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Events, Speeches &
Floor Statements

Senator Klobuchar Talks about Rising Health Care Costs

November 20, 2009 | Watch

Mr. President, I am going to focus for the next 10 minutes on the issue of costs. I know many people are focused on important issues like the fact that this bill will finally eliminate the limitations on preexisting conditions, so if your kid gets sick, you don’t have to lose your health care; and the fact that people will be able to keep their kids on their health care until they are 26. These are very important parts of the bill. It is very important to people of my State.

The other facet that is very important to people in my State is something I heard about all over the last few months: the issue of more affordable health care. This is why: At $2.4 trillion per year, health care spending represents close to 17 percent of the American economy. It will exceed 20 percent by 2018 if the current trend continues.

Hospitals and clinics are providing an estimated $56 billion in uncompensated care. In fact, today, Peter Orszag, the Budget Director for the President, wrote an opinion piece for the Washington Post that highlights the fiscal importance of passing health care reform. One of the things he said is, looking forward, if we do nothing to slow the skyrocketing costs of health care, the Federal Government will eventually be spending more on Medicare and Medicaid than all other government programs combined. He notes that it is time to move toward the high-quality, lower cost health care system of the future.

As you know, Mr. President, coming from Wisconsin, we know how to deliver high-quality, highly efficient care. They do it in Wisconsin and in Minnesota. They also do it in Washington State. A number of States have figured out how to do this. Those are the models we need to see all across the country. We need to make health care affordable for everybody, and we need to reduce the waste and fraud that plagues the current system in this country.

In 2008, employer health insurance premiums increased by 5 percent, two times the rate of inflation, and the annual premium for an employer health plan covering a family of four averaged nearly $12,000.

In fact, I tell people around me that they have to know 3 numbers: 6, 12, and 24. Ten years ago, the average family was paying $6,000 for their health care premiums. Now it is $12,000. That is average. A lot of small companies in Minnesota—the owners of companies are paying more than that. But right now the average nationally is $12,000. If we do nothing to bend the cost curve, the average family will be paying, on an annual basis, $24,000 for their health care 10 years from now.

Meanwhile, a new study found that small businesses pay up to 18 percent more to provide health insurance for their employees. 

We are talking about a backpack company up in Two Harbors, MN. 

A guy started that small company, and it is now up to 15 employees. He has a family of four and is paying $24,000—in Two Harbors, MN—for his family to make sure they have health insurance. He said if he knew it would have cost that much, he might not have started that company. Now they are providing beautiful, great backpacks for our troops who are serving us—high-quality backpacks. Those backpacks wouldn’t have existed if he knew what was happening. 

Those jobs would not have existed. He could be working at a big company and paying less. 

But he was an entrepreneur, and we should reward that.

The American people know inaction is not an option.
 
If we don’t act, costs will continue to skyrocket, and 14,000 Americans will continue to lose their health insurance every single day. We must keep what works and fix what is broken.

Let me tell you about some good news. It is encouraging news that the Senate will start considering the bill that will reduce the Federal deficit by $127 billion in 10 years. If we go out 20 years, it is a $650 billion reduction in the deficit. That is good news. We achieve these long-term savings by making our health care system more efficient, rewarding quality, and improving patient outcomes, and reducing administrative spending and waste.

Most health care is purchased on a fee-for-service basis. So more tests and more surgery mean more money—quantity not quality pays.

According to researchers at Dartmouth Medical School, nearly $700 billion per year is wasted on unnecessary or ineffective health care. That is 30 percent of total health care spending. One study showed if the hospitals in some of these inefficient areas would follow the high-quality protocol the Mayo Clinic uses—and a lot of people would like to have that kind of health care—we would save $50 billion in taxpayer money every 5 years for chronically ill patients—$50 billion. That is just one example for one set of patients.

That is what we do in Minnesota. We want that same kind of health care, the same kind of high-quality care, the incentives on the Federal level that aren’t there now, and that is what we are seeing in this reform package.

I am pleased the "value index" I proposed, which was cosponsored by Senator Cantwell of Washington and Senator Gregg of New Hampshire, was included in the Senate bill. This indexing will help reduce unnecessary procedures because those who produce more volume will need to also improve care or the increased volume will negatively impact their fees. Doctors will have a financial incentive to maximize the value and quality of their service instead of the quantity. This is supported by doctors in my State.

Linking rewards to the outcomes for the entire payment area creates an incentive for doctors and hospitals to work together to improve quality and efficiency. In too many places patients struggle against a fragmented delivery system, running all over with x rays in the back of the car, seeing specialists, and not having someone in charge, or a quarterback running the team, having 20 wide receivers running this way and that way. That is why we need the integrated care that is rewarded in the bill—bundling of services. What you pay for is the result, the combination of services that gives you good results. That is what bundling is about.

There is another good thing about the bill. In 1 year, hospital readmissions cost Medicare $17.4 billion. A study found that Medicare paid an average of $7,200 per readmission that was likely preventable. Who wants to go back in the hospital if you don’t need to? One of the problems, if we don’t have quality indexes in place—my State has one of the lowest hospital readmission rates in the country. If we don’t have that index in place, we are rewarding bad practice. We want to reward high quality and put the patient in the driver’s seat. That is what we do with the provisions in the bill.

I am encouraged the Senate bill includes a provision that calls for reduced payments to hospitals if they have preventable readmissions.

In this bill, we also work to better reward integrated health care systems. At places such as Mayo Clinic or Health Partners in Duluth, a patient’s overall care is managed by a primary care doctor in coordination with specialists, nurses, and other care providers, as needed—one-stop shopping.

In our rural communities, critical access hospitals utilize this model and provide quality health care for residents in their communities with a team of providers.

To better reward and encourage collaboration, we encourage the creation of accountable care organizations. This is what I hear from the people in my State and across the country: We want more accountability in this health care system.

Do you know what else accountability means? It means better enforcement of Medicare fraud. When the dollars are so tight and people are having so much trouble affording health care, why do we want to waste $60 billion a year on fraud? Think what that money could be spent for to make it easier to go to the hospital or doctor instead of $60 billion wasted on fraud.

This bill and some of the amendments we are going to propose in the next month will bring us much closer to reducing that fraud, bringing that fraud down, and will hold the perpetrators accountable, including criminal penalties—that is important—making sure we have direct deposit, a bill that Senator Snowe and I have, so nobody can make out false checks and try to get the money that way; giving our law enforcement officers more tools to go after Medicare fraud. We can save $60 billion a year.

In today's Washington Post, Peter Orszag writes:

As we enter the homestretch, the greatest risk we run is not completing health reform and letting this chance to lay a new foundation for our economy and our country pass us by.

I argue one of the most important things we can do—and I know everybody is focusing on who pays and what the provision means—is to change the delivery system in this country, reward that kind of high-quality, highly efficient care, so that our big companies are able to compete with companies in other countries that have more highly efficient delivery systems so our small companies are able to exist and multiply and keep their employees on health care, so that individuals in this country aren’t cut off just because their child gets sick. That is what this reform is about. Thank you. I look forward to the vote tomorrow.

I yield the floor.