Long term health care budget likened to a dysfunctional relationship

The long term budget outlook for slowing the growth of health care costs was discussed at a hearing before the U.S. Senate Committee on Finance. Panelist Dr. Peter R. Orszag, Director of the Congressional Budget Office (CBO), gave the analogy of a dysfunctional relationship to illustrate the unsustainable state of the federal budget. Orszag said that, like such a relationship, there was no telling how long the budget would last but the end was bound to be messy.

Panelist Mr. Gene Dodaro, Acting Comptroller General of the Government Accountability Office (GAO) cautioned that Social Security cash surplus would start declining in 2011. Dodaro said that this would force increased borrowing from the public, reduced spending or increased revenue. Dodaro also said that American standard of living would be affected in terms of how the types of services would be funded.

Chairman Max Baucus (D-Mont.) noted that Congress would be able to help more if given more data regarding health care costs and guidelines. Orszag agreed and discussed ways to constrain costs without adversely affecting health benefits. Orszag recommended increasing the salience of health costs and improving health care efficiency. He said that might result in a change in cost-consciousness which would shift demand. Orszag also recommended generating more information about effectiveness and changing incentives such that people pay for ‘better care and not just more care’. Lastly, Orszag stressed the importance of adopting measures that promote healthier living such as increasing cigarette tax to discourage smoking.

Healthcare challenges daunting for United States’ economy

Ben Bernake, the Chairman of the United States’ Federal Reserve, gave his remarks on improving the performance of the healthcare system at the Senate Finance Committee’s “Prepare for Launch” Health Reform Summit. Bernake said that improving healthcare is one of the most important problems facing the United States’ economy.

Bernake explained that healthcare is both an economic and social issue; it is the fastest growing sector of the economy exceeding 15 percent of the overall national Gross Domestic Product. Bernake said that there are three areas of focus that need to be addressed: access, quality, and cost. Access of healthcare needs to be expanded because the amount of Americans without insurance is steadily increasing. Bernake also said that an uninsured individual is 30 percent more likely to die from a car accident than someone insured because they will not be treated as quickly and thoroughly as necessary.

Bernake said that the quality of healthcare also needs to be increased. Last year about 98,000 people died in hospitals because of medical errors. Bernake explained that the scope for improving patient safety remains extremely large and that there exists a disturbing gap between the principle and practice of quality healthcare.

Controlling the costs of healthcare is the last issue that Bernake spoke about. The United States’ per capita spending is greater than per capita incomes. Bernake said that the country’s spending exceeds most industrial countries and it keeps increasing. He also said that the high cost of healthcare is much higher than necessary. Bernake explained that taking on these challenges will be daunting for the United States and no single set of reforms will address all the problems. He said that an eclectic approach which meets each individual problem in a different way will be best.

Health insurance a societal obligation

Forty-five million uninsured Americans prompted the Senate Finance Committee to discuss ways to reform health care, listening to recommendations that could help to provide insurance coverage to the uninsured. According to panelists, the uninsured are shut out of the system due to increasingly high health care costs, high insurance rates, and partial coverage.

Ron Williams, the CEO of Aetna, told the committee that lowering insurance rates will require lowering the cost of health care since the price of insurance reflects on the cost of treatment. Williams also said universal participation in health insurance is necessary to lower prices and help those in need, comparing societal assistance in health care to food taxes that help feed the hungry. He noted that patients seeking coverage after being diagnosed with a serious illness is not insurance but in fact a way of financing treatment, suggesting that measures be taken to combat reactionary purchases of health insurance. Williams also said that grouping people by methods other than risk factors would allow for an even distribution of healthy and unhealthy and prevent costs from skyrocketing due to an influx of customers needing high remittances.

Mark Hall, a professor at Wake Forest University, agreed with Williams’s idea of grouping customers into pools without determining risk factors. Hall said that one percent of the American population uses almost 25 percent of federal expenditures on health care while half the population uses four percent. Hall said that pooling would allow natural statistics to have an effect on health prices by preventing concentration of the sick. Raymond Arth, a small business owner from Ohio, urged the committee to be conscious of small business owners. Arth said that small business owners desire to provide health insurance to employees but that increasing renewal figures make it difficult financially.

Poor quality of health care is “deadly”

The Senate Finance Committee held a hearing on "Rising Costs, Low Quality in Health Care: The Necessity for Reform" where Chairman Max Baucus (D-Mont.) said the health care system needs to be reformed so all Americans have access to affordable and high quality health care.  Elizabeth McGlynn, Ph.D, associate director of RAND Health and distinguished chair in health quality, said that she has found that on average, "American adults received just 55 percent of recommended care for the leading causes of death and disability."  She also said that "We spend nearly two trillion dollars annually on health care and we get it right about half the time" and that "poor quality is deadly."  

Arlene Hold Baker, executive vice president of the AFL-CIO, said the AFL-CIO launched an online survey "that captured working families' concerns about health care."  She said 96 percent of respondents are "somewhat or very concerned about affording coverage in the next few years."  She added that "annual premium costs for family coverage have almost doubled between 2000 and 2007" and that "as the number of uninsured grows, so too does the cost-shifting that occurs in our fragmented system." 

As for ideas on reforming the system, Paul Ginsburg, president of the Center for Studying Health System Change, said cost-containment and quality-improvement are vital to get better value for the amount of money spent on health care. He also said that to increase efficiency, services with little or no value should be forgone.  McGlynn encouraged improving quality whether or not it saves money, since it's "the right thing to do." 

Felicia Fields, group vice president of human resources and corporate services at the Ford Motor Company, said that "a better approach is to improve health care coverage affordability by evaluating the key cost drivers of health care and how to address them."  Some of the programs she suggested included implementing generic prescription drug substitution to control the rate of prescription drug costs, removing legislative and regulatory barriers on wellness programs, and strong federal leadership for "establishing one set of standards for health care quality and one set of basic guidelines for improving the population's health status."

"Iran is not a Saddam Hussein Iraq"

The senate finance committee held a hearing today discussing the "S.970, the Iran Counter-Proliferation Act of 2007."
The panel was consisted of Philip Gordon, senior fellow for U.S. Foreign Policy at the Brookings Institution, Orde Kittrie, visiting associate professor at the University of Maryland, school of Law, William A. Reinsch, president of the National Foreign Trade Council and lastly Danielle Pletka, vice president of Foreign and Defense Policy at the American Enterprise Institute.

The panel discussed the advantages and the disadvantages of the S.970 bill, which introduces the Iranian Nuclear sanctions; it also includes prohibition of exports to Iran. Although the panel consisted of both critics and supporters of the bill, they all highlighted the seriousness of the nuclear development in Iran. They introduced different means of approaching to the problem, professor Kittrie, for instance, urged the bill to be passed by the Senate and stressed the fact that the bill is the only way of stopping Iran from further nuclear development. He added by saying that the economic situation of Iranians, as a result of the bill, is the fault of their government.

Mr. Reinsch, on the other hand, expressed his concerns of passing the S.970 stressing that it may lead to a war. In his opinion, balancing the situation will make the U.S. stay strong. He even said that direct diplomacy with Iran is the key to finding a solution. In addition to that, in Reinsch's perspective the S.970 will "withdraw the international attention from the core problem".

As the hearing went on, Ms Pletka raised an awareness of the consequences of a dialogue; she said "a dialogue too often means negotiations" and continued by asking the members of the Senate whether or not they are ready to trade something with Iran. Mr. Gordon stressed the fact that Iran is not a Saddam Hussein Iraq and thus matters should be analyzed and act upon accordingly.