high-quality providers and direct 

patients to them, which is not feasible in a public program like 

Medicare. 

So you have two types of health plans potentially competing with 

one another, offering different things to Medicare beneficiaries. 

Some will like the public plan for what it offers, the free choice of 

provider and the like. Others might like Kaiser Permanente as an 

alternative. Rather than saying we want one or the other, I think 

we ought to be striving to build a system that has both strong public plans and private plans competing on a level playing field. 

Mr. PALLONE. Thank you. 

Ms. Baldwin. 

Ms. BALDWIN. Thank you, Mr. Chairman. One quick comment before I get to my questions. I know we have had a little of discussion 

about public plans versus private plans and the playing field, and 

even in the Medicare Part D context. I would draw attention to the 

fact that I think Wisconsin is the only State that does have a public plan in the Medicare Part D program called Senior Care. It was 

based on a pharmacy waiver that was granted prior to enactment 

of the Medicare Part D program. It is wildly popular to the degree 

that on a bipartisan basis, every member of the Wisconsin delegation weighed in to try to keep that program in existence as the 

Medicare Part D program was phased in. And I think it would provide an interesting analysis for some of the—you know, to see 

whether some of the comments we have been hearing really have 

a basis or not. 

Chairman Hackbarth, I wanted to explore with you and have you 

talk a little bit about the value of demonstration projections as a 

way to go from current payment systems to perhaps testing some 

of the recommendations that MedPAC has made for reform. Congress, it seems, has funded through Medicare legislation for years 

demonstration projects such as the physician group practice demonstration or the premier hospital demonstration yet it seems like 

we fund those projects and don’t insist that they are replicated 

elsewhere or expanded on a much more broad scale. I am curious 

about their value to inspire confidence that new models of payment 

will achieve desired results and whether we ought to be looking at 

more. Please comment. 

Mr. HACKBARTH. I worry about this a lot, and more and more 

over time, and I think it is an issue that MedPAC is going to try 

to think through systematically, but let me offer some personal 

thoughts. We have got to make a lot of payment changes for all the 

reasons that have been discussed today. The changes that we need 

to make are sometimes operationally complex and uncertain in 

terms of their effect on cost and quality and so it stands to reason 

that we may want to do tests of them first. The fear that I have 

about the process that we have been using is that often the tests 

are small and so our ability to detect meaningful results is compromised. They are small projects that run for a few years and we 

are trying sometimes to affect things that will only materialize over 

a longer period of time. There is almost a bias in the design to finding no effect, and then we throw out the idea and say well, that 

didn’t work and we will go on to something else when in fact it may 

be in part a function of the limits of the design. 


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A second issue is that even when things work, and I think you 

were pointing in this direction, then they have to come back 

through the legislative process for further consideration, maybe 

modification, in ways that might undermine whatever success we 

found in the demonstration. And so it seems to me that Congress 

may want to consider ways that we can accelerate that process, do 

more of what we have referred to as pilots, large-scale tests that 

will be better able to find whether it works or not, and if it works 

according to pre-established standards, move immediately towards 

implementation as opposed to saying let us now go back through 

the legislative process again. So those are a couple ideas but I 

think we need to look at the whole process of innovation in payment and figure out where we can take out unnecessary steps and 

unnecessary resources and streamline that process. We have to get 

better way faster than we are right now. 

Ms. BALDWIN. You and I have had a chance to talk about this 

sort of pilot idea before. You would conceive of that under the auspices of CMS, and are there good examples of that working in the 

past or is this something that we would need to authorize? 

Mr. HACKBARTH. Well, the most recent example was in the disease management pilot. It was retitled, I think, Medicare Health 

Support or something like that, and the intervention that was 

being tested was having third-party disease management entities 

counsel patients, provide information, make sure they take their 

meds and whatnot. In that case, the intervention was pretty large 

scale. The test was pretty large scale and the finding was no effect, 

but the legislation had authorized the Department to go ahead and 

implement program-wide it if had worked, and they found that it 

didn’t so we didn’t go down that path. We need to do more of that. 

I think that is a model worth maybe tweaking some but exploring 

for future projects, and bundling is an example that we have suggested a pilot approach. 

Ms. BALDWIN. Thank you. 

Mr. PALLONE. The gentlewoman from California, Ms. Capps. 

Ms. CAPPS. Thank you, Mr. Chairman, and thank you both. I 

read your statements. I wasn’t able to be here. But I have a question for each of you and I know I have 5 minutes, so we can base 

it accordingly. Both of you discussed the fact that we lack primary 

care coordination of and incentives for primary and preventive 

care. 

Mr. Elmendorf, you mentioned in your testimony that the potential effects of initiatives where we might invest more now, which 

preventive care is all about, and not realize the savings until later. 

This would be certainly true in efforts to offer preventive care services but right now the CBO doesn’t even allow us to account for 

savings, and as I have often said about a field that I care a great 

deal about, which is preventive health care as a public health 

nurse, there is no special interest group pushing for preventive 

health care. And so my question is, how do we integrate into our 

proposals a way to realize that the savings later are what we are 

investing now for, and if you could give me your response to that. 

I have a different question for you, Mr. Hackbarth. 

Mr. ELMENDORF. So Congresswoman, CBO does not just as a 

blanket matter ignore the health effects of changes in policy. The 


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tobacco example was raised earlier as a case where we very specifically look at the effects of higher tobacco taxes or tougher tobacco 

regulation and try to trace that through to the effects on spending, 

for example, in Medicaid, the number of premature infants that are 

born and the costs of that. So we are very actively looking for evidence to help us trace through the effects of changes in policies on 

health and then on federal and on private health spending later. 

So in no sense are we putting those issues to the side. We are focused on them. The problems that I mentioned are lack of evidence 

in many cases or very long-run effects in many cases and it is just 

more difficult to trace things out over several decades. 

Ms. CAPPS. When you talk about tobacco smoking, it is a specific 

act, and when you talk about prematurity there is a specific entity 

surrounding it. I guess what I am talking about in the area of prevention some harder measures that may be more pervasive. Comprehensive health education for kids in a school curriculum is a 

subject dear to my heart. There is no—most school curricula have 

no place for it today, and if we were to target things like that, 

maybe not that specifically, where it is general education but targeted towards preventive health care, are you looking to us or to 

some study group to measure the impact of the input and then 

some kind of impact and outcome? 

Mr. ELMENDORF. Yes. So we looked to outside researchers to 

guide us in the choices that we make in our estimating process. So 

on the tobacco front, there has been a wide range of research about 

the effects of tobacco on health outcomes. 

Ms. CAPPS. How about obesity and diet and exercise? 

Mr. ELMENDORF. And I think that as well. I think on obesity, 

there are several steps of the prevention that have to work. So I 

think there is a good deal of evidence about the effects of obesity 

on health problems, less on how particular public policy changes 

will—— 

Ms. CAPPS. So that is what we need to work on. 

Mr. ELMENDORF. And that is what we look for. 

Ms. CAPPS. And I hope there are some outside researchers listening who will help us take the ball. I want to turn to another topic, 

but that is one that certainly needs to be explored further, and I 

appreciate what you have just said. 

Mr. Hackbarth, in your testimony you alluded to the declining 

number of medical students pursuing a career in primary care. 

This has been well demonstrated. Could you please expand on how 

you do the correlation between Medicare reimbursement structure 

and this decline? And if I could just roll all my questions together, 

you will understand. Could you offer some suggestions on how we 

would need to restructure a payment system to incentivize primary 

care and how this would then spill over to private payers? 

Mr. HACKBARTH. So the first question, the relationship between 

payment levels and the decline in interest in primary care, I am 

not going to be able to point to particular studies off the top of my 

head but we could—— 

Ms. CAPPS. Maybe you could get back to us if you know of some. 

Mr. HACKBARTH. But certainly in talking to people involved in 

medical education including some of our commissioners and other 

people that I work with in other walks, what I hear from them over 


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and over again is that medical students considering their career options often point to a couple things about primary care that make 

it unattractive. One is the income level relative to other specialties. 

Second is the demands, the lifestyle demands that they experience 

in primary care as opposed to some of the other specialties. 

Ms. CAPPS. Do you think the cost of medical school has anything 

to do with that? I am seeing a lot of people nod behind you. 

Mr. HACKBARTH. Yes, it certainly could. Obviously if you are 

making a salary or an income that is two or three times larger you 

can pay off those medical school loans a lot faster. 

Ms. CAPPS. Exactly. 

Mr. HACKBARTH. And so the cost of medical education is not 

equal for all specialties but it tends to be a real problem for people 

concerning primary care. As far as what to change, we have made 

three types of recommendations. One, you are familiar with the 

process of establishing the fee levels, the relative value of scale, 

and we have identified what we think are some problems with how 

that process works. In particular we think the process focuses more 

on things that are undervalued and increasing values than things 

that are overvalued and need to be reduced. The net effect of that 

bias that we have seen in the system is to hurt primary care fees. 

Ms. CAPPS. Exactly. 

Mr. HACKBARTH. And some steps are being taken to reform that 

process that we are cautiously optimistic about. The second thing 

that we have recommended is what we refer to as a primary care 

modifier. It is basically a bonus for physicians and other clinicians 

who through their practice demonstrate that they are committed to 

primary care. So it would be a modifier. You would get your fee 

plus an increase of 5 or 10 percent if you are designated as a primary care clinician. 

The third thing that we have recommended is a large-scale pilot 

of the medical home idea, a key element of which is to say for primary care because of the unique nature of the specialty, we ought 

to pay not just fee for service but on top of that pay a lump sum 

per patient to cover activities that are not included in the Medicare 

fee schedule, various counseling activities, following up on specialty 

referrals and the like, plus give primary care practices money to 

build some infrastructure including hiring staff that would allow 

them to more effectively coordinate care, especially for complex patients. 

Ms. CAPPS. Has that proposal—— 

Mr. PALLONE. We have got—— 

Ms. CAPPS. I know. I would like to follow up on that topic with 

you. 

Mr. HACKBARTH. I would be happy to talk more about it. 

Mr. PALLONE. Thank you. 

The gentlewoman from Ohio, Ms. Sutton. 

Ms. SUTTON. Thank you, Mr. Chairman. 

Mr. Hackbarth, I understand you may have touched on this already but I would just like to expand it a little bit. In your testimony you mentioned that one way to cut costs from Medicare is to 

reduce payments for hospitals with relatively high readmission 

rates for select conditions. You go on to say that we know that 

some readmissions are avoidable and in fact are a sign of poor care 


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or missed opportunity to better coordinate care, the premise being 

of course that keeping readmission rates down is critical not only 

for saving cost but for quality care. I am interested though in what 

criteria would be used to deem a readmission as unnecessary or 

avoidable. I mean, how do we know that are only penalizing hospitals for readmissions that could have been avoided? 

