The United States Senate Committee on Finance

Baucus Remarks on Health Care Reform Before the Academy Health Conference

The 19th Century British philosopher Herbert Spencer wrote: “The preservation of health is a duty.”I believe that this Congress has a duty to reform health care.

Two years ago, when I spoke at this very meeting, it seemed that the opportunity to take up national health care reform was on the horizon. The confluence of three trends in health care – growing numbers of uninsured; uneven quality of care; and ever-rising health care costs – had reached the pointin our national dialog that action seemed certain.

Today, I am here to tell you that our day has arrived. The voices calling for health reform have onlyintensified. And the American people elected a new President and a newly empowered Congressionalmajority. We have a duty to deliver the change for which the people voted.

Getting health care reform legislation enacted this year is my top priority. In preparation for this effort,the Finance Committee held 10 hearings on issues critical to the debate. We had a day-long healthsummit this past June.

And most recently, in November I released my own vision for health reform. This “Call to Action”outlines a comprehensive approach to reform. It was intended to spur dialog and show a path forward.

The stars may have truly aligned in favor of health reform and how it can happen. Of course, in politicswe try to avoid using the word “inevitable.” But I’ve been in this business long enough to know when writing is on the wall. And when it comes to health reform, real action is long overdue.

So this morning, I’d like to spend some time talking about the potential obstacles we may face as wemove forward – and the reasons why those barriers can be overcome.

The most obvious reason for reform is that people are hurting and the problems with our health systemare only getting worse.

I spent the month of October holding listening sessions on health care across my home state of Montana. The stories I heard are heartbreaking. People who need health care but go without because they can’t afford it. Families who thought they had coverage but still face a mountain of debt due to health care bills. Small businesses that want to continue providing health coverage for their workers butcan no longer afford it.

In the last eight years, average wages have increased only 20 percent. But the average cost ofemployer-sponsored health coverage has doubled. Premiums have tripled. Health spending has grownfrom 12 percent to 17 percent of the economy.

The cost of health care not only affects workers and their families. It’s also getting harder for Americancompanies to compete in the world. And the cost of health care makes it harder for small businesses tosurvive.

The second reason for believing that the time for health reform has come is a growing recognition thattrue economic recovery cannot happen without health reform. There is a price to pay for inaction related to the cost of poor health, shorter lifespan, lost productivity and cost shifting. According to oneestimate, the cost of doing nothing about health care could be as high as $200 billion a year and rising.

The same study estimates that, as health care inflation continues to outpace wages, the average cost ofhealth insurance for a family could reach $24,000 in 2016 – an 84 percent increase from today.

What does this mean for the average worker- It means that half of U.S households will spend morethan 45 percent of their income to pay for health insurance. Clearly, health reform must be on the tableas we seek ways to spur economic growth.

The third factor in favor of health reform is a President committed to making our health care systemwork. President Obama made health reform a central issue in his campaign, and signaled that reform ishigh on the agenda in his inauguration address.

Overhauling the health system will require significant political capital. It will require the leadership andvision of the new President. So far, the signals we’ve received are positive.

Fourth – though much is made of the partisan divide on health care, initial conversations with many of my Republican colleagues suggest that there is a greater consensus of ideas on reforming the healthsystem than most imagine. There is recognition that reform must encompass coverage, cost andquality. There is a broad acceptance of the fact that reform will require an upfront investment but thatover time, just as important is the need to bend the growth curve of health spending – and improvehealth care quality.

Most believe that we should build on our current system – including both public and private coverage –and not undermine the employer-based system.

If these seem like generalities, they are. But the fundamentals are important, and the building blocksneeded to achieve comprehensive reform are, in fact, incremental steps. As much as we all want abetter system overnight, I’ve come to understand how complex our system is and how change will notbe possible overnight.

This leads me to the final reason why reform seems possible. I sense a genuine interest in workingtogether on the part of key republicans in the Senate.

Why might reform not happen this year?

As is often the case, the new Administration and the new Congress face competing priorities. Thesepriorities compete for time on the agenda and attention in the press and in public.

And in a time of severe economic crisis, when the country is waging a war on two fronts, and the publicis demanding ways to promote new sources of energy and break our dependence on foreign oil, the newPresident’s dance card is indeed full.

Despite all of these competing demands, however, nothing seems to resonate with families more thanthe issue of health care.

A second barrier is the recognition, based on the experience in 1993-94, that we must move swiftly onhealth reform – to take advantage of the air of inevitability and the early goodwill of health carestakeholders and interest groups.

But, complex problems often require time to understand and time to develop solutions. And as faralong as we are on building the case for reform and the fundamentals of a plan, we have a ways to go.And the longer it takes, the more likely it is that the agenda becomes crowded with other priorities.

That being said, I feel an unprecedented sense of urgency among Members and the Administration andan understanding of our limited window of opportunity.

The third most important barrier is the budget deficit. Already this year, the deficit is estimated to be $1.2 trillion. The economic recovery legislation currently under consideration could add another $800billion.

Many will claim that, in the face of our current, ever-growing budget deficit, we cannot afford to spendmore on health care. In fact, some have called for an entitlement reform commission as a solution toreigning in our health care spending. I believe that we will never address the federal deficit in thiscountry without reforming our health care system.

I do agree, however, that our ability to enact reform is contingent on our ability to bend the growthcurve of health spending. If we can’t generate savings, then reform is not likely to happen.

However, we cannot and should not anticipate savings in every year of the budget window nor should we claim that we will be able to pay for health care reform. Our intention is not to spend any more thanwe are currently projected to spend over the next ten years but to do so more efficiently while coveringall Americans.

There are some items, however, that are pending and which must be addressed before we move tohealth care reform. We must reauthorize the Children’s Health Insurance Program before the end of March. I expect that this will be done within days. CHIP reauthorization provides the opportunity tomake a down payment on expanded coverage by providing health insurance to four million additionalchildren.

In the current economic crisis, our first duty is to pass legislation to spur economic recovery. And thatlegislation can take the first steps to address health care reform.

In this economic crisis, if states do not get additional Federal funding, they will cut Medicaid coverage.

They will cut payments to providers, public health programs, and educational institutions. At least 17states have made cuts that will affect low-income children’s or families’ eligibility for health insurance orreduce their access to health care services.

To help stave off more cuts, the economic recovery proposal that the Finance Committee will considerincludes assistance to states though Medicaid.

The economic recovery package will also provide additional assistance for people struggling to maintainhealth care coverage through COBRA. And the economic recovery package will begin investing in healthinformation technology and comparative effectiveness research.

Health care is a critical part of our economic recovery. By investing in health I.T. and comparativeeffectiveness research, we can create good new jobs, infuse dollars into our economy, and make adown-payment on health care reform.

Health I.T. and comparative effectiveness research are both essential to increasing the value that we getfor our health care dollars. That is why I believe these proposals should be included in the economicrecovery package.

The sooner we invest in those priorities, the better it will be for the economy and for our health carereform effort.

I’ve highlighted several reasons that we must reform our health care system this year and just a few ofthe reasons why it will be hard. But, nothing worth doing is ever easy. We need to work togetherthroughout the debate. We’re all in this together.

My door is open. And I want to hear from you.

But come with a “can-do” spirit and an open mind.

I am privileged that the people of Montana have put me in a position to influence the debate on healthreform. It is a road that we will all travel together.

It is our duty to do so. It is our moral obligation. And it may just turn out to be one of the mostimportant things that we ever do. I will look forward to working with all of you in the coming months tosee that it is.

And so, let us deliver the change for which the people voted. Let us do all that we can to help rebuildthe American economy. And together, let us bring on fundamental change in health care in America.

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