Mr. HACKBARTH. Let me just begin with a little bit of factual 

background. If you look at the rate of readmissions within 30 days, 

it varies according to the type of admission it is. The rate is higher 

for some things than others. Take a condition like congestive heart 

failure or chronic obstructive pulmonary disease, very common reasons for admission among the Medicare population. You see as 

much as a fourfold difference in the readmission rates between the 

hospitals that are the best and those that are lagging. So we are 

not talking about small differences here. There are quite large differences. Our approach would be to look at the readmission rate 

and set a threshold and obviously this is policy judgment about 

how high to set that threshold but you could set it at quite a high 

level so that, you know, you are basically hitting institutions that 

are way, way above the mean, way above the average in terms of 

this performance on this dimension and we believe that with appropriate incentives, and it could be structured different ways that by 

focusing people’s attention on it, we can improve performance, and 

there are models that they can look to. There are institutions. Don 

Berwick’s organization, the Institute for Health Care Improvement 

has really started to focus on teaching hospitals the things that 

they can do to reduce their readmission rates. So you want an incentive coupled with support information on how to improve. 

Ms. SUTTON. Again, and this is an example in a way of those preventative measures we can take to reduce cost, what we don’t want 

to do is though have an incentive that goes too far the other way 

and people who need to be readmitted aren’t readmitted, so that 

is the balance there. 

Mr. HACKBARTH. Absolutely. 

Ms. SUTTON. Mr. Elmendorf, you know, I understand that in 

keeping with CBO’s nonpartisan role you can’t offer recommendations on any specific policy options, but do you think if we fail to 

enact some meaningful health care legislation in this Congress, 

that the cost to tackle reform down the road will be greater, and 

if so, in what specific areas do you foresee the highest increase of 

costs? 

Mr. ELMENDORF. Congresswoman, I appreciate your understanding of the role of CBO in this regard. Many analysts would 

agree that the changes in the health care delivery system that 

would be needed to improve the efficiency of delivering care will be 

changes that cannot be made overnight. As I said in my testimony, 

there are decades of experience following the rules as they have 

been laid down, the structures, the policies that have been created, 

and a lot of ingrained habits, and devising the rights sorts of incentives, collecting the right sort of information and then letting the 

health care professionals make the improvements in what they do 

is a task that will take time. So the sooner the process is started, 

the more unnecessary and ineffective care can be avoided. The 

longer that policymakers wait to create the incentives and help to 


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provide the information, the more unnecessary and ineffective will 

be given, and because the rising cost of health care imposes such 

a burden on the federal government and on the private sector, the 

more it will be necessary to make starker, more radical changes to 

balance budgets, to let employers and families pay for health care 

down the road, and starting sooner is a way to make the changes 

most based on evidence and the most effective way. 

Ms. SUTTON. Thank you. 

Mr. PALLONE. Thank you. 

Mr. Murphy. 

Mr. MURPHY of Connecticut. Thank you very much, Mr. Chairman. 

It is curious to me listening to people talk on this panel and in 

other forums about how we talk about this issue of rationing as if 

rationing is some futuristic, catastrophic development that is going 

to happen in our health care system when we know it happens 

every day right now. Medicare makes decisions on who gets care 

and who doesn’t, this Congress makes those decisions, and in particular private insurers make those decisions, sometimes based on 

medicine but other times based on cost. And so I wanted to bring 

one particular difference that I see between private plan management and public plan management to your attention and get your 

thoughts on it. 

When I was chair of the health committee in the Connecticut 

State Legislature, we brought in our insurers one afternoon to talk 

about a development that occurred in that the insurers had essentially stopped covering bariatric surgery across the board. Now, certainly there are a lot of abuses in bariatric surgery where it is 

more cosmetic than medical but we know that there plenty of circumstances in which it saves lives and reduces enormous costs 

later on in the system. The answer that we got from the insurers, 

not necessarily when they were all sitting together but privately 

was that because the average time that an individual spends on 

their particular plan is only two or three years before they switch 

to another plan, that it didn’t make sense for them to pay for that 

enormously expensive surgery up front if they weren’t going to bear 

the benefits of the person’s extended health down the road. And it 

seems to me to be a particular handicap of a private insurance system where people now even if they stay with an employer or move 

from employer to employer are moving from plan to plan over a 

long period of time. It is a perfect example of the tragedy of the 

commons. If they all made the decision to cover bariatric surgery, 

they would all be benefited, but they don’t because they are calculating that they are going to pay the cost and not receive the benefits. 

And so in evaluating whether we—the question to you, Mr. 

Hackbarth, is how do you look at that particular problem as you 

weigh the benefits of public or private plans? And then to Mr. Elmendorf, in terms of looking at how you score a new system that 

is reliant on the existing system of private plan management or an 

expanded public option, is that an issue that gets considered in 

your cost estimates? 

Mr. HACKBARTH. A couple thoughts. Earlier I was talking about 

public plans and private plans, each have distinct advantages, and 


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if you are a private plan and you are in a market where there is 

lots of turnover in your enrollee population, it would be surprising 

if they didn’t make the sort of calculation that you were talking 

about; I am not going to have this patient in the long run, and that 

could influence their thinking. I don’t think that is true of all private plans, however. There are some like Kaiser Permanente who 

take the long-term view, in part because they have pretty good stability in their membership but in part also because it is the right 

thing to do. So I wouldn’t want to cast all private plans in the light 

of being, you know, calculating green eyeshade types that are just 

looking for short-term profit. Some are that way, others are not. 

The last comment I would offer on this whole subject of rationing 

is that it has been characterized, well the haves and the have nots. 

That is an important dimension of the debate but let us just focus 

on the haves for a second. I think we are all of two minds about 

the soaring cost of health care. If we are the patient or our loved 

one is the patient, of course is only natural that we want access 

to the latest, most innovative treatment that can help them get 

better. On the other hand, we are also all taxpayers and premium 

payers. You know, Mr. Elmendorf can correct me if I am wrong but 

I think this most recent economic expansion was pretty unusual in 

that the median income did not rise, and a big part of that was 

health care was taking the money out of people’s pockets and a lot 

of Americans are very worried about that in addition to the possibility of losing their health insurance altogether. So, you know, I 

don’t think this is a haves versus have nots. We have got finite resources as a society. We need to figure out how to use them most 

effectively to achieve all the things we want to achieve. 

Mr. ELMENDORF. To the extent that a public plan would provide 

more services now that would save cost down the road, that is 

something we would try to incorporate in our estimates. As I have 

said a couple of times, it is very difficult to track all of those effects 

but certainly something we would try to have in mind. The only 

thing I would just add is that incentives can be created for private 

plans that would not otherwise do the sorts of preventive services 

that are important to do them. The government could pay for vaccinations, flu shots, things of that sort administered through private plans or through public plans so there are ways to work 

through the private plans to accomplish some of those objectives as 

well. 

Mr. PALLONE. Thank you. I think that concludes our questions, 

so I want to thank you very much. First of all, you raised some 

major new ways of doing things and looking at things and all the 

cost efficiencies. It was very helpful in terms of our trying to craft 

health care reform. So thank you very much. 

I will ask the next panel to come forward. Let me welcome all 

of you and introduce everyone. Starting on my left is Jack Ebeler, 

who is vice chair of the Committee on Health Insurance Status and 

Its Consequences of the Institute of Medicine, and then is Alan Levine, who is secretary of the Louisiana Department of Health and 

Hospitals, and then we have Dr. Todd Williamson who is president 

of the Medical Association of Georgia, and finally Dr. Gawande— 

I hope I am pronouncing it correctly—who is associate professor of 

surgery at the Harvard Medical School and associate professor of 


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the Department of Health Policy and Management at the Harvard 

School of Public Health. Again, I want to thank you all and we will 

have opening statements for 5 minutes. 

We will start with Mr. Ebeler. 

STATEMENTS OF JACK EBELER, VICE CHAIR, COMMITTEE ON 

HEALTH INSURANCE STATUS AND ITS CONSEQUENCES, INSTITUTION OF MEDICINE; ALAN LEVINE, SECRETARY, LOUISIANA DEPARTMENT OF HEALTH AND HOSPITALS; M. TODD 

WILLIAMSON, M.D., PRESIDENT, MEDICAL ASSOCIATION OF 

GEORGIA; AND ATUL GAWANDE, M.D., ASSOCIATE PROFESSOR OF SURGERY, HARVARD MEDICAL SCHOOL, ASSOCIATE PROFESSOR, DEPARTMENT OF HEALTH POLICY AND 

MANAGEMENT, HARVARD SCHOOL OF PUBLIC HEALTH 

STATEMENT OF JACK EBELER 

Mr. EBELER. Thank you, Chairman Pallone, Ranking Member 

Deal, members of the subcommittee. I am pleased to present today 

the findings and recommendations of the Institute of Medicine 

Committee on Health Insurance Status and Its Consequences, 

which is funded by the Robert Wood Johnson Foundation and 

chaired by Larry Lewin. It is a particular honor to appear before 

this subcommittee which I once had the privilege of staffing. 

The IOM presents its findings formally in rigorous and occasionally dense academic reports. Looked at another way, we present a 

simple and unfortunately logical three-part story about coverage of 

the uninsured. Coverage is trending down. The evidence is better 

than ever before that health coverage matters for access and 

health, and even the care of the insured may be affected by high 

rates of uninsurance in the community and we strongly recommend 

action. Let me briefly review each area. 

First, since 2000, we see an erosion in employment-based health 

benefits coupled with improvements in Medicaid and the child 

health program. The net result is that the portion of children who 

are uninsured has remained relatively stable at 11 percent while 

the portion of adults who are uninsured has risen from 17 to 20 

percent. The principal cause of that eroding coverage: rising health 

care costs and premiums coupled with changes in the economy and 

the labor market. With premiums rising about three times faster 

than wages, employers are less able to offer coverage and employees are less able to afford it even if offered. Our committee concluded that these trends would not reverse without concerted action and the current recession will only make the problem worse. 

Second, we find that the evidence is stronger than ever before 

that even with the availability of safety net services, uninsured 

Americans frequently delay or forego doctor visits, medications and 

other effective treatments and those deficits in care have consequences for health. We see that in particular for those who are 

sick with serious health care needs, chronic and acute, for which 

medical intervention can be most beneficial. Again, there is a simple logic here. Coverage and access matter more as our health care 

gets better. For uninsured children, we see shortfalls in immunizations, in prescription medications, asthma care and basic dental 

care, missed school days and more preventative hospitalizations. 


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Uninsured adults with chronic health conditions are more likely to 

have received no medical attention in the prior year and they experience more rapid declines in their health status. They are less 

likely to receive vaccinations or cancer screening services, more 

likely to be diagnosed with late-stage cancer and they are more 

likely to die prematurely. 

Fortunately, we also found good news. When uninsured people 

acquire health insurance, they can experience improvements. Previously uninsured children who enroll in CHIP or Medicaid are 

more likely to have their serious health problems identified earlier, 

have fewer avoidable hospital stays, better asthma outcomes, fewer 

missed days of schools and more appropriate preventive services. 

Previously uninsured adults who become eligible for Medicare are 

more likely to receive appropriate care that improves their health 

and prevents costly complications. Their risk of death when hospitalized for serious conditions is also reduced. We concluded that 

lacking health insurance reduces access to effective health care 

services and is hazardous to the health of children and adults. 

More importantly, we can now validate for you that gaining health 

insurance provider substantial health benefits to the previously uninsured. 

Third, we report on a potential spillover effect. When community 

level rates of uninsurance are high, the insured population is more 

likely to report difficulties in accessing needed care and less likely 

to report satisfaction with that care. We also found that widespread 

vulnerabilities in local health care delivery including emergency 

care are sensitive to financial pressures that may be exacerbated 

by high rates of uninsurance. The committee concluded that the 

trends in coverage and the evidence of adverse health consequences 

are all too clear, and while we did not advance specific policy proposals we called for immediate action to address the coverage and 

cost problems. Stated formally, the Institute of Medicine recommends that the President work with Congress and other public 

and private sector leaders on an urgent basis to achieve health insurance coverage for everyone, and in order to make that coverage 

sustainable, to reduce the costs of health care and the rate of increase in per capita health care spending. 

Thank you. I look forward to our discussion. 

[The prepared statement of Mr. Ebeler follows:] 


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Mr. PALLONE. Thank you, Mr. Ebeler. 

Mr. Levine. 

STATEMENT OF ALAN LEVINE 

Mr. LEVINE. Thank you, Mr. Chairman. I am here today to support systemic reform of health care in our country and to advocate 

that every American have access to affordable health insurance. 

However, covering the uninsured by simply expanding government 

programs like Medicaid and Medicare without structural reforms 

that focus on early identification of people with chronic disease and 

prevention is not a solution and may in fact make the problem 

worse, particularly from the perspective of the States. Let me explain. 

In Louisiana, we are proud of the fact that 95 percent of our children have insurance. Most are covered through Medicaid, and 

while they have coverage, only 39 percent accessed a dentist last 

year. Only 55 percent of our infants zero to 15 months received 

their recommended well-child visits. Our infant mortality rate is 

the second highest in the Nation. Our death rate among children 

is the second highest in the Nation. We have one of the highest 

rates of insured children but the real question is, does that alone, 

does the Medicaid one size fee for all system provide the access, 

proper diagnosis and coordination of needed services. Structurally, 

we argue it doesn’t. Considering that 56 percent of our Medicaid 

population is African-American and nationally 56 percent of the 

Medicaid population is minority, we are literally as a matter of 

practice institutionalizing the very disparities that we all want to 

address. 

Who is accountable for the fact that 30 percent of what we are 

spending does nothing to improve health outcomes, and what industry would a purchaser accept paying a 30 percent premium for 

services that don’t add value? Medicaid and Medicare were originally designed simply to pay claims, a financial process, at its 

worst breeding waste, corruption and fraud, and at its best supporting payment policies that incent legal but unnecessary and 

sometimes even harmful care. Many argue the low administrative 

cost of Medicaid and Medicare are reason enough to expand a government solution. I argue it doesn’t cost anything to simply pay 

claims. The comparison simply isn’t a fair comparison. The hidden 

cost of the inefficiencies caused by not coordinating care, not managing chronic illness and chasing fraud costs tens of billions of dollars each year that is not counted toward the administrative costs. 

To quote Dr. Emmanuel, special advisor to the President on 

health care reform, the health care delivery system is a fragmented, fee-for-service arrangement emphasizing delivery of more 

services rather than the right services. I couldn’t agree more. Why 

is the C-section rate 121⁄2 percent in Minneapolis but 26 percent in 

south Florida? Why does Louisiana have the highest Medicare cost 

per capita but the worst health outcomes? Just last week, three 

more physicians in south Florida were arrested for infusion therapy 

fraud. In 2005, providers in two south Florida counties submitted 

more than $2.2 billion in claims for infusion therapy, 22 times the 

total filed by the rest of the country combined, even though only 

8 percent of the HIV/AIDS population lives in south Florida. We 


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will never catch up with fraud or inefficiency if our system is designed to pay claims first and then ask questions later. It is simply 

difficult to manage. 

Even States are forced to resort to gimmicks in Medicaid to optimize federal funding, a persistent source of frustration for Congress, the executive branch and for the States. We believe the solution is a structural reform that provides each American with access 

to health insurance, harnessing the resources and infrastructure of 

the private sector and government. Consumers should have a 

choice with government acting in its proper role of ensuring transparency and providing the system with proper oversight. 

I again agree with Dr. Emmanuel, the President’s advisor, who 

has said the advocates for a single-payer system fail to recognize 

the very organizations with the infrastructure necessary to coordinate care and implement the technology to develop rational payment models are the very insurance organizations they disfavor. 

Opportunities exist to correct the tax code to eliminate the bias 

against individuals, particularly low-income individuals. Rather 

than segregate the poor into government programs like Medicaid 

where they are confined without choice to poor outcomes, low-income Americans could be provided with premium assistance and be 

permitted to choose their own certified health plan that meets 

stringent requirements. The premiums should be risk adjusted and 

align the financial incentives with early identification of people 

with chronic conditions so they can be properly managed. Each 

plan should be measured publicly on key performance metrics, particularly for children, and we should focus on things like management of chronic disease, engaging consumers in their own behaviors, and I will tell you, the evidence as I will talk about during 

the Q&A shows that these models work. They have worked in California, they have worked in New York, they have worked in Arizona, they have worked in States all over the country, and we have 

shown actually that avoidable hospitalizations were reduced by 30 

percent for minorities in California by using this model. 

I look forward to answering your questions, particularly as it relates to the medical home model. We think that has to be the heart 

of any reform as well as investment in creating more primary care 

physicians and dealing with the medical liability system. 

Mr. Chairman, I appreciate the opportunity. 

[The prepared statement of Mr. Levine follows:] 


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Mr. PALLONE. Thank you. 

Dr. Williamson. 

STATEMENT OF M. TODD WILLIAMSON 

Dr. WILLIAMSON. Good afternoon, Chairman Pallone and Ranking Member Deal and members of the committee. My name is Todd 

Williamson, and I want to thank you for the opportunity to speak 

to you today on an issue that is vitally important to my profession 

and my patients. 

I am particularly pleased that you have included on this panel 

an actively practicing physician who sees patients on a daily basis. 

I am a medical doctor, board certified in neurology, and practice in 

Lawrenceville, Georgia. I also have the privilege of serving as the 

president of the Medical Association of Georgia and am testifying 

on behalf of six State medical societies representing more than 

35,000 physicians. 

Medical care in America became the best in the world because 

of the patient-physician relationship and the right of a patient to 

select his or her own physicians. Patients have the right to privately contract with the physician of their choice. Decisions regarding care and the cost of care were made as part of this coveted relationship. This relationship and the profession it fostered served patients well and attracted bright young men and women into a rewarding field of service to their community. Clearly now something 

has changed. The private practice of medicine, once the backbone 

of America’s medical care system, has become nearly untenable. 

Many newly trained physicians do not have the option of going into 

private practice because of large educational debt and high practice 

startup costs. This is especially true for primary care specialties. In 

many communities, only older, established practices are feasible 

and new physicians are rare. In my home county of Gwinnett, the 

population has nearly doubled during my practice tenure but the 

number of full-time practicing neurologists has remained nearly 

constant. The number of primary care physicians has not kept pace 

with the population and the number of general surgeons has actually declined. This means that it is more difficult for patients to see 

the doctor of their choice. 

How did this happen? The answer lies in examining how we pay 

for our medical care. Initially, health insurance was a mechanism 

for distributing risk, not a means of paying for all medical care 

services. Soon after, third parties began paying for medical care 

and they began controlling the delivery of medical care. Medical decisions have become the business of third-party payers causing 

delays in the delivery of care. Our patients have lost the ability to 

choose where they receive care and physicians are faced with takeit-or-leave-it contracts offered by large health plans. As the impact 

of third-party payers increased, administrative burdens were 

placed on physicians. When I started practicing nearly 15 years 

ago, my office of four doctors employed one person to submit insurance claims. We are now down to three doctors but we have three 

full-time employees just to manage insurance issues. These added 

administrative costs divert funds that could be used for patient 

care. Simultaneously, Medicare and Medicaid rates have not kept 

pace with the cost of providing care, and in many instances are 


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below the cost of delivering the care. Private payers have reduced 

payments dramatically using federal payment levels as guidelines. 

We all know the payment system is broken. How should it be 

fixed? I believe the way to heal our payment system is to restore 

the patient-physician relationship by ensuring that patients have 

the right to privately contract with the physician of their choice 

without onerous penalties regardless of the presence of a private or 

government third-party payer. The importance of this point cannot 

be overstated. Medical decision making would once again be in the 

hands of patients and their physicians. This will enhance patient 

choice, heal the ailing payment system and once again restore the 

best medical care system in the world. We hear a lot about the 

high cost of medical care in our country. Please consider the difference between medical care costs versus medical care expenditures. While the cost of many specific procedures and therapies is 

actually lower today than in years past, we now expend much more 

for care because more patients have access to more tests and therapies that simply were not available in years past. We can significantly reduce health care expenditures by enacting proven, effective medical liability reform measures that will eliminate the need 

for so-called defensive medicine. 

As an early adopter of electronic medical records, I will caution 

you not to overestimate the savings from advances in health information technology. We must continue to guarantee patient privacy 

and ensure that medical records are kept confidential. However, regardless of whatever reforms are enacted, we can preserve patients’ 

access to quality medical care only by ensuring the rights of physicians and patients to privately contract for care. 

I appreciate this opportunity to present the views of a practicing 

physician to you today, and I am happy to answer any questions 

you may have. Thank you. 

[The prepared statement of Dr. Williamson follows:] 


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Mr. PALLONE. Thank you, Dr. Williamson. 

I just want everyone to know, we have three votes. We are going 

to hear from Dr. Gawande and then we will break and come back 

right after the votes for questions, so we will ask the panel to stay. 

Dr. Gawande. 

STATEMENT OF ATUL GAWANDE 

Dr. GAWANDE. Chairman Pallone, Ranking Member Deal and distinguished members of the subcommittee, it is an honor to be 

speaking to you today about repairing our ailing health care system. As a clinician and observer, this is what I see. Our health system is failing in cost, coverage, safety and value because health 

care itself has become so immensely complex. I will try to explain. 

The new edition of the International Classification of Diseases 

identifies more than 68,000 different diagnoses that we now know 

a human being can experience, and science has given us beneficial 

remedies for most of them with more than 4,000 different procedures and 6,000 different drugs, but the remedies are rarely simple. Each involves different steps care, risks and uncertainties, 

often expensive technologies and complex coordination. This extreme complexity has produced failures of coverage and of execution with large numbers of patients experiencing inappropriate 

treatment, avoidable infections and other forms of costly harm. 

These failures reveal that the structure of our health system is not 

suited to what we have learned is required for good care. It has 

three main problems. Human beings need preventive and acute 

care throughout our lives including costly medications, procedures 

and hospitalizations yet most Americans lack coverage for significant stretches of time. The system doesn’t measure its successes or 

failures. And third, the system has no reliable mechanism for deployment of practical knowledge for ensuring, in other words, that 

important discoveries actually reach the average American. 

The result is a troubling mismatch. We are an industry of highly 

skilled and extraordinarily hardworking individual professionals 

but we work in a structure where no one is aware of, let alone responsible for, the overall effects of what we do, whether for our patients or the economy as a whole. 

This reality, I want you to know, comes home to me weekly. Recently I helped care for a critically ill woman in her 60s with severe 

abdominal pain. Insurance coverage troubles may have played a 

role. She had not seen a doctor in 15 years and had multiple preventable problems. To save her, I operated to repair her ruptured 

colon, a cardiologist treated her subsequent heart attack, 

intensivists managed her pneumonia and a vascular surgeon tried 

to rescue her foot, which had become gangrenous and would have 

to be amputated. She didn’t make it. It was all too much for her. 

But there was a moment when we thought she would pull through, 

and as we contemplated it and considered that when she went 

home she would be unable to work, unable to eat for months and 

have a large open wound, someone asked, who is going to be her 

doctor, who is going to take care of her. The silence was deafening. 

The answer, of course, was that we all needed to be her doctor. 

Each of us would see this woman in our clinics for one of her problems but we had no real mechanism, let alone incentives, to work 


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as a team and ensure that nothing fell between the cracks, that we 

all worked in a common direction for her. 

The great satisfaction of medicine is to have skills that help people and to be rewarded for using them but there is also a constant 

demoralizing recognition that one is but a white-coated cog in a 

broken machine. Our present structure of health care with its gaps 

in coverage and value has set us up for failure. A better health system requires a few new capabilities. For one, it must provide coverage for people without it, a kind of lifeboat for those left out or 

dropped from care, and over the next few months we are going to 

be hearing you argue until we are all blue about whether that lifeboat should be a public program, a private program or both, but 

the key is that the coverage must be there and it must be adequate. We must simply take that step. Just having an insurance 

program, though, will not make health care better, safer or less 

costly. We must also outfit the system to measurably reduce failures and increase success in health care delivery and thereby increase the value of our immense investment in health care, and 

that requires doing three new things. 

Number one, we have to measure national statistics. We must 

measure in real time the results and value of care nationally, how 

many Americans suffer hospital infections, die from surgical complications and other basic indicators. Our current data measurement is inadequate, uncoordinated and at least 3 years out of date. 

This is one-sixth of our economy, and not having these measures 

is like not knowing our unemployment or inflation rate. 

Second, we have to support discovery of practical know- how. We spend $30 billion a year seeking new scientific discoveries but little 

to identify how hospitals and doctors’ offices can put them all into 

effective use. This is vital, lifesaving reach. My team at Harvard 

and at the World Health Organization, for example, devised a 90- 

second safe surgery checklist that was found to reduce surgical 

complications and deaths by more than one-third. We need more 

solutions like these, basic team checklists for everything from heart 

attacks to infectious outbreaks, and we also need investigation of 

the complex solutions you heard about today such as how to organize and bundle payments for teams to be more effective for care 

and wellness and measure what is happening with them. 

And third, we need to coordinate deployment. At present, new 

knowledge like that safe surgery checklist, takes more than a decade to reach most Americans because no one is responsible for ensuring dissemination. A reformed system must therefore support 

active deployment. 

I would like to see this work coordinated in a national institute 

for health care delivery but it can be done through existing agencies like the National Center for Health Statistics, the Agency for 

Health Care Research and Quality, and insurers like Medicare or 

a coverage program for the uninsured. The debate about how we 

will do any of these things will be fierce but we must do these 

things if we want a better health system and the goals are achievable. By 2013, we can virtually eliminate personal bankruptcies 

due to health care debt. We can make health care measurably more 

effective including reducing the number of infections picked up in 

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diac disease is no longer the number one cause of death, and by 

reducing major complications and deaths from surgery by at least 

a fourth. We can improve the ability of clinicians to do their jobs 

by reducing the burden of insurance paperwork by at least 50 percent, and we can cut overall health inflation by at least half by 

2013 and ensure no business has to spend more than 15 percent 

of payroll on ordinary health coverage. 

Health reform is not going to produce a utopia but we can have 

transformation, which is to say we can do more than just catch up 

to other countries. If we follow through on this work, we will have 

the most effective health care system in the world. I thank you. 

[The prepared statement of Dr. Gawande follows:] 


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Mr. PALLONE. Thank you. You went over, but your optimism 

makes me feel good. 

What we are going to do is, we have about half an hour approximately for votes and then we will come back, so we ask you to stay 

here and then when we come back we will have questions. So we 

are in recess. 

[Recess.] 

Mr. PALLONE. The committee will be called to order. Myself and 

Mr. Deal are the first questioners so we might as well get started 

and then I am sure the others will start coming in. I will recognize 

myself for 5 minutes. 

I wanted to ask Dr. Gawande the first questions. During the 

health summit, and I keep harking back to that, the consensus was 

clearly that we weren’t looking to make radical changes with the 

system. You know, we really were just looking to improve the current system, and I mean, politically certainly that is going to be the 

easiest way to go, and of course, from my perspective, when we talk 

about the current system, I divide it into three parts. One, existing 

government programs like Medicare, Medicaid, SCHIP and how we 

can improve those, and then the second thing would be employersponsored care, which I think Mr. Ebeler stated has been drastically reduced because of rising costs over the last few years, the 

percentage of Americans that get their health care through their 

employer is down, and then finally of course, there is this area of 

creating some kind of a health market or national insurance pool 

that the government would regulate in some way either with totally private insurers or possibly with a government option for 

those who now can’t get a government program because they are 

not eligible or they don’t get it through their employer and they 

have to go on the private market. So when I talk about building 

on the current system, I mean those are the kinds of things that 

I talk about. 

But you say, I think, Dr. Gawande, that we can’t simply expand 

coverage and leave it at that. In other words, we hope that we can 

reduce costs and reduce growth and come up maybe with a new 

funding source, as the President has in his budget, but that is all 

part and parcel of the ability to expand coverage. In other words, 

we are going to hopefully expand coverage by using some of the 

cost savings but if all we do is expand coverage, that is not going 

to be good enough. 

And I also wanted to hark back to what Mr. Ebeler said because 

I was thinking of my staff person in my office. You said that high 

levels of uninsurance may undermine health coverage for the insured population, and in the previous panel I used the example of 

my staff person in New Jersey who has, I think, Blue Cross/Blue 

Shield, works for me, but he couldn’t get a primary care physician 

so he ended up in an emergency room. So I guess my fear is, you 

know, we want to build on the current system, we want to expand 

coverage but at the same time we have to make sure that it is done 

in a way that improves the system and creates cost efficiencies. So 

I guess I would like to know from Dr. Gawande, how do we achieve 

these goals? I mean, can you walk me briefly through and show 

how it is achievable to cover everyone and use cost savings to pay 


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for a good percentage of it and still have a quality system? I mean, 

you could talk for days but—— 

Dr. GAWANDE. So the short answer is that it is going to have to 

happen on a path that takes a step-by-step process. So imagine on 

January 1, 2011, what can we do. Within weeks we could cover an 

entire population of people. We could start with people under 25, 

for example, and have them in coverage by saying that we would 

enroll them in a plan and it can build on the experiences we have. 

It could be one that is based on something like the federal employee benefits plan which offers a range of private options. It 

could be an option that is a public option building off of Medicaid 

or Medicare. But that coverage part can be done. The second part 

of it is whether you are able to begin to include the kinds of proposals that people proposed earlier in that first panel. Do you begin 

to include, for example, in Medicare and other kinds of programs 

medical home and other models which start to make primary care 

better, just better organized. But we have work to do on our side 

in medicine as part of reform as well, and I think that includes 

being able to now test ways to structure care that make it more 

cost effective but more important better in safety and better in 

quality. 

Mr. PALLONE. Let me ask you this, and I am not trying to cut 

you off, but include for me your opinion about whether there should 

be a public option and whether or not we should be expanding employer-sponsored care, for example, by providing tax credits or, you 

know, making it more affordable using federal dollars for that. 

Dr. GAWANDE. Well, the debate over the private-public option is 

a bit baffling to me. I think the question people are asking is 

whether the existence of a public choice undermines the ability of 

the private sector to succeed, and we live in a world that looks like 

that as it is. We live in a world where we have Medicaid, we have 

the VA, we have Medicare and we have private insurance. We have 

a kind of flotilla of ships that provide our health care system with 

a big gap because you have 15 percent dumped off of these ships 

into the sea without coverage and so what we are talking about is 

what is the makeup of this ship that would be a lifeboat for the 

people who are left out. As a clinician, I don’t have any strong preference about a private plan. Dealing with private insurers is as 

ugly to me as dealing with Medicare. I have, just like Dr. 

Williamson laid out, I have a full-time person who has to manage 

just dealing with insurance rejections and referral numbers and everything else and so I think a fundamental part of this is that we 

include research work for the practical know-how of cutting that insurance paperwork and that private insurance administrative costs 

for us down. I think there is a burden that I see as both a citizen 

and as a physician where I wonder what is the added value of paying more for some of those private insurance costs that I am absorbing and I do think there is a burden to prove that value in 

being able to coordinate care and improve the value of our end results. 

Mr. PALLONE. OK. Thank you. 

Mr. DEAL. Well, this is a difficult onion to peel. First of all, I 

would like to ask the two doctors here, both of whom are specialists, when we start talking about concepts like medical homes, obVerDate Mar 15 2010 14:24 Mar 02, 2012 Jkt 067099 PO 00000 Frm 00164 Fmt 6633 Sfmt 6633 E:\HR\OC\A099.XXX A099

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viously your practices depend on referrals from someone below you 

in the chain of delivery. Do you have concerns about medical homes 

becoming the proverbial gatekeepers that maybe absorb more responsibility than perhaps we would anticipate? Is that a concern? 

Dr. WILLIAMSON. That certainly was a concern I think back in 

the 1990s. I think what we saw is that the gatekeeper model really 

didn’t work for anyone. It added delays, it added extra costs. I do 

agree that anything that would serve as a gatekeeper function is 

concerning to specialists and it should be concerning to patients. As 

I understand the medical home concept as it has been presented, 

it is not fundamentally a gatekeeper as that term was initially introduced. So yes, I am concerned about any gatekeeper scenario but 

my understanding of the medical home scenario as is being put 

forth now doesn’t include that as a significant consideration. 

Dr. GAWANDE. And I would agree. The medical home concept, as 

I understand it, and it does shift a bit but the general idea is that 

the only way the primary care physician is paid is if you are physically with the patient in your office, and compensating them for 

all that time they spend on the phone, on e-mail, coordinating care 

with other specialists should be done and that is a major part of 

what primary care physicians do and we should make that more 

attractive and better structured, and I think that would make the 

specialty care better as well. The way I think of it is, we should 

have a medical home but there are going to be specialists in the 

neighborhood. 

Mr. DEAL. Well, I agree with the concept as long as it plays out 

the way the both of you have talked about. 

One of the other concerns I have is that we are talking about reform but invariably we come back to wanting to use our current 

programs as a model or a basis for expansion, and as somebody, 

several of you actually have pointed out, we currently face the crisis of SGR every year. The complaints that we get from both Medicare and Medicaid, from the provider community continue to grow, 

and to anticipate we are going to dump 47 million people into government programs that already have their problems without structurally reforming those programs I think is not feasible. Now, we 

talk in terms of being able to save half or whatever of the ultimate 

cost to pay for this expanded coverage from efficiencies within the 

current system but then that means there is another half that 

comes on top of that. 

Mr. Levine, I also have a concern of, for lack of a better term, 

the woodworking effect. We recognize that there is always a woodworking effect once you have coverage of expanding the utilization. 

Do you have a concern about that? 

Mr. LEVINE. Thank you, Mr. Deal. I would think that anything 

that we do to expand government programs can potentially have 

the unintended consequence of allowing people the opportunity to 

leave their private coverage and come into the public program, and, 

you know, the difficulty from the States’ perspective as it relates 

to Medicaid is, if that starts to occur, if you see Medicaid rolls increase dramatically, we can’t serve the population we have now. 

Providers, because of the rates paid in Medicaid, it is very difficult 

to get specialists and even primary care. So I would be concerned 


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about what we call the crowd-out. So I think States really need to 

be consulted on that before that decision is made. 

Mr. DEAL. Dr. Williamson, you mentioned the question of defensive medicine practices and the necessity for medical malpractice 

reform. 

Dr. Gawande, do you agree that that is an element that ought 

to be addressed in this overall discussion? 

Dr. GAWANDE. I have actually written a great deal about what 

I consider to be a problematic medical malpractice system. It 

doesn’t work for patients, it doesn’t work for doctors and it is excessively costly. One of the most—from some of the research work we 

have done, though, the most valuable thing we can do for malpractice is have universal coverage. Other countries that have universal coverage have markedly lower malpractice costs, primarily 

because the payouts for the medical costs are no longer in the legal 

system and that is the majority of what is paid out in the costs. 

So physicians could have a markedly reduced premium for their 

malpractice expenses in a universal coverage system simply because that system now guarantees the coverage for universal coverage and it doesn’t end up in that legal expense. 

Mr. DEAL. I don’t quite follow the logic of that. Let me say from 

the perspective of what I just heard you say, is that if we get more 

people into the public system, that the doctors don’t need to worry 

as much about the cost of medical malpractice. It would seem to 

me that they would have even exponentially more reason to worry 

about it. 

Dr. GAWANDE. So if I get sued and I have to pay $1 million for 

a malpractice suit, most of that money is future medical expenses 

for the patient who was harmed and left disabled. In other systems, because that person’s disability and their medical expenses 

are covered in a national health system, that doesn’t enter the 

court system and so the costs for medical malpractice are massively 

lower, much lower than you would achieve with a cap, much lower 

than other kinds of approaches, and a universal coverage system 

is hugely, hugely beneficial for us as physicians in helping decrease 

that malpractice cost. 

Mr. DEAL. That would require some substantial changes of State 

and perhaps federal law as well, I think to be able to discount the 

cost of future medical as a compensable factor in medical malpractice. 

Dr. GAWANDE. It is just that every other country that has a universal coverage system is able to do that because they have health 

coverage. 

Mr. DEAL. OK. Thank you. 

Mr. PALLONE. Ms. Christensen. 

Ms. CHRISTENSEN. Thank you, Mr. Chairman. 

Mr. Levine, I clearly support Medicaid and like the Chairman, 

you know, consider that building upon Medicaid, SCHIP and others 

as part of extending coverage but I do share some of your concerns 

about the ineffectiveness of the care and the poor outcomes but 

don’t you think we can fix Medicaid without throwing the baby out 

with the bathwater? I mean, there are other factors like lack of 

providers, facilities, services in poor neighborhoods. 


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Mr. LEVINE. I agree with you. I am not suggesting necessarily 

throwing the system out but what I am saying is that expanding 

it without fixing it will be perilous for us. I will tell you, I look at, 

for instance, in California. When California implemented the coordinated care model and they allowed consumers to opt out of the 

fee-for-service system into a managed Medicaid model, unique to 

California, the rate of avoidable hospital admissions for AfricanAmericans decreased by 36 percent, Hispanics by 37 percent. When 

we talk about proving out prevention—because what went along 

with that was, looking at, for instance, in New York, cervical cancer screenings went from 39 percent to 71 percent using a coordinated care model, diabetes testing went from 32 percent to 76 percent. What you find when you move towards a coordinated model 

is, you will spend more on physicians, particular primary care physician services, you will spend more on pharmaceuticals for things 

like diabetes maintenance drugs and things like that, but you will 

spend much less on institutional services that cost more. And that 

data is out there. There is compelling data over 20 years to support 

that claim. 

So I think that fundamentally before you look at any expansion 

into public programs, into public fee-for-service programs, I would 

argue that you should fix the structure so it does three things. 

Number one, it is geared towards risk adjustment of premiums so 

if somebody is chronically ill, there are more resources that follow 

them. Number two, it also incentivizes people to identify people 

with chronic conditions and it also encourages chronic disease management, and then finally engaging the consumer in their own behavior, particularly if they have a chronic disease. 

Ms. CHRISTENSEN. Thank you. I am going to try to get two more 

questions in. Thank you for the clarification. 

Dr. Gawande, you mentioned one of the reasons for having the 

problems within the system is decision making not being as consistent or reliable as people deserve. Now, in looking at that decision-making problem, have you seen any racial, ethnic, economic or 

gender basis for this or is it across all lines? 

Dr. GAWANDE. No, and just as Mr. Levine pointed out, the ways 

in which the insurance coverage plays in affects the disparities in 

the care and then also in the decision making that occurs and we 

have seen some very powerful studies that show, for example, that 

people presenting with the same complaints about chest pain end 

up having very different care. One of the striking things from being 

able to implement our work in making surgery safer is we have 

done it from rural Tanzania to top hospitals in places like Seattle, 

and the striking thing is that you are taking places that are hugely 

disparate and even with that degree of resource changes, we were 

able to reduce their complication rates and bring them all up the 

bell curve and reduce the disparities considerably, and if we can do 

that from India and Tanzania and Jordan to London and Toronto 

and Seattle, we can do that between, you know, my hometown in 

rural Ohio and a place like here in D.C. 

Ms. CHRISTENSEN. Thank you. 

Dr. Williamson, could you elaborate on your statement in your 

testimony that you caution us not to overestimate the savings from 

advances in health information technology? 


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Dr. WILLIAMSON. Yes, I can, and that is made purely from a perspective of a practicing physician. I was one of the first 4 percent 

of physicians in Georgia to implement an electronic health record 

as well as electronic billing services, and that one item was the single largest purchase in my practice in its 25-year history, and 

maintaining it is enormously expensive every month. Once you buy 

it, you have got it. Changing it is prohibitive. So you are pretty 

much locked into a certain cost of maintenance month by month. 

It is a fantastic tool and it allows you to do things that you simply 

cannot do otherwise. Unfortunately, saving money is not one of the 

immediate advantages that I have found. Now, I know many practicing physicians that have bought systems like this and actually 

abandoned them and just called it a loss. I know other physicians 

that feel like it has added to the productivity of their office. It is 

not a slam dunk though, and it shouldn’t be, I don’t feel, viewed 

as a way to instantly save money across the board. 

The other concerns that I have about health information technology going forward, although certainly it could make us more efficient, is that protecting patient privacy be paramount in that because a patient is much less likely to come to the doctor if they 

know that their medical records are instantly going to be on the 

Internet somewhere, and we have got to keep that in mind going 

forward. You are talking about something that would keep patients 

out of the doctor’s office. That definitely would. So I strongly encourage you to keep that in mind as we go forward, protecting patient privacy in health information technology. 

Ms. CHRISTENSEN. Thank you, Mr. Chairman. I would like to just 

ask unanimous consent to enter a statement for the record submitted by AARP for this hearing. 

Mr. PALLONE. We have seen it, so without objection, so ordered. 

Ms. CHRISTENSEN. Thank you. 

[The information was unavailable at the time of printing.] 

Mr. PALLONE. Mr. Burgess. 

Mr. BURGESS. Mr. Chairman, before I do questions, may I just 

take a moment for a point of personal privilege? I wanted to add 

to your optimism after Dr. Gawande testified and he gave you 

great hope. I have a young constituent here from Texas, Wen Chin, 

who is a student at the Texas Academy of Math and Sciences at 

the University of North Texas. This is where young high school 

students are taken into a college environment and allowed to flourish, and Mr. Chin has done exactly that and he has developed a 

new system called pulse plasma deposition, which lays down a 

layer of plastic, silicone, metal and a variety of other substances 

which inhibits the growth of bacteria and therefore could one day 

reduce our hospital-acquired infections with a very inexpensive 

process that he has developed. So Mr. Chin, stand up and take a 

bow. As I understand it, he has won a scholarship from Siemens 

Westinghouse for $100,000 and he is a finalist for an Intel scholarship, so congratulations. I wanted to add to your sense of optimism 

that there are indeed new breakthroughs on the horizon that are 

not going to break the bank. Thank you, Mr. Chin, for your indulgence. 

Now, I am going to ask you a question. This is really mean to 

do it but I am going to do it anyway because I have been sitting 


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here all day, and you don’t have to answer, but let me just go 

across the board here and if you have health insurance today, 

would you swap that one for one for Medicaid coverage? Mr. 

Ebeler? 

Mr. EBELER. I am in a policy box here because I am representing 

the IOM committee and we did not speak to that, so my only advice 

to you is that health insurance coverage matters, it is important 

for everybody to have it. We have no judgment on that question. 

Mr. BURGESS. Very good evasive answer. 

Mr. Levine? 

Mr. LEVINE. Would I trade my coverage for Medicaid? 

Mr. BURGESS. Yes. 

Mr. LEVINE. No. 

Mr. BURGESS. Dr. Williamson? 

Dr. WILLIAMSON. No. 

Mr. BURGESS. Dr. Gawande? 

Dr. GAWANDE. No. 

Mr. BURGESS. The reason I ask is, I offered an amendment during the SCHIP legislation so that members of Congress could get 

a better idea, and Mr. Levine, you have alluded to it, that provider 

rates are different in Medicaid. Of course, it varies from State to 

State. It may be different in different States but it is typically hard 

to find a doctor if you pick up the phone and call and say will you 

take my Medicaid. And then of course for the doctors who do, it is 

very difficult if you need a cardiologist or an ear, nose and throat 

specialist or whatever, it is hard to find a specialist to take that 

care. So I offered an amendment to get members of Congress to 

give up the FEHBP, the Federal Employee Health Benefit Plan, 

and switch to Medicaid so we could live that life for a while and 

see if we couldn’t be more creative about offering better solutions, 

and I didn’t get any votes. So just like you all, you are not unique 

in that. But I didn’t poll the IOM and maybe next time I need to 

do that. 

Now, Mr. Levine, you have brought up some very interesting concepts about Medicare being simply a bill-paying organization and 

therefore the overhead, when we hear overhead comparisons between Medicare and other private sector plans that that is perhaps 

a false comparison, and we also all know that we never calculate 

the cost of capital. Medicare has a huge unfunded liability and if 

any of us were to construct a business plan and carry liability we 

would have to have interest payments on that liability going forward. But would you care to speak to that just a little bit more? 

Mr. LEVINE. Well, there are a couple of things, I think two 

things, first, about the administrative costs of Medicare and Medicaid and then two, relating to rates. Let me answer the second 

part first. You talked about rates. Let us be clear about how Medicaid sets rates. It is different from Medicare. Medicaid sets rates 

based on how much a State can afford generally in the aggregate 

and there is no rationale behind the rates. If you are a neurosurgeon in Lake Charles, Louisiana, and you are a neurosurgeon 

in Baton Route, you are getting paid 90 percent of Medicare, and 

by the way, I understand that is a good pretty rate compared to 

other States. 

Mr. BURGESS. Very good. 


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Mr. LEVINE. So come to Louisiana if you are a doctor. But irrespective of the market conditions, we pay the same thing. That is 

not a way to deal with the shortages that we have, and in fact, I 

have a case right now, a woman with a brain tumor that literally 

was told by her primary care doctor who lives in Lake Charles, you 

have a brain tumor, there are no neurosurgeons taking new Medicaid patients, drive to Shreveport, go to the ER, tell them you 

have a brain tumor and you will get to a neurosurgeon. That is 

how Medicaid operates, and there are stories like that in every single State, so it is not a unique anecdote. 

As to the administrative costs, understand, and I am going to 

refer to the American Medical Association. They have done their 

own analyses of administrative costs between public and private 

programs. First of all, when you measure the administrative costs 

of Medicare and Medicaid, fundamentally all they are really doing 

is paying claims and then chasing the claims afterwards when they 

go after fraud and abuse and overbilling. But they don’t even count 

administrative costs the same. In the Medicare program, and this 

is according to the AMA, premium collections by private payers is 

counted but not by the government when they count their own administrative costs. Medicare outreach, customer service, OIG auditing, contract negotiations, these things are not added the same, 

and what administrative costs also don’t count in the public paying 

systems is, like for instance in Medicaid, people that are very sick, 

very chronic that are in the Medicaid fee-for-service program as a 

percentage if you are measuring the cost as a percentage, of course 

they are going to be lower because the per-unit billing, the per-person cost is substantially higher. 

Mr. BURGESS. I need to move on to one other thing. GAO did a 

report 2 years ago that suggested within the Medicaid system that 

Medicaid becomes the primary payer when in fact it should be the 

secondary payer and this occurs roughly 15 percent of the time, different in different States, as low as 11 percent in Texas, 25 percent 

in Iowa, and I suspect this is a problem because of the difficulty 

with collecting across States lines if a patient changes addresses 

and changes locations. Is there a way that we can deal with that 

problem of Medicaid going from a secondary insurance to a primary 

insurance when a private insurance should in fact be covering that 

patient? 

Mr. LEVINE. We do have recruitment processes but typically 

again, as I mentioned earlier, we are paying and then chasing 

afterwards. I need to do some more research on that for you. 

Mr. BURGESS. I will get you the link to the GAO report and I 

would be interested to get your thoughts on that. 

Thank you, Mr. Chairman. I will yield back. 

Mr. PALLONE. Thank you. 

Ms. Capps. 

Ms. CAPPS. Thank you, Mr. Chairman, and thank you to these 

witnesses and for your perseverance and staying as long as you 

have. I want to turn first to Dr. Gawande and then Mr. Ebeler for 

the last half of my precious 5 minutes. 

Dr. Gawande, I appreciated your testimony very much, as I told 

you, and I am very interested to learn more about your idea for a 

national institute for health care delivery. As we develop a strategy 


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to improve our health system overall in that big picture, clearly clinicians are the most integral players, and I would like to ask how 

you foresee a national institute for health care delivery or something like that working and how we could get that information to 

clinicians, how actually you would see that implemented? 

Dr. GAWANDE. So a good example would be to break down our 

services that we provide into several buckets. We do 3–1/2 billion 

prescriptions, we do about a billion office visits, we do 120 million 

ER visits, and if you had a national institute of health care delivery, it would focus on asking why do the ERs not work, what are 

the tools they need to get rid of diversion, to deal with organizational problems, to stop the waiting times in ERs, to divert the 

group who are getting, you know, non-urgent care that should be 

in other places. They would invest in programs that we don’t invest 

in, for example, experiments with how do you triage people correctly so they go to the right place safely and get quality care and 

save money. NIH does not pay for that work. I spent 3 years trying 

to say that we know how to make surgery have fewer complications 

but there was no funding in the government to get it. I got the 

funding to carry out an American study from the World Health Organization. In the end it only took about $100,000. I made sure we 

tested it in eight countries, and I showed here at home that we 

could reduce our complications with a 90-second checklist that 

costs, you know, nothing at all, and so that is the kind of work I 

can imagine coming from a national institute for health care delivery service by service, in the ER, in dialysis, in operating rooms 

and in offices and clinics. What is it we need to make those places 

organize all of these drugs and technologies we are trying to deliver. 

Ms. CAPPS. Thank you very much. I would like to follow up with 

that. 

Mr. Ebeler, some of the testimony that has come forward today 

during this hearing argues that we should look at private arrangements, that sort of sacred physician-patient relationship in the private context or others have argued that our health care problems 

can be solved through a tax code alone, in other words, leave those 

decisions in that other sector. Your research seems to indicate another direction and maybe you would elaborate on why this might 

not work according to some studies that you have access to. 

Mr. EBELER. Let me say what we found, and it is not—we are 

not speaking particularly to different options that the subcommittee and committee have for reforming system. Our message 

and our research really hones in on the fact that people who have 

no coverage are getting less than they need, they are suffering 

worse outcomes, and that relates a little bit to Mr. Deal’s question, 

very good research that when you add coverage, whether that be 

children becoming eligible for CHIP or adults becoming eligible for 

Medicare, for folks who were previously uninsured you see very 

positive results of that. So that is the way to go. So the message 

we have for you is the need to proceed, the need to make sure that 

those uninsured patients get coverage so that they can have a connection with a physician. The flavor of that approach of the different options in front of you, we don’t have a view on that at this 

point. 


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Ms. CAPPS. Your basic discovery, if you will, sort of makes sense 

too, that if you don’t have a regular path to some provider that you 

use for small things, that when you are forced because of the drastic nature of your symptoms to seek health care, you are not going 

to have as good an outcome, and you have documentation to show 

that too, so which kind of care it is that we pursue with some kind 

of goal of everybody getting coverage some way, is it less important 

to you than the difference between not having coverage and having 

coverage? 

Mr. EBELER. Correct. 

Ms. CAPPS. Anyone else? I have 16 seconds left if anyone has a 

final thought on that topic. I appreciate that very much. I think it 

gives us a good starting basis from which to—I mean, I hope we 

can all agree as a result of this day that we spent with you that 

it is more important to have some access to care than not to have 

any, even though there is care available in the community. 

Mr. EBELER. That is an important point, because these studies— 

the simple reality is, the uninsured are getting some care and there 

is a safety net out there and there are doctors and nurses and hospitals trying to help every day, but the simple reality is, when you 

adjust for all the things you need to adjust for, they are not getting 

the clinically appropriate care and they are suffering worse outcomes. 

Ms. CAPPS. I yield back. Thank you very much. 

Mr. PALLONE. Thank you. 

Mr. Gingrey. 

Mr. GINGREY. Mr. Chairman, thank you, and I will direct my 

first question to Dr. Gawande. 

Dr. Gawande, when Ranking Member Deal was talking to you 

about medical malpractice and that sort of you and you were saying under universal coverage it would be much less expensive. 

When you referenced universal coverage, were you meaning the 

same thing as this phrase national institute for health care delivery? Is that basically the model that you were talking about? 

Dr. GAWANDE. No. So a national institute for health care delivery 

would be more like a research organization like we have with the 

National Institutes of Health, which does new discovery of technologies and this looks at the side of how do we make sure 

those—— 

Mr. GINGREY. OK. Then I understand that. But basically I guess 

when you said universal coverage, you were referring to universal 

health care, a single-payer system? 

Dr. GAWANDE. No, that is not true. Any system in which—so, for 

example, in Switzerland, they don’t have a single-payer system, 

they have multiple private insurers that provide coverage for the 

entire population. They don’t have a public insurance—— 

Mr. GINGREY. Reclaiming my time. The reason I asked you that 

question, because I really do believe that a lot of people get confused about universal coverage and universal health care, and I 

think it is important to understand that members on this side of 

the aisle and even on the other side of the aisle, we are in favor 

of universal coverage without question. I think those 47 million 

people ought to be insured and I think that would be good for our 

country, good for our economy and certainly good for them, for the 


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individuals. But universal health care when it means a singlepayer system or national health insurance program, and I think 

that was the thing that seemed to be a little bit confusing when 

Representative Deal was asking you about the cost of malpractice 

coverage and he was a little confused, and clearly I think it would 

not be cheaper just because you had universal coverage. But anyway, I am going to move away from that. I wanted to ask the other 

witnesses a couple of questions. 

Real quickly for Mr. Levine, in regard—you run that Medicaid 

system in Louisiana. Do you feel that we should get away from the 

Medicaid system and very likely put everybody in a managed care 

Medicaid sort of program, maybe through a connector where you 

have insurance companies that are going to bid on this business? 

Mr. LEVINE. I am for consumers have a choice of what model 

they want. I think it is very difficult for States—we process 54 million claims a year. We spent a lot of our time just really chasing 

fires as opposed to trying to put these integrated systems together 

that we need to. There is a variety of different models out there. 

I think philosophically where we are at is a coordinated system of 

care where consumers can choose from different networks, which 

network they want based on transparent outcomes, which one has 

the best patient satisfaction, which one has the best provider satisfaction, best compliance with well-child checkups, and let a consumer choose that plan that works best for them. I think in that 

model the consumers win because fundamentally everyone is going 

to react to the most powerful force out there, which is—— 

Mr. GINGREY. Reclaiming my time because I do want to get to 

my colleague from Georgia with the last question but I tend to 

agree with you on that, Mr. Levine. 

Dr. Williamson, I thank you for your testimony, and, you know, 

like every aspect of our economy, health care and its costs are also 

a function of supply and demand. I think you brought that out in 

your testimony, and obviously when we are discussing our health 

care system, demand is the need for medical services by the patient 

and supply is very much contingent on the quality and quantity of 

doctors and other medical providers in the market. I am wondering 

if you can tell us from your perspective what obstacles potential 

medical students of the future may face when considering entering 

the field of medicine? I am talking about education costs, years of 

schooling, cost of liability insurance and practice overhead, if you 

could in the few seconds remaining. 

Dr. WILLIAMSON. It is a significant endeavor to start down that 

road, and you just listed, I think, all the major items. Students, as 

you know, now face enormous debt when they finish medical 

school. The numbers are way into six figures. I have heard a lot 

of figures thrown around. But that amount of money is easily equal 

to a mortgage, easily, and I remember when I first finished residency I felt like I should be looking for a retirement community 

rather than a job, but I had to go out and find a job, and that basically is a starting-over point for residents that finish their training 

after a 13-year or so depending on what specialty you are in, tenure and you have accumulated quite a lot of debt, made very little 

money and spent a decade and a half, and I am concerned that 

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duced so eloquently earlier aren’t going to pursue the profession of 

medicine if they don’t see it as a viable way to take care of their 

families and their debts, and that is a very real problem that we 

have now. It is not just attracting bright young men and women 

to the field but it is keeping them. 

Mr. GINGREY. Real quickly, because my time has run out, do you 

feel like if we go to a single-payer system, national health insurance and that these bright young men and women realize that they 

indeed will be working not managed by the government but for the 

government that they would disincentivize them even further from 

choosing medicine as a profession? 

Dr. WILLIAMSON. I believe that is correct, and we have data in 

Georgia that bears that out. We have survey data that practicing 

physicians have said in a majority that they do not feel that increased government involvement in financing health care is going 

to be a good thing for the profession, so I think you are right. I 

think larger government involvement in health care in general is 

going to dissuade bright young men and women from entering the 

field of medicine. 

Mr. GINGREY. Thank you, Doctor. 

Mr. PALLONE. Thank you. 

Mr. Sarbanes. 

Mr. SARBANES. Thank you, Mr. Chairman. Thank you to the 

panel. 

Dr. Gawande, I have to say your response to the malpractice 

question is kind of like a heat-seeking missile. I thought that was 

very good. I am sure it is going to generate a lot of follow-up research and inquiry. But I wanted to ask another question because 

I am so focused on this issue of the physician shortage, particularly 

in the primary care arena, and also how it gets linked to new and 

more innovative delivery models or taking some of the existing delivery models that we have and expanding them. The term I use 

for this is sort of place-based health care, so for example, schoolbased health clinics. That is where the kids are. That is where they 

spend most of their day. There should be a health center in every 

school and you are going to need pediatricians to staff those. There 

is a concept called naturally occurring retirement communities, 

which are where people are aging in certain neighborhoods so you 

can look at the whole neighborhood like you would like at a senior 

living community so you could argue that a place-based clinic with 

an emphasis on geriatricians in a NORC, a naturally occurring retirement community, would make sense. The concept of clinics in 

places of employment, I mean, if you walk down the hall there is 

a health clinic, you know, a health suite right down the hall here 

to make it easy for people who work here on the Hill to go get 

health care. So I don’t know how much you have thought about 

that but I would love to get your perspective on that in terms of 

informing the kind of delivery model we are trying to move towards 

and where you would base a lot of these new primary care providers like geriatricians and pediatricians and others once we get 

them in the pipeline. 

Dr. GAWANDE. My immediate reaction is that what are you 

honing in on is that we have had half a century now of lost innovation with how primary care is created and delivered because we 


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haven’t provided the incentives for people to put them anywhere 

else other than in offices that might be from 9 to 5 with very limited evening hours, very limited weekend access and so on. The 

idea of putting them in places closer to where people actually need 

their care if there was more incentive for those physicians to be entrepreneurial, it would be—you would see those cropping up and 

you would see that come into place. I think the creation of ideas 

like medical homes starts to give people incentives for organizing 

their groups in places where they can do that work most effectively 

and get to their patients that they are looking for and so I think 

that is an important point. 

The second thing is that on physician shortage, your earlier comments and then coming again here to say that we have this looming aging population without adequate primary care and then a 

world where if we create universal coverage will provide increased 

demand for basic services. We have seen that in Massachusetts 

where we have coverage now and primary care physicians can finally see people but because there weren’t enough primary care 

physicians around we still have insured people, as the chairman 

mentioned, going to emergency rooms and so I think that work that 

you are interested in is very fundamental. 

Mr. SARBANES. And of course, that will be the critique, right? If 

you get the coverage and you don’t have the providers in place, 

then people are going to have to wait, you know, weeks and months 

to see somebody, and that is the refrain you get from those who 

don’t want us to move to coverage—— 

Dr. GAWANDE. It is the chicken and the egg problem. You can’t 

create those physicians sitting there with their offices open without 

knowing whether there are going to be people coming, and you see 

it in plenty of places that expand coverage that you see a growth 

in those models. But what you are going to have happen over time 

is that we also have to learn how to take care of an enormously 

growing aging population. We are going to double the number of 

people over 65 in the next 20 years and our health workforce isn’t 

going to grow much to keep up with that no matter what we do. 

And so our models have to evolve. An example is at Intermountain 

Health Care in Utah. Brent James, who leads that program, was 

able to take care of their entire diabetic population with just two 

endocrinologists by being creative and they are getting better quality results than almost anywhere in the country. 

Mr. SARBANES. The concept of medical home is one that we typically think of in terms of an individual, but I think what we are 

also discussing here is the potential to think of a medical home for 

a community, and that is what a clinic in a school is. It a medical 

home for that school community. It is what a clinic in a naturally 

occurring retirement community is. It has a staff of geriatricians. 

It is a medical home for that community so we can look at it both 

in terms of the individual and in terms of the community. 

Mr. PALLONE. Thank you. 

Ms. Schakowsky. 

Ms. SCHAKOWSKY. Thank you, Mr. Chairman. I think the need in 

this discussion as we go forward in time to use accurate data is 

going to be very important. I talked about the myth that I think 

Mr. Ebeler has talked about in his studies that there is a difference 


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between getting access to care and then getting access to care you 

need. You can go to an emergency room but obviously insurance is 

very important, and this notion that somehow we have absolutely 

the best care system in the world and no one in the United States 

goes without health care really begs the question of the negative 

effects of not having insurance. We also need to talk about Canada. 

If you ask the question, would Canadians swap with the United 

States on their health care system, I think we should get that data 

about what is really going on in a country is pretty satisfied with 

their health care. And finally, the issue of students not wanting to 

go into health care if there were a national system. I have talked 

to plenty of doctors who say not having to deal with billing and if 

we had a really good system of public health that it would be more 

satisfying. 

But I wanted to ask Mr. Ebeler, a previous IOM study found that 

the lack of insurance resulted in 18,000 premature deaths annually 

in the United States. I am wondering if you have updated that at 

all or how your new study contradicts the notion that we are all 

accessing the care we need. 

Mr. EBELER. Thank you. The report I am presenting today is sort 

of an update of a very extensive six-part IOM series that was presented between 2001 and 2004. We did not update that particular 

study on 18,000 deaths. We did again look at the literature very 

clearly and the evidence is even better than was available to that 

committee when it met that it absolutely does matter to have 

health insurance, it matters for the access of children and adults 

and it matters for the health outcomes, and the likelihood of premature death is higher for those who have no health insurance. We 

didn’t follow up and quantify that though. 

Ms. SCHAKOWSKY. Mr. Chairman, the Institute of Medicine 

study, has that been inserted into the record, or at least the report 

brief? Has the Institute of Medicine study been put into the record 

already? If not, I would like to—— 

Mr. PALLONE. I am a little concerned about the number of pages. 

Ms. SCHAKOWSKY. Well, how about the report brief? 

Mr. PALLONE. Yes, that is fine. We will put that—— 

Ms. SCHAKOWSKY. OK. With unanimous consent—— 

Mr. PALLONE. Without objection, so ordered. 

[The information appears at the conclusion of the hearing.] 

Ms. SCHAKOWSKY. I also wanted to ask Mr. Levine, I was interested in your statement and agree with much of it, but you said 

that Medicare and Medicaid are not innovators in quality and you 

mentioned the importance of medical home model, which I support. 

In Illinois we began the primary care case management medical 

home initiative in the fall of 2006. We have enrolled 1.6 million 

Medicaid and SCHIP beneficiaries in 5,300 medical homes, and a 

May 2008 memo from the National Academy for State Health Policy mentions medical home models in Pennsylvania, in Arizona. I 

think there were other States, I think including Mississippi, that 

were doing well. And by the way, that memo also talks about State 

Medicaid innovation in health IT. So Louisiana could undertake 

similar initiatives, could it not? 

Mr. LEVINE. Well, in fact, Louisiana is doing a lot of those things. 

We have a primary care case management program where 700,000, 


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800,000 of our residents that are in Medicaid have a—we pay an 

enhanced fee to the primary care doctor, $3 per member per month, 

and frankly, our results haven’t been—in some instances have been 

good in terms of reducing ER visits but when you compare us with 

the national measures with other States, we perform poorly, and 

so we are looking to improve that system. We have 37, I believe, 

medical homes that were just certified by the NCQA just last week 

and I think we are the second State in the country to have a hospital certified as a hospital-based medical home. So, you know, we 

are embarking on that. You know, we are a State that has 23 percent of our children in poverty, you know, we are a State that I 

think is still going through rebuilding from two hurricanes in 2005 

and now again two more in 2008, and so we are engaged and we 

have submitted a waiver request to CMS to allow us to dramatically transform our Medicaid program to get to what you are talking about, allowing consumers to choose between different coordinated care networks, and we are still going through what the complexion of those networks will look like, but at the end of the day— 

and I think the doctor said it right. He said we shouldn’t stop with 

a discussion about the medical home. You really have to consider 

the neighborhood. You have got to have specialists. You have to 

have institutional support. You have to have home-based services. 

So I think that is the model, and I think Medicaid programs all 

over the country are going to have to transform to that model. 

Ms. SCHAKOWSKY. Thank you. 

Mr. PALLONE. Before I go on to the next member, we have entered a number of executive summaries here and I have one more. 

This is the economic impact of private practice physician offices in 

Georgia. I am going to put in the executive summary and then reference the Web site for the full document. I am going to do that 

with each of the ones that we have had today. And then in addition 

to that, your article, Dr. Gawande, from the New Yorker, ‘‘Getting 

There from Here: How Should Obama Reform Health Care,’’ I 

would ask unanimous consent to put that in and the Georgia document. Without objection, so ordered. 

[The information appears at the conclusion of the hearing.] 

Mr. PALLONE. And next is Ms. Castor. 

Ms. CASTOR. Thank you, Mr. Chairman. 

Thank you, gentlemen, very much for your testimony. Health 

care in America is such a patchwork. You know, you have Medicaid 

for folks in poverty, primarily children and pregnant women, then 

Medicare if you are 65 and over but sometimes seniors, sometimes 

nursing home under Medicaid and Medicare and then SCHIP, and 

private health insurance is the bulk of it, of course, but Mr. Ebeler, 

in your testimony you point out it is practically impossible for a 

hardworking family now to access insurance if they don’t get it 

through their employer and they are working hard so they are not 

going to qualify for Medicaid, they are too young for Medicare, and 

I think the latest estimates for a family it would cost over $12,000 

a year to access it and that is if they don’t have preexisting conditions. If they do, they will meet the hand. 

In my community in Tampa, Florida, in Hillsborough County we 

have a model program that we set up over a decade ago to kind 

of fill those gaps for folks that don’t have health insurance from 


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any other source, and I think it is one of those models that we need 

to be looking at, and then I am going to ask if you all can identify 

other models from around the country. What the Hillsborough 

health care plan does, it is kind of like what Mr. Sarbanes was discussing and Congresswoman Capps, a more expansive community 

clinic system, not just community health centers but they are an 

important piece of it. We have developed a neighborhood clinic system in conjunction with our hospitals and doctors, private hospitals 

and private doctors that do this, because a decade ago we were 

having our property taxes going to indigent care in the hospitals. 

So instead we said let us get these folks out of the ER and into 

neighborhood clinics. It has worked very well and we are able 

now—we have built in programs like smoking cessation and prevention and they have that medical home in their neighborhood. It 

might not be as close as Members of Congress have right down the 

hall but they recognize the doctor, they recognize the nurses in 

their community. They are part of their community. They are their 

neighbors. 

Can you all identify other models like this? Mr. Levine, you are 

familiar with this because of your experience in Florida. Is this 

something that we need to—a model we should be looking at and 

can you identify other models across the country where we should 

focus in and learn some lessons? 

Mr. LEVINE. I think first of all, I am familiar with the 

Hillsborough Health Plan. As you might know, I used to run South 

Bay Hospital and Sun City Center. And they operate it as an insurance plan. Basically once you meet qualifications, you effectively 

have a medical home, and it does operate well for the people that 

fall through the cracks and don’t have other forms of coverage, 

whether Medicaid or private coverage. Healthy Palm Beaches is 

another one that operates. They actually offer an SCHIP insurance 

plan, as you know. Almost every child in Florida is covered 

through—every child in SCHIP in Florida is covered through private insurance and Healthy Palm Beaches is operated as a private 

insurance plan, even though it is a public plan. The North Carolina 

model is a medical home model that seems to be working well in 

North Carolina. Arizona uses models. There are 40 States that are 

using different variations of integration of care all the way from 

straight managed Medicaid all the way to various forms of enhanced primary care case management. And I think each State related to Medicaid has to do what works for that State and really 

what drives that is the provider community, what does your provider network look like, how robust is it, and can your model work. 

But I think there might be other people can answer as well. 

Mr. EBELER. Actually I am familiar with those where I used to 

work at the Robert Wood Johnson Foundation which—— 

Ms. CASTOR. Yes, and the Robert Wood Johnson Foundation recognized them. 

Mr. EBELER. Let me talk about it briefly from the perspective 

again the relatively constrained lane I am from the committee. It 

reminds me a little bit of the lexicon issue that Mr. Gingrey raised 

when people hear everybody covered or universal coverage. From 

the perspective of our report, that is an open issue of how one 

achieves that so, you know, these different models of how one gets 


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to everybody getting coverage is the key variable that we are here 

reporting to you. 

The second thing is the models you are describing connect to another piece of our recommendation and I think what many committee members have been discussing, which is you can’t—everything relates to everything. You can’t get to coverage without cost, 

which is why we have recommended action on both. You can’t get 

to cost without attention to deliver. You can’t get to delivery without quality. You can’t get to those two without primary care. So the 

idea of looking at models that do not just coverage but other approaches to reforming delivery, producing the high-performance 

system that you are talking about a very positive direction to go. 

Ms. CASTOR. Thank you. 

Mr. PALLONE. Thank you. 

Mr. Scalise. 

Mr. SCALISE. Thank you, Mr. Chairman. I appreciate extending 

the courtesy. 

As we discuss the importance of health care reform, obviously 

there are a lot of different options, a lot of different ways we can 

go, and I am sure on this committee there is going to be a whole 

lot of discussion on what the different routes are. I know I have 

some real concerns about a socialized health care model and I 

think we have heard some of the problems with Medicaid specifically and how just spending money doesn’t necessarily yield better 

health outcomes, and Secretary Levine, if you can touch on the 

medical home model that Louisiana is pursuing and how this provides more options for people on Medicaid to maybe use the money 

smarter in essence to yield better health outcomes with the money 

that is being spent. 

Mr. LEVINE. Louisiana faces a problem not unique. It is faced by 

almost every State, and that is first in 2004 our Medicaid budget 

was 10 percent of our State budget and now it is 22 percent of our 

State budget just 5 years later, and so we clearly have to do something to maintain the sustainability of Medicaid. And so we started 

looking at the cost of our program. We realized that we need to 

focus our effort on, number one, early identification of people with 

chronic conditions so that we can properly manage the condition 

before it becomes acute and we wind up spending money. Our State 

has the highest rate of avoidable hospitals in the United States, 

which is one of the drivers for why we have such an expensive system with poor outcomes. So our proposal, which we have submitted 

to CMS, creates a medical home model. Everybody in Medicaid 

would have a patient-centered, NCQA-certified eventually medical 

home. We actually require the coordinated care networks to share 

any bottom line results if there is a positive bottom line at the end 

of the year related to the coordinated care network, they must 

share the savings with the primary care physicians. That is something that I don’t know that any other State is doing right now. 

So there are some unique tenets to our proposal we would ask people to look at and we certainly are going to try to get CMS to approve it. 

Mr. SCALISE. How long has it been since the application to CMS? 

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pate because of the transition. It might speed up one there is a secretary and an administrator in place. 

Mr. EBELER. Just briefly, at the risk of defending Medicaid, 

again, our view of this is no coverage is the wrong amount one 

wants to move to coverage, and we are open about the various tools 

at your disposal to do that, one of which is Medicaid, one of which 

is improving Medicaid, and I guess the only thing I would point out 

is that if we were a random draw of five males at this table from 

the community, it is likely that one of us would be uninsured, and 

the choice of no coverage and Medicaid might be viewed differently 

than sort of the currently insured. So it is—again, the IOM report 

has no particular policy option that is preferred. My only message 

is to urge you to keep various options on the table as you deliberate 

and make your choices. 

Mr. SCALISE. Right, and I think earlier when everybody was 

asked to go down the table and respond to whether or not you 

would be willing to trade your health policy for Medicaid and nobody responded that they wanted to do it, I think that said a lot 

about the problems but I will say, you know, we have experienced 

this in Medicaid populations, not just in Louisiana, but you have 

seen a shrinking number of doctors that accept Medicaid patients 

because of some of those problems, and especially with this last 

SCHIP bill. I think the concern a lot of us had was that as you go 

to a much higher level of bringing more people in that otherwise 

in some cases are on private insurance because the lure might 

sound good, that you are paying for private insurance now, you can 

get on SCHIP and you don’t have to pay, many of those people are 

experiencing that many doctors don’t take Medicaid and so you get 

a decreased list of options as a parent. I would be curious to hear 

your take, Dr. Levine, about the problems with Medicaid as we are 

talking about physicians, we want to attract more physicians and 

a big challenge is in getting enough doctors, people to come into the 

profession. If it looks like we are doing something, creating policies 

that replicate more of a Medicaid model, how would that help attract more doctors when in fact many doctors don’t want to take 

Medicaid today? 

Mr. LEVINE. I think any model, particularly in Medicaid, historically Medicaid has achieved its financial goals by pushing down 

provider rates. That is pretty much the only weapon we have to try 

to fight the growth in Medicaid. And as we have done that, it has 

been a self-inflicted wound in that we wind up with fewer particularly specialists that will take new Medicaid patients and then that 

creates a serious access problem and obviously it drives ER utilization and we know what the consequences are. And I think the 

problem is the spiral that we are in is if we don’t—if we expand 

Medicaid, if we use Medicaid as the vehicle by which we expand 

access to coverage and we call that a victory, we have not solved 

this problem. We have given people a card for a system that may 

not be able to serve their needs. 

Mr. SCALISE. And we may in fact have made it worse, and I know 

my time is expired but I appreciate your comments and hopefully 

we can get CMS to approve that application, the waiver. 

Thank you, Mr. Chairman. 


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Mr. PALLONE. Thank you. We are done with our questioning but 

I want to thank all of you. You may get additional questions in 

writing from us over the next few days, so we would appreciate 

your getting back to us about that, but again, this was our first 

hearing today and I appreciate your participation. We obviously 

have a long way to go but we are determined to deal with this 

issue of health care reform. 

So thank you again, and without objection, this meeting of the 

subcommittee is adjourned. 

[Whereupon, at 3:45 p.m., the subcommittee was adjourned.] 

